‘We’ve been calling for gold to be above US$2,000 (per ounce) for quite some time now. We’re there, and we think that once you get to US$2,200 it’s going to be kind of a FOMO trade in terms of some of these gold stocks,’ he said.
‘I think the downside risk is retesting that US$1,800 round number … (but) I just don’t think we’re going to get to the US$1,790, US$1,800 level,’ Feneck continued, adding that he’s confident the metal would hold if it did go there.
While the gold price is historically high, gold stocks aren’t performing as well as investors would like.
‘I can’t remember even looking at 2016 the disparity between the gold price and mining stocks,’ Feneck said at the Prospectors & Developers Association of Canada (PDAC) convention. He uses the Relative Strength Index (RSI) to evaluate companies, and said right now many gold stocks have RSIs between 27 and 35 — the 30 level is generally a time to buy.
‘Broadly for the (big-cap gold stocks) I like what i’m seeing. I can’t remember a quarter like this where everyone’s beating (when it comes to results) and yet the prices are so depressed,’ Feneck commented.
In terms of precious metals stocks he likes, he mentioned Guanajuato Silver Company (TSXV:GSVR,OTCQX:GSVRF), Coeur Mining (NYSE:CDE) and Hecla Mining (NYSE:HL), as well as Silver X Mining (TSXV:AGX,OTCQB:AGXPF) and Aftermath Silver (TSXV:AAG,OTCQX:AAGFF). Feneck is also interested in VR Resources (TSXV:VRR,OTCQB:VRRCF) on the copper side.
In closing, Feneck emphasized due diligence. ‘Make phone calls to companies right now. This is the time you want to do your homework. Get any questions answered about what you own and what you’re thinking about owning,’ he said.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.