'Serious Sell-Off' This Fall: Fed Action To Trigger Market Panic | John Feneck
Summary
Market Outlook: John Feneck anticipates a potential market correction this fall due to the Fed's actions and the current economic indicators, such as the CPI and job growth figures.
Investment Strategy: Feneck emphasizes the importance of holding a diversified portfolio with a focus on precious metals and mining stocks, highlighting the potential for significant gains in these sectors.
Precious Metals: Gold and silver are seen as strong investments, with gold signaling underlying issues in the US economy and silver catching up in performance, particularly after breaking long-standing resistance levels.
Federal Reserve Actions: The possibility of rate cuts by the Fed is discussed, with Feneck noting that a 25 basis point cut may not suffice to prevent a market downturn, while the Fed's dual mandate on inflation and employment remains a key focus.
Sector Performance: The mining sector, particularly gold and silver miners, has shown strong performance, with companies like Newmont and others reporting significant earnings beats, attracting attention from portfolio managers.
Investment Opportunities: Feneck highlights opportunities in the mining sector, including companies diversifying into tech, and emphasizes the need for investors to understand the risks and rewards of investing in junior miners.
Economic Concerns: The discussion touches on the potential for a Japanese-like recession in the US, driven by factors such as high consumer debt and weakening job growth, which could impact broader market dynamics.
Long-term Outlook: Feneck remains optimistic about the mining sector's prospects over the next few years, suggesting a potential for continued strong performance despite broader economic challenges.
Transcript
Gold is is telling you something that something is broken in the US economy. So what's the truth? The American consumer led the way for many many years, right? And that is over. What if Trump finds a way to get rid of Pal? That would be like a huge like liberation day kind of volatility event and the US going into a Japanese-like recession. I think everything happens like this now. It's so much faster than people recognize. We'll see a good couple of years in this sector and I'm going to try to take advantage of that while we can. Our [Music] next guest has correctly called the bare market of 2022. What's his outlook now for 2025 and 2026? Are we in for the same grim outlook as a couple years ago or our sunnier skies ahead? Well, we'll talk to John Fedick. He's the founder of Fenic Consulting and also a portfolio manager. He'll give us his outlook for stocks, the economy, gold, precious metals, and a few mining stocks that he likes. Welcome back to the show. Good to see you in person, John. Likewise, David. Thanks for having me. We were here a couple years ago in 2022. Bad year for stocks, bad year for gold as well. Bad year for bonds. That was when the Fed started raising rates. Now, it's the exact reverse. We're talking about a potential Fed rate cut next week. People have been telling me online here, 50 basis points is on the table, even 75. the market's pricing at 25. We'll talk about the Fed, but let's just get your market outlook. You've been kind of bearish all throughout 2025. That hasn't played out exactly as you expected. What are you anticipating now? Yeah, so um bearish on the NASDAQ, the S&P, the Russell, you know, the broad market. I've been very bullish on silver and gold and miners, and that's contributed to our outperformance. As for NASDAQ, S&P, look, I mean, here's the stat. the Russell 2000. Um there's 2,000 stocks. Uh almost a thousand of them have no earnings. Yet the IWM, which is the ETF that is the Russell 2000, so popular with advisers is in every model portfolio probably in every retirees account, right? Like why? I mean, some of this stuff is the potential for a serious sell-off. And so what I've been kind of preaching for the last, you know, probably since May, David, is sit down with your financial advisor, have a difficult discussion and say, "Look, I've made so much money, thank you, for the last 15 and a half years, but what's your prognosis for the next year?" Because now that that Powell has pivoted, you know, August 22nd at Jackson Hole and has become more doubbish. Well, what what do rate cuts or a series of rate cuts mean for my portfolio? Yeah. What do you do in a year when pretty much everything except bonds has been up? you know, we're not talking about capital rotation from one thing to another. It's just a matter of putting your basket or your eggs in the most bullish basket, so to speak, right? And I I'll just say um I differ than probably most of your guests in that uh many people I've heard at the show here saying that there won't be tax laws selling in the mining space this year. Absolutely wrong. There is always pressure in our sector. Why? Because this year Bitcoin is up, all a lot of crypto is up. Um, tech is up, real estate is up, right? So, everything to your point is melting up, but we're melting up too. So, I think there's two different camps that have been built. One is the value camp. Stan Ducken Miller, Ray Dallio, our portfolio, you know, guys that that that represent and see value in the market still. And then the growth guys, right, that are just following momentum. That's work, too. So, at some point, you're going to have something break. And I think that when you look at a really longdated chart of the S&P or NASDAQ going back to March of09, you'll see for 15 and a half years, it's been a pretty nice run. So, we're in the camp that you will see a correction and you could see a correction this fall based on the Fed not delivering, right? Because that that 25 basis points you mentioned is baked in September 17th. We'd have to get 50 andor some really dovish comments from Powell. and Pal being a former attorney, I just don't see that he always is going to deliver on what people wants. Why do we have to see dovish action from the Fed, especially considering this week's CPI came out at 2.9% headline CPI, which is hotter than expected and of course larger than last month's 2.7, right? Yeah. So CPI is is still on their radar for sure, but if you noticed in last month's um you know, his wording was more about the jobs. August 1st, non-farm payrolls missed, but the big number or the big headline was the revision down of 258,000 jobs, you know, for previous 2 months. And then you look at September 5th and it missed again. So now you've got like a string of months here where the job growth in the US is very poor. Does it seem kind of arbitrary to you that sometimes the Fed favors the jobs and sometimes the Fed favors the inflation side? They have two mandates. They somehow shift priorities depending on XYZ. What's that XYZ? I don't know. Yeah, we've heard about inflation for it seems like forever with POW, right? And then we added the tariff thing into the into the mix uh earlier this year. And I still think the tariff thing is very much a valid thing. Like when I saw Trump in November of last year, you know, win, I was like, "This guy's talking about tariffs and he means business." And I didn't think it was going to be like Liberation Day business, you know, to that extent. But I did think that he sees this as is sort of like a personal thing. He's going to win or else kind of mentality. And we're not seeing these like 5 10% things. We're seeing 15% plus tariffs in some big countries out there. So that really hasn't been factored into the CPI number yet. David, in our view, why do you think the labor market's been showing signs of weakness? And ultimately, it's a 25 basis point cut or even a 50 basis point cut going to help. 25 will do nothing. I mean, it's it's like checking a box that it's the first of hopefully many, right? But the market would tank I think on a 25 basis point cut subsequently because we're we're kind of in this euphoric phase since August 22nd. Not just for the NASDAQ S&P but also our sector right to be fair. GDX and GDXJ have just rallied huge. I mean if you look at a longdated GDX chart it broke out above where it was during the last real rally in our sector. GDXJ has a lot of headroom in blue sky. It's trading around 86 87 yesterday's close. Um it's high of all time 17910. So I mean we're like halfway there on on the juniors which is what you know it's really exciting. So what's ultimately your expectation for this fall? The Fed's not going to deliver what many people want them to deliver and then the stocks the indices will do what? So we'll see what happens on September 17th. It really is his wording that's the most important. It's not the headline number, you know, because we want to see him change in terms of what what he was saying last fall, right? He was, you know, the market was factoring in four rate cuts for this year and then after the December meeting, it went to three cuts and then by sometime in the spring it was two cuts. And so now we've sort of just gotten used to this um lack of rate cuts and the market is forward-looking, right? So, it's hoping is is is not a strategy um to get Powell to play ball. What if Powell doesn't play ball? And then secondly, what if Trump finds a way to get rid of Powell? That would be like a huge like liberation day kind of volatility event. The Treasury Secretary has been very critical of the Fed. In a post on Twitter this week, he said that the Fed is responsible for inequality in America. So, you have to think what Powell wants his legacy to be because this might be his last year as Fed chair. Well, most likely it will be. And uh and you have to think, well, he doesn't want to be the guy that's responsible for not containing unemployment going up. He doesn't want to be the guy that also uh was the last Fed share to see inflation tick up out of control because he's lowering rates. It's kind of in a tough place. What would you do if you were him? If I were Jerome Pal and this is your last year at the end of the quarter, you know, he's pretty stoic guy. Like I don't know that he's going to be like a draggy type from Europe and say like this is my legacy and I'm going to go out with like 10 million rate cuts. I wish that were the that not not the case because I have a lot of money that would benefit from rate cuts, right? Um but you know, Trump's over here saying let's get eight rate cuts cuz I own all this real estate and uh that would help me and help a lot of Americans. But that's also a farce. That's not going to happen. Trump I mean Pal is going to do what Pal's going to do. But I think August 22nd was very constructive in terms of the sentiment change. I saw a presentation by Stephanie Palmboy at the keynote yesterday at the conference and there was a chart that stood out to me that real 10 year yield and the gold price has been correlated for the most part of this year and most of last year I believe which is strange because historically those two variables moved in opposite directions. kind of makes sense when the real yield goes down. People are looking for yield in other places besides fixed incomes. They go to gold when hot when yields are high. You don't need to be in a safe haven. Fixed income does the job for you. But they've moved together. What's your explanation? I haven't looked at that chart. I didn't see the presentation. Um all I can say is right now we've had a lot of naysayers in gold all year, all of last year, all the year before. They've all been wrong, right? So like gold is is got its own thing going on right now and and little sis silver is catching up and that's that's really the important thing. Why do you think gold's been going up all year despite the fact that the Fed hasn't changed rates much if any? Um gold is is telling you something that something is broken in the US economy. I personally have been saying all year that when the non-farm numbers start to wayne as we saw August 1st that's when you put your chips in on miners because that's the last shoe to drop. I mean the only other shoe to drop is the NASDAQ and S&P to start selling off because that would also help our sector right look at the earnings we just saw from Numont you know in July they beat by 27 cents uh the beat on revs the tickers NEM that led a series of beats core beat CDE ag beat AEM all of these stocks caught the attention of portfolio managers that are generalists but they're not doing anything about it yet because if you're a US portfolio manager and you're a large cap core fund you're benching against the S&P, right? You have to beat the S&P no matter what. The S&P 500 right now is 45% tech, right? So, like you're not going to say, you know, I'll put all this money into mining stocks and be 20% tech and take that huge gamble cuz you won't get bonus and you'll get fired. Like that's really what happens, right? So, so then the point you're making is correct me if I'm wrong. Uh there should not be any capital rotation now out of tech into miners or has that already happened? Oh, it hasn't happened yet. Technology was 45.4% in the SPY as of August 31st and our sector represented less than 1%. I'm just curious why the GDX and GDXJ exploded post August. Like I'll get your explanation. It's been going up all year, but then it's been kind of flat. We'll show a chart on the screen. It's been kind of flat since April and then start of August. It exploded upwards and then we didn't see a huge crash in the NASDAQ around that time as well. Yeah. Right. So, we didn't see like, you know, you can't explain that as capital rotated from one sector to another. Maybe it did. What What happened? So, Newmont's earnings in July kicked off that earnings season. Yeah, that was fantastic. I mean, look at the holdings of GDX and GDXJ. Look at their earnings. Almost every company beat, but they beat handily because analysts in our sector, they they're very very conservative is a nice way to put it. I don't think they're worth much. Most of our analysts are really wimpy. They don't they don't take risk, right? So, it's twofold. One is their earnings were fantastic. Why were the earnings fantastic? while gold was trending at 3,100 to 3,300 for months. So, these companies were able to clip, you know, a really nice um they were able to generate a lot of free cash flow based on their costs not going up too much. I remember when I was covering the sector in 2021 2022, one of the themes was oh the crypto sector stealing the thunder away from the gold mining sector. Remember how that those two years was kind of quiet for the gold miners and the altcoins exploded? Well, now right now, I mean, the retail interest isn't as high in crypto as maybe it was from 2021, but there's new all-time highs for Bitcoin. Ethereum just had a huge run. The altcoins are starting to catch up. At the same time as GDX's up 90% year to date, gold's up to new all-time highs. Can you still make the same narrative today in 2025? Um, the narrative that they're competing industries when one industry does well, the other doesn't. Yeah. I I've never said that. Um I think there's plenty of money to go around. I think the big thing to watch is not Bitcoin selling off for funding of our sector. It's the S&P and the NASDAQ and the Russell, right? So, okay. Now, what do you think is going to happen to uh gold in 2026? Let's just get your outlook for gold in 2026. Um you know, in January, we'll put out our targets. Our targets last year, we missed by eight bucks, so we were really close. This year, we said 3,200 should be easy. 3500 will be harder and 3,800 is our target now that we've achieved both other targets. Um, next year I haven't really thought about it too much yet, David, but I will say that the banks that were at 3,000 to 3200 are now at 3500 to 4,000 for next year. That's right. Um, and JP Morgan is interestingly one of the biggest manipulators of silver of all time. Um, by anyone's standards if you go look it up. um they are at the highest of of the big banks in terms of go target price for next year. So that's really bullish. We've seen a major flip-flop. What was their target? I know Goldman's at 4,000. So I I think I I guess I I think it's like 4,200. Yeah. Yeah. So So um you know, look, the best part about all this, you don't need 4,000 or 4200 gold for GDX and GDXJ and the silver miners to crank. Remember in 2020 when people were calling for 5,000 gold and one of the reasons for why gold would reach $5,000 in the next couple years. Is the world falling apart? Do we still need that narrative for gold to hit 5,000? Nope. Because gold has so much momentum and it's got so many things going for it now. Not just central bank buying, but also the backdrop for global economies is very uncertain, you know, and gold loves uncertainty. Yeah. The other narrative is a central bank buying of gold that's been expediting in the last couple of uh months if not uh 12 to 18 months. What's your uh explanation around why gold's been so favored by the central banks outside of the US? Well, I mean that trend's been in place if you look at a chart, David, since February of 2022. China led the way and that was because of the Russia Ukraine conflict. They literally went all in. And I mean they were already heavily in but they you can see it on the chart of Chinese you know consumption of gold and then a lot of other countries that are much smaller than China f followed behind them over the last three and a half years. Okay. So in this next year when gold is going to go higher um how are the other assets going to perform? You already are cautious on equities in the fall. Do you think this is an environment where cash is king or hard assets is king? Hard assets are king. Um, in fact, if you're in our sector right now and you're heavy cash you're really chasing almost there's some exponential moves at this conference, you know, we've got I don't know how many companies here, 150 plus, but there's probably another 100 CEOs milling around outside. Um, there's a lot of people um, you know, proud of what they've achieved over the last couple years and are telling that story to a lot wealthier crowd here. Credit spreads are starting to widen, John. And I'm wondering if slowed down or recession risks are underestimated by the market. Certainly that theme has been ignored by investors, economists, kind of the like we've given up on the recession theme in 2025. I agree. But I think it's important to understand what a recession is, right? When GD when GDP misses two consecutive quarters going back to 1929, that kind of signals the possibility for a recession in a big way. That already happened this year, right? Um, non-farm payroll. What if the government doesn't declare it? Well, the government's never going to declare it cuz, you know, we're never going to be in a Well, Trump was just said yesterday, zero inflation, right? We're You just said 2.9. So, what's the truth? 2.9. It's it's, you know, and and it doesn't feel like 2.9. feels like a lot worse for the American consumer which is really part of this is is like the the American consumer led the way for many many years right and that is over because when you look at auto loan defaults rate default rates right now are near an all-time high credit card debt all-time high you can go down a list of things the person the people the American people that were buying and helping this rally are you know less apt to do so going forward the rise of silver has been interesting to me. Usually at the onset of a gold rally, silver starts to outperform. That wasn't the case in 2024. It really started to shine in the latter half of this year. John, very Yeah. Tell us about why silver moved a little bit later than usual in the cycle. Yeah. So, I was fortunate enough to work on the SPRA uh silver portfolio management team in the dark ages about 10 years ago. Um, and so silver is my largest holding. Um in full disclosure it's 10% of my portfolio physical silver and we bought it five times last year David on the way up right we bought it at 24 25 27 29 and 31 um and basically you can see on the chart when it broke 30 with authority that was like major major news for us because it had been resistance $30 an ounce for 11 years. So when we broke through 30, we were like, "Hey, 35 is in play." 35 was your next takeout, right? And that got taken out kind of like butter, you know? It was really amazing to watch. And now that we've cracked through 40, the last resistance point between now, excuse me, 40 and 50 is the 42 to 43 level, which we bounced off of once or twice here just recently and failed. So we have to get through 42 to 43. We're recording this around 41. Um, once you crack 43 on a couple closes, it's it's 50. But here's the important thing to for investors to understand about silver. It's not 50 anymore. That's not, you know, people look at charts and say, "Oh, it's 50." No. Inflation adjusted 50 is like 68 to 70. That's sort of my new target for silver in 2026. 68 to 70. Yeah. To mirror the previous all-time high of 2011. That's the logic there. Exactly. By the way, in 2011, silver hit 50. it didn't stay there for very long. People are looking at charts now and saying, "Well, that could be the case again, right?" Is is that the case now? That's a very valid, you know, stance to take. Um I'm going to be monitoring 50 very closely, too. I mean, I I guarantee there's going to be some resistance at 50. There's no way you're just going to go right through it unless there's a black swan event. Sure. So, if you wanted an exit, you know, I would be selling between 49 and 50. Um, but then listen to what I said and and go do the math for yourself as a as a listener that it's not 50 anymore. It's closer to 70. It should be your target and then even I would be looking to sell a little bit just to take some off the What what's the thesis for silver going to 70? Is it just following gold or is there something else? Yeah, the gold to silver ratio as you know is is an ounce of gold divided by an ounce of silver. Gold to silver ratio this year has been extremely elevated. It hit over a 100red for multiple days in a row. Um, that's extremely rare by historical norm. Historical norm will show you it's closer to 35 to 50. Um, and we're nowhere close to that. So, I think silver has to catch up. I don't necessarily agree that gold has to sell off. You know what I mean? What's your strategy for balancing the bullions versus the miners? Yeah, that's a good question. Um, so I have a portfolio called the Fenic Metals and Mining Portfolio. It's called that because we do both. We buy metals, you know, through ETFs. uh we're physical and then we also buy miners and um right now if I were to look at my physical gold and silver that's about 11% allin um if I look at my GDX and and GDXJ along with my silver ETFs that's about another 22% so 33% a third of my portfolio is in pretty you know normal stuff that the average investor could buy. Uh well before we get into the details, what is the logic behind getting both bullion and miners in the same portfolio? Don't they move in the same direction? Well, today silver is up 1% and first majestic up 9%. So So why don't you just hold the miners that let's say there's so much risk, you know, I mean First Majestic, you know, earlier this year was at 5 bucks. Now it's trading at 950. So you you know, there's there's a lot of risk to these things both up and down. And so, you know, I I don't think everyone's built for our sector. I think most clients aren't built for our sector. It's extremely volatile and there's a lot of risk. Okay. So, yeah. Uh, how did you decide on the allocation numbers? Um, we've always wanted to have about a quarter to a third of our portfolio in what we call the hub. You know, that's that's the stuff that we won't sell. We just we just add to it as it goes. As we pointed out with silver, right? We had a position in silver that that was before 24 an ounce. Then we bought five times last year into this current rally and we've just held all year. We haven't really added much. Um the spoke part of our um um portfolio construction is where we'll do two things. One, we buy miners like um gosh, Silver Corp, SVM. We've held from now 20 2016 to now we haven't sold you know it's gone from a dollar to 513 you know and so it's like a core holding for us but we will trade on the periphery right so like where I don't have a relationship with a CEO or a company if I see a trade opportunity based on news based on you know uh uh Trump starting to give more love to critical minerals right um I'll buy something at a dollar sell it at a$150 and make 50% and move on Right. Does your allocation towards equities versus bully and change depending on your macro view? So let's say we get a soft landing, no recession, does that change your allocation at all? Sure. Yeah, we would overweight equities and take some silver and gold off the table because those are defensive metals, right? You know, we think we're entering a time where you want to have some defense in the portfolio. And we we'd uh I've worked with portfolio, excuse me, portfolio managers and and financial adviserss for 25 years. Yeah, that's what I did before Fenic Consulting. So, I always, you know, have a shout out to those guys and girls and say contact us if you need to understand more about our sector. It's probably the number one sector year to date. I don't know. I mean, it's GDX is up 90% as we record this. So, it's it's a pretty good year. Um, they don't understand how to hedge in a portfolio, the average adviser, right? By hedging, I mean they will buy 1% in GLD and half% in SLV and think they're hedging something. If you have a $100 million you're managing and you have 1.5 million over here that's safe like you're not doing anything in a selloff, right? So you have to have higher percentages in gold, silver and miners. What are some of the most um commonly heard misconceptions about investing in the gold sector or I guess silver sector as well that you've heard? Oh, um from advisors like um look at 2023 John and 2024 John and this even this year uh look at QQQ just the the NASDAQ right as an example. I'm making 20 25% a year. Why do I need you? Right? And I get that argument. But if we're up 90 and you're up like 60 cumitively, we're already outperforming you over that 2 and 1/2 year stretch and we're doing it with less risk. Right? the beta on our sector. Um, look, at this level there's some there's some risk because we we've gone up a lot, but two years ago there's it was like half the risk of the of the S&P or NASDAQ, I would argue. Well, are you are you adding to your portfolio now or taking profits at current levels? We went uh heavily in again August 1st when we saw the non-farm payroll miss and the revisions down. Um, we also right before the GDX shut up dramatically. Well, only because we talked to traders a lot, David, and and they were all saying copper, silver, and gold were all short that day. Like people were just buying handover fist, right? So, so um because we're not the only ones that see that non-farm payrolls is an important metric to follow. What's the positioning now? So, right now we're frictional cash. I'd say three traders, are they more long or short right now? Um definitely more long. Okay. Yeah, there's still a lot of I mean, silver is like a very thin market, so I think there's still some players that are are short silver waiting to see if it'll crack 42 to 43. If they're wrong, they better cover quick cuz it's going to go to 50 very fast. Well, what are some of the biggest mistakes that people make when investing in the junior mining sector? Oh, yeah. That that's a great question. Um, I said on stage here at Beaver Creek that for me it always starts with people. Most people that I compete with are starting with the project, the jurisdiction. Those are all important things, too. But for me, if you have a great project and it's in a great part of the world like the USA, and you're a liar and you're doing bad things to shareholders, why would I want to work with you? You know, I mean, it's just eventually you're going to do the wrong thing. How would you know they're a liar and they're bad people until you start working with them? Well, so, um, I don't want to out someone, but let's just say that, um, I have a gold stock that I owned, you know, seven, eight years ago. Sure. Um, I went on a plane and went bankrupt when I was on a plane intraday. Like, I've never seen that actually happen. Um, and then I saw that same team, uh, the IR person and the CEO emerge on a copper stock two years ago. So, I sent a note to all my clients and I said, "Look, I'm not defaming these people. I'm just saying invest in your own risk. do you want to see this team again like hit the reset that that company is now bankrupt too. So like sometimes history repeats itself because people are greedy and they do the wrong thing for sure. What are some red flags that investors can get just by looking at the financial statements maybe even lack of cash uh carrying debt? Carrying debt is always a problem for a junior. Yeah, debts. Yeah, I just met with a junior yesterday. He's got 20 million in debt. How do you how do they even get debt? They don't have cash flow. Well, um, let's say you bought equipment during co like Yeah. and and you're still trying to work it off and you know, you have to pay 8% or 10% to some hedge fund or what, you know, there's there's there's there's ways that you timing really like Norwegian Cruise Lines did that same thing. They bought a new fleet right before CO and the stock just went down like 70. I'm just saying how how a junior miner is able to even acquire a debt instrument from a bank in the first place. Oh, I hear I hear what you're saying. Yeah. Well, um, there's other forms of debt, right? Cuz a lot of these CEOs and and and and board members will carry that debt and and what we call bankroll the company through bad times, yet they still want to get repaid their their money at some point down the road. Um, so there's a lot of things to look at. You got to make phone calls to the CEO or the chairman and really ask these kind of questions. What's an appropriate runway for a junior? Like 18 months, 12 months, 24 months. So they're all created differently. Um for me there's three major buckets. One is explorers. Uh those are the most riskiest but also the highest return potential. Uh developers are companies that you know are in that part of the LAN curve that is sort of no man's land. However, as they get closer to production, they start getting bit up. And that's happening with NEXOLD right now. I met with them yesterday. NXGCF in the States, NEXG in Canada. Stocks gone from 51 cents to 90 cents US in uh a month just because they identified some some short sellers and extinguished them. And also they came out with good news about permitting one of their two projects. So I think when you're getting closer to um production, David, and they're not close, I mean it's a couple years away. um investors get more interested in see you know saying hey I can invest in this for a couple of years okay see that through to production the other thing to ask is can you even build the mine right because that team is deep they can build the mine at xold but a lot of juniors sitting here at this conference they have no chance of building it because their team isn't that good um on the uh on the production side let's say you're looking at a big production company or bareric or something of that sort what are the most important metrics you're looking at is it on the sustaining any cost margins? Is it jurisdictional risk, shareholder structure? What's it for you? When when it comes to the producing guys, I'm not as concerned about share structure because I I personally feel there's a lot of liquidity in the sector right now. Okay. But what I do look at is all in sustaining cost is one of the first things I look at. Pneumont, if you if you look at a chart back in Q1, was trading around 35 37 bucks because their all sustaining cost was well above their their biggest peers, Agniko and Bareric. And then uh most recently they've announced that it's just under 1,600 and gold's at 3,600, right? So huge margins and the market's starting to get uh on board with that, right? Like 1,600 isn't so bad. When you see some of these gold miners at the conference here, I'm hearing like 1,100 ASIC. That's really exciting because these these smaller producers can really um have a lot of torque. I met with one last night for dinner called Daenerius Metals. uh DNRSF in the States, DME in Canada. These guys are trading at 37 cents US and they just went into production a few months ago. They've got a second project which was the focus of the dinner in Spain. Yeah. Um you know, good jurisdictions. Uh the chairman's been in one of those two jurisdictions for 20 years with his CFO. So they've been a good team for two decades, right? They've seen a lot of good and bad and ugly in our sector. And so I look for that as well like not just a good person but what's your competency right I'll give you two examples of people who don't like the gold sector for various different reasons so Kevin Olirri famously has said on various media including my own show that hey um he doesn't like the miners because why not just invest in the precious metals directly why be exposed to additional risk from malpractice of management like you pointed out earlier man mismanagement of costs, operational risks, jurisdictional risks, nationalization risk, the host of risk goes on and on. You know, why take that additional risk when you can just have upside from gold? Okay, so I'll answer that. So, if you look at First Majestic again today as our example, the ticker's AG, it's up 9% when we started recording. Silver's up 1.1%. I'm not saying that the ratio should be like 9x, right, to to uh the actual metals performance, but typically it's about three. So, silver's up one, some of the miners are up three, right? That's that's very uh normal in a bull market like 2016 or 2020. So, we're seeing that kind of price action. Again, to answer Kevin's, you know, inquiry, it's it that's that's why you invest in the miners is you're getting triple the upside potentially because of the leverage, the inherent leverage that that stock has to the underlying metal. Um, just to counter that, I could in theory replicate that leverage with a margin account or if I trade gold on margin or leverage. Yeah. Yeah. You could buy a double or triple ETF, GLD, right? Um, that's that's another way to do it. I don't recommend margin to people that can't handle losses because you saw what happened in 2020, right? A lot of people got margined out and they never got back in. It's it's it's scary stuff. So, you have to be a uh you need to assess your own risk tolerance. On the other hand, you've got people like Mark Cuban who's called uh gold a pet rock. Uh Warren Buffett and Charlie Moner have said that they were uh well, they think gold is an unproductive asset. They've never liked gold. It's underperformed the S&P 500. Um if you take a look at um a long time period like over 30 40 years um however Warren Buffett did Berkshire Hathway did buy Bareric in 2020 and owned the stock for a few months. Yeah. Literally like less than a quarter. Yeah. Because they liked the stock. They liked how they were producing free cash flow. They still didn't like the underlying metal itself. How do you respond to the exact opposite of Kevin? Yeah. Um I mean look, Warren Buffett is the man. I mean, he's he's built a tremendous track record in the broad market. Mark Cuban super successful, just left Shark Tank. You know, everyone knows the guy and he may run for for office at some point, right? I mean, these are these are people that uh the hats off to because they they've made money and they've made a lot of money for their followers. So, there's always ways to make money. It's not like we say like mining or else, right? It's there's plenty of ways to make money. I think next year though, David, what you're going to see is it'll be less easy to make money in real estate, less easy to make money in tech, etc. And we're going to see people come around to the fact that we're going to continue to post great quarters in this sector. Well, can you give us maybe one or two names in the mining sector that you like just to illustrate your point about how to pick a stock? Yeah, sure. I'll give you one that um you might you might take a look at yourself because I know that you don't only look at mining, you're looking at tech and some other things. This company is a mining company that got involved with a tech play about a year and a half ago called Pyro Delta. Pyro Delta um has a number of applications. Their last press release a few days ago talked about the $64 billion drone market and how they were going to break into that. This is a six six cent US stock right now. I mean, it's been absolutely pummeled. Um wait, what do they do? They mine. So, they have a couple of mines. They have one in the US and they have one in Canada. And um their focus is tallium, gold, and copper. So tallium is a critical mineral. Um it's about 65% produced in China. Gold and copper. Yeah, they're No, they're mostly an explorer. Okay. They've kind of shifted their focus though to focus more on the Pyro Delta stuff because not only does that have an application for drones and military, it has an application um to uh uh replace alternators in cars. Yeah. So, I mean, like I don't care what happens. This thing at 6 cents has got to go up. Like, it's So, why do you like them? Because they're diversifying into tech. Uh, yeah. I like I like that because, you know, like about a year and a half, two years ago, they said, "Why are we drilling when no one's paying paying us to, you know, they're not the market isn't responding to our results, so let's focus on something else." So, Tai owns about 12% of the stock, him and his uh family. So, I like that, too. Right. He's got skin in the game and um it's a pretty tight share structure when you look at it. Okay. Uh, and um, won't your investors ask you, "Hey, John, why don't you just do a pure play gold company and a pure play tech company then if you want exposure to both?" Sure. I I don't know how to value tech at this point in the cycle. It's so expensive. So, something like this that is tech for real. Um, and you're getting it for pennies on the dollar, it's like really exciting. Um, but I can give you one other if you want. Yeah. So, what's the name of the last one? Yeah, correct. Sure. It's first Toarium. It's uh FSTTF and FTEEL. Do you do you personally own shares in these companies? I do. I do own that one. Yeah. Um I think I disclosed all the other ones. Um and the last one I'll mention um uh so I since we last sat down, I've been really been getting invested in in Tungsten. Um Tungsten has been a huge home run for us this year. Um one that I I still think has a lot of upside is American Tungsten. and they're here at the conference. Uh it's TUNG GF in the States, TUNG in Canada. Um new CEO this year raised a decent amount of money at at a at good valuations. Um they are in the process right now of getting DoD money next year. Um that's a theme that we talked about off camera that I think you're going to see a lot of companies get uh what we call non-dilutive money. Well, did you see just completely off track, did you see it's not called DoD anymore. Trump changed it to the Department of War last night. D. He cited executive Yeah, he cited executive orders changing it back to the Department of War, which apparently is what it was called before the 40s. Anyway, I'm sure that had nothing to do with China and Russia and India getting together two weekends ago. No, anyway, it's uh the Department of War is now looking into uh Yeah. Uh acquiring stakes in critical minerals. Yeah, that's already been happening. Yeah, I think it's going to be a really good um runway here. But um I would encourage people like my YouTube partner Dond Derret is talking about like a decadel long kind of rally and and the US going into a Japanese-like recession. I think everything happens like this now. It's so much faster than people recognize. If you're not an investor or a trader or a portfolio manager where you're looking at it regularly, things happen way quicker than people expect. So I think we'll see a good couple of years in this sector and I'm going to try to take advantage of that while we can. Good talk. Thank you very much. Where can we follow you, John? Yeah, sure. I have a website called fenic consulting.com. We'll have our 10ear uh performance David posted on there. Uh December 31st is our 10 year anniversary. So it's been a a rocky 10 years, but I'm I'm happy to be able to say that we'll probably be top desile in the in the sector. Um and we'll we'll hopefully market that in January. Thanks, John. Appreciate it. Thank you, David. Yeah. Thank you for watching. Don't forget to like and subscribe.
'Serious Sell-Off' This Fall: Fed Action To Trigger Market Panic | John Feneck
Summary
Transcript
Gold is is telling you something that something is broken in the US economy. So what's the truth? The American consumer led the way for many many years, right? And that is over. What if Trump finds a way to get rid of Pal? That would be like a huge like liberation day kind of volatility event and the US going into a Japanese-like recession. I think everything happens like this now. It's so much faster than people recognize. We'll see a good couple of years in this sector and I'm going to try to take advantage of that while we can. Our [Music] next guest has correctly called the bare market of 2022. What's his outlook now for 2025 and 2026? Are we in for the same grim outlook as a couple years ago or our sunnier skies ahead? Well, we'll talk to John Fedick. He's the founder of Fenic Consulting and also a portfolio manager. He'll give us his outlook for stocks, the economy, gold, precious metals, and a few mining stocks that he likes. Welcome back to the show. Good to see you in person, John. Likewise, David. Thanks for having me. We were here a couple years ago in 2022. Bad year for stocks, bad year for gold as well. Bad year for bonds. That was when the Fed started raising rates. Now, it's the exact reverse. We're talking about a potential Fed rate cut next week. People have been telling me online here, 50 basis points is on the table, even 75. the market's pricing at 25. We'll talk about the Fed, but let's just get your market outlook. You've been kind of bearish all throughout 2025. That hasn't played out exactly as you expected. What are you anticipating now? Yeah, so um bearish on the NASDAQ, the S&P, the Russell, you know, the broad market. I've been very bullish on silver and gold and miners, and that's contributed to our outperformance. As for NASDAQ, S&P, look, I mean, here's the stat. the Russell 2000. Um there's 2,000 stocks. Uh almost a thousand of them have no earnings. Yet the IWM, which is the ETF that is the Russell 2000, so popular with advisers is in every model portfolio probably in every retirees account, right? Like why? I mean, some of this stuff is the potential for a serious sell-off. And so what I've been kind of preaching for the last, you know, probably since May, David, is sit down with your financial advisor, have a difficult discussion and say, "Look, I've made so much money, thank you, for the last 15 and a half years, but what's your prognosis for the next year?" Because now that that Powell has pivoted, you know, August 22nd at Jackson Hole and has become more doubbish. Well, what what do rate cuts or a series of rate cuts mean for my portfolio? Yeah. What do you do in a year when pretty much everything except bonds has been up? you know, we're not talking about capital rotation from one thing to another. It's just a matter of putting your basket or your eggs in the most bullish basket, so to speak, right? And I I'll just say um I differ than probably most of your guests in that uh many people I've heard at the show here saying that there won't be tax laws selling in the mining space this year. Absolutely wrong. There is always pressure in our sector. Why? Because this year Bitcoin is up, all a lot of crypto is up. Um, tech is up, real estate is up, right? So, everything to your point is melting up, but we're melting up too. So, I think there's two different camps that have been built. One is the value camp. Stan Ducken Miller, Ray Dallio, our portfolio, you know, guys that that that represent and see value in the market still. And then the growth guys, right, that are just following momentum. That's work, too. So, at some point, you're going to have something break. And I think that when you look at a really longdated chart of the S&P or NASDAQ going back to March of09, you'll see for 15 and a half years, it's been a pretty nice run. So, we're in the camp that you will see a correction and you could see a correction this fall based on the Fed not delivering, right? Because that that 25 basis points you mentioned is baked in September 17th. We'd have to get 50 andor some really dovish comments from Powell. and Pal being a former attorney, I just don't see that he always is going to deliver on what people wants. Why do we have to see dovish action from the Fed, especially considering this week's CPI came out at 2.9% headline CPI, which is hotter than expected and of course larger than last month's 2.7, right? Yeah. So CPI is is still on their radar for sure, but if you noticed in last month's um you know, his wording was more about the jobs. August 1st, non-farm payrolls missed, but the big number or the big headline was the revision down of 258,000 jobs, you know, for previous 2 months. And then you look at September 5th and it missed again. So now you've got like a string of months here where the job growth in the US is very poor. Does it seem kind of arbitrary to you that sometimes the Fed favors the jobs and sometimes the Fed favors the inflation side? They have two mandates. They somehow shift priorities depending on XYZ. What's that XYZ? I don't know. Yeah, we've heard about inflation for it seems like forever with POW, right? And then we added the tariff thing into the into the mix uh earlier this year. And I still think the tariff thing is very much a valid thing. Like when I saw Trump in November of last year, you know, win, I was like, "This guy's talking about tariffs and he means business." And I didn't think it was going to be like Liberation Day business, you know, to that extent. But I did think that he sees this as is sort of like a personal thing. He's going to win or else kind of mentality. And we're not seeing these like 5 10% things. We're seeing 15% plus tariffs in some big countries out there. So that really hasn't been factored into the CPI number yet. David, in our view, why do you think the labor market's been showing signs of weakness? And ultimately, it's a 25 basis point cut or even a 50 basis point cut going to help. 25 will do nothing. I mean, it's it's like checking a box that it's the first of hopefully many, right? But the market would tank I think on a 25 basis point cut subsequently because we're we're kind of in this euphoric phase since August 22nd. Not just for the NASDAQ S&P but also our sector right to be fair. GDX and GDXJ have just rallied huge. I mean if you look at a longdated GDX chart it broke out above where it was during the last real rally in our sector. GDXJ has a lot of headroom in blue sky. It's trading around 86 87 yesterday's close. Um it's high of all time 17910. So I mean we're like halfway there on on the juniors which is what you know it's really exciting. So what's ultimately your expectation for this fall? The Fed's not going to deliver what many people want them to deliver and then the stocks the indices will do what? So we'll see what happens on September 17th. It really is his wording that's the most important. It's not the headline number, you know, because we want to see him change in terms of what what he was saying last fall, right? He was, you know, the market was factoring in four rate cuts for this year and then after the December meeting, it went to three cuts and then by sometime in the spring it was two cuts. And so now we've sort of just gotten used to this um lack of rate cuts and the market is forward-looking, right? So, it's hoping is is is not a strategy um to get Powell to play ball. What if Powell doesn't play ball? And then secondly, what if Trump finds a way to get rid of Powell? That would be like a huge like liberation day kind of volatility event. The Treasury Secretary has been very critical of the Fed. In a post on Twitter this week, he said that the Fed is responsible for inequality in America. So, you have to think what Powell wants his legacy to be because this might be his last year as Fed chair. Well, most likely it will be. And uh and you have to think, well, he doesn't want to be the guy that's responsible for not containing unemployment going up. He doesn't want to be the guy that also uh was the last Fed share to see inflation tick up out of control because he's lowering rates. It's kind of in a tough place. What would you do if you were him? If I were Jerome Pal and this is your last year at the end of the quarter, you know, he's pretty stoic guy. Like I don't know that he's going to be like a draggy type from Europe and say like this is my legacy and I'm going to go out with like 10 million rate cuts. I wish that were the that not not the case because I have a lot of money that would benefit from rate cuts, right? Um but you know, Trump's over here saying let's get eight rate cuts cuz I own all this real estate and uh that would help me and help a lot of Americans. But that's also a farce. That's not going to happen. Trump I mean Pal is going to do what Pal's going to do. But I think August 22nd was very constructive in terms of the sentiment change. I saw a presentation by Stephanie Palmboy at the keynote yesterday at the conference and there was a chart that stood out to me that real 10 year yield and the gold price has been correlated for the most part of this year and most of last year I believe which is strange because historically those two variables moved in opposite directions. kind of makes sense when the real yield goes down. People are looking for yield in other places besides fixed incomes. They go to gold when hot when yields are high. You don't need to be in a safe haven. Fixed income does the job for you. But they've moved together. What's your explanation? I haven't looked at that chart. I didn't see the presentation. Um all I can say is right now we've had a lot of naysayers in gold all year, all of last year, all the year before. They've all been wrong, right? So like gold is is got its own thing going on right now and and little sis silver is catching up and that's that's really the important thing. Why do you think gold's been going up all year despite the fact that the Fed hasn't changed rates much if any? Um gold is is telling you something that something is broken in the US economy. I personally have been saying all year that when the non-farm numbers start to wayne as we saw August 1st that's when you put your chips in on miners because that's the last shoe to drop. I mean the only other shoe to drop is the NASDAQ and S&P to start selling off because that would also help our sector right look at the earnings we just saw from Numont you know in July they beat by 27 cents uh the beat on revs the tickers NEM that led a series of beats core beat CDE ag beat AEM all of these stocks caught the attention of portfolio managers that are generalists but they're not doing anything about it yet because if you're a US portfolio manager and you're a large cap core fund you're benching against the S&P, right? You have to beat the S&P no matter what. The S&P 500 right now is 45% tech, right? So, like you're not going to say, you know, I'll put all this money into mining stocks and be 20% tech and take that huge gamble cuz you won't get bonus and you'll get fired. Like that's really what happens, right? So, so then the point you're making is correct me if I'm wrong. Uh there should not be any capital rotation now out of tech into miners or has that already happened? Oh, it hasn't happened yet. Technology was 45.4% in the SPY as of August 31st and our sector represented less than 1%. I'm just curious why the GDX and GDXJ exploded post August. Like I'll get your explanation. It's been going up all year, but then it's been kind of flat. We'll show a chart on the screen. It's been kind of flat since April and then start of August. It exploded upwards and then we didn't see a huge crash in the NASDAQ around that time as well. Yeah. Right. So, we didn't see like, you know, you can't explain that as capital rotated from one sector to another. Maybe it did. What What happened? So, Newmont's earnings in July kicked off that earnings season. Yeah, that was fantastic. I mean, look at the holdings of GDX and GDXJ. Look at their earnings. Almost every company beat, but they beat handily because analysts in our sector, they they're very very conservative is a nice way to put it. I don't think they're worth much. Most of our analysts are really wimpy. They don't they don't take risk, right? So, it's twofold. One is their earnings were fantastic. Why were the earnings fantastic? while gold was trending at 3,100 to 3,300 for months. So, these companies were able to clip, you know, a really nice um they were able to generate a lot of free cash flow based on their costs not going up too much. I remember when I was covering the sector in 2021 2022, one of the themes was oh the crypto sector stealing the thunder away from the gold mining sector. Remember how that those two years was kind of quiet for the gold miners and the altcoins exploded? Well, now right now, I mean, the retail interest isn't as high in crypto as maybe it was from 2021, but there's new all-time highs for Bitcoin. Ethereum just had a huge run. The altcoins are starting to catch up. At the same time as GDX's up 90% year to date, gold's up to new all-time highs. Can you still make the same narrative today in 2025? Um, the narrative that they're competing industries when one industry does well, the other doesn't. Yeah. I I've never said that. Um I think there's plenty of money to go around. I think the big thing to watch is not Bitcoin selling off for funding of our sector. It's the S&P and the NASDAQ and the Russell, right? So, okay. Now, what do you think is going to happen to uh gold in 2026? Let's just get your outlook for gold in 2026. Um you know, in January, we'll put out our targets. Our targets last year, we missed by eight bucks, so we were really close. This year, we said 3,200 should be easy. 3500 will be harder and 3,800 is our target now that we've achieved both other targets. Um, next year I haven't really thought about it too much yet, David, but I will say that the banks that were at 3,000 to 3200 are now at 3500 to 4,000 for next year. That's right. Um, and JP Morgan is interestingly one of the biggest manipulators of silver of all time. Um, by anyone's standards if you go look it up. um they are at the highest of of the big banks in terms of go target price for next year. So that's really bullish. We've seen a major flip-flop. What was their target? I know Goldman's at 4,000. So I I think I I guess I I think it's like 4,200. Yeah. Yeah. So So um you know, look, the best part about all this, you don't need 4,000 or 4200 gold for GDX and GDXJ and the silver miners to crank. Remember in 2020 when people were calling for 5,000 gold and one of the reasons for why gold would reach $5,000 in the next couple years. Is the world falling apart? Do we still need that narrative for gold to hit 5,000? Nope. Because gold has so much momentum and it's got so many things going for it now. Not just central bank buying, but also the backdrop for global economies is very uncertain, you know, and gold loves uncertainty. Yeah. The other narrative is a central bank buying of gold that's been expediting in the last couple of uh months if not uh 12 to 18 months. What's your uh explanation around why gold's been so favored by the central banks outside of the US? Well, I mean that trend's been in place if you look at a chart, David, since February of 2022. China led the way and that was because of the Russia Ukraine conflict. They literally went all in. And I mean they were already heavily in but they you can see it on the chart of Chinese you know consumption of gold and then a lot of other countries that are much smaller than China f followed behind them over the last three and a half years. Okay. So in this next year when gold is going to go higher um how are the other assets going to perform? You already are cautious on equities in the fall. Do you think this is an environment where cash is king or hard assets is king? Hard assets are king. Um, in fact, if you're in our sector right now and you're heavy cash you're really chasing almost there's some exponential moves at this conference, you know, we've got I don't know how many companies here, 150 plus, but there's probably another 100 CEOs milling around outside. Um, there's a lot of people um, you know, proud of what they've achieved over the last couple years and are telling that story to a lot wealthier crowd here. Credit spreads are starting to widen, John. And I'm wondering if slowed down or recession risks are underestimated by the market. Certainly that theme has been ignored by investors, economists, kind of the like we've given up on the recession theme in 2025. I agree. But I think it's important to understand what a recession is, right? When GD when GDP misses two consecutive quarters going back to 1929, that kind of signals the possibility for a recession in a big way. That already happened this year, right? Um, non-farm payroll. What if the government doesn't declare it? Well, the government's never going to declare it cuz, you know, we're never going to be in a Well, Trump was just said yesterday, zero inflation, right? We're You just said 2.9. So, what's the truth? 2.9. It's it's, you know, and and it doesn't feel like 2.9. feels like a lot worse for the American consumer which is really part of this is is like the the American consumer led the way for many many years right and that is over because when you look at auto loan defaults rate default rates right now are near an all-time high credit card debt all-time high you can go down a list of things the person the people the American people that were buying and helping this rally are you know less apt to do so going forward the rise of silver has been interesting to me. Usually at the onset of a gold rally, silver starts to outperform. That wasn't the case in 2024. It really started to shine in the latter half of this year. John, very Yeah. Tell us about why silver moved a little bit later than usual in the cycle. Yeah. So, I was fortunate enough to work on the SPRA uh silver portfolio management team in the dark ages about 10 years ago. Um, and so silver is my largest holding. Um in full disclosure it's 10% of my portfolio physical silver and we bought it five times last year David on the way up right we bought it at 24 25 27 29 and 31 um and basically you can see on the chart when it broke 30 with authority that was like major major news for us because it had been resistance $30 an ounce for 11 years. So when we broke through 30, we were like, "Hey, 35 is in play." 35 was your next takeout, right? And that got taken out kind of like butter, you know? It was really amazing to watch. And now that we've cracked through 40, the last resistance point between now, excuse me, 40 and 50 is the 42 to 43 level, which we bounced off of once or twice here just recently and failed. So we have to get through 42 to 43. We're recording this around 41. Um, once you crack 43 on a couple closes, it's it's 50. But here's the important thing to for investors to understand about silver. It's not 50 anymore. That's not, you know, people look at charts and say, "Oh, it's 50." No. Inflation adjusted 50 is like 68 to 70. That's sort of my new target for silver in 2026. 68 to 70. Yeah. To mirror the previous all-time high of 2011. That's the logic there. Exactly. By the way, in 2011, silver hit 50. it didn't stay there for very long. People are looking at charts now and saying, "Well, that could be the case again, right?" Is is that the case now? That's a very valid, you know, stance to take. Um I'm going to be monitoring 50 very closely, too. I mean, I I guarantee there's going to be some resistance at 50. There's no way you're just going to go right through it unless there's a black swan event. Sure. So, if you wanted an exit, you know, I would be selling between 49 and 50. Um, but then listen to what I said and and go do the math for yourself as a as a listener that it's not 50 anymore. It's closer to 70. It should be your target and then even I would be looking to sell a little bit just to take some off the What what's the thesis for silver going to 70? Is it just following gold or is there something else? Yeah, the gold to silver ratio as you know is is an ounce of gold divided by an ounce of silver. Gold to silver ratio this year has been extremely elevated. It hit over a 100red for multiple days in a row. Um, that's extremely rare by historical norm. Historical norm will show you it's closer to 35 to 50. Um, and we're nowhere close to that. So, I think silver has to catch up. I don't necessarily agree that gold has to sell off. You know what I mean? What's your strategy for balancing the bullions versus the miners? Yeah, that's a good question. Um, so I have a portfolio called the Fenic Metals and Mining Portfolio. It's called that because we do both. We buy metals, you know, through ETFs. uh we're physical and then we also buy miners and um right now if I were to look at my physical gold and silver that's about 11% allin um if I look at my GDX and and GDXJ along with my silver ETFs that's about another 22% so 33% a third of my portfolio is in pretty you know normal stuff that the average investor could buy. Uh well before we get into the details, what is the logic behind getting both bullion and miners in the same portfolio? Don't they move in the same direction? Well, today silver is up 1% and first majestic up 9%. So So why don't you just hold the miners that let's say there's so much risk, you know, I mean First Majestic, you know, earlier this year was at 5 bucks. Now it's trading at 950. So you you know, there's there's a lot of risk to these things both up and down. And so, you know, I I don't think everyone's built for our sector. I think most clients aren't built for our sector. It's extremely volatile and there's a lot of risk. Okay. So, yeah. Uh, how did you decide on the allocation numbers? Um, we've always wanted to have about a quarter to a third of our portfolio in what we call the hub. You know, that's that's the stuff that we won't sell. We just we just add to it as it goes. As we pointed out with silver, right? We had a position in silver that that was before 24 an ounce. Then we bought five times last year into this current rally and we've just held all year. We haven't really added much. Um the spoke part of our um um portfolio construction is where we'll do two things. One, we buy miners like um gosh, Silver Corp, SVM. We've held from now 20 2016 to now we haven't sold you know it's gone from a dollar to 513 you know and so it's like a core holding for us but we will trade on the periphery right so like where I don't have a relationship with a CEO or a company if I see a trade opportunity based on news based on you know uh uh Trump starting to give more love to critical minerals right um I'll buy something at a dollar sell it at a$150 and make 50% and move on Right. Does your allocation towards equities versus bully and change depending on your macro view? So let's say we get a soft landing, no recession, does that change your allocation at all? Sure. Yeah, we would overweight equities and take some silver and gold off the table because those are defensive metals, right? You know, we think we're entering a time where you want to have some defense in the portfolio. And we we'd uh I've worked with portfolio, excuse me, portfolio managers and and financial adviserss for 25 years. Yeah, that's what I did before Fenic Consulting. So, I always, you know, have a shout out to those guys and girls and say contact us if you need to understand more about our sector. It's probably the number one sector year to date. I don't know. I mean, it's GDX is up 90% as we record this. So, it's it's a pretty good year. Um, they don't understand how to hedge in a portfolio, the average adviser, right? By hedging, I mean they will buy 1% in GLD and half% in SLV and think they're hedging something. If you have a $100 million you're managing and you have 1.5 million over here that's safe like you're not doing anything in a selloff, right? So you have to have higher percentages in gold, silver and miners. What are some of the most um commonly heard misconceptions about investing in the gold sector or I guess silver sector as well that you've heard? Oh, um from advisors like um look at 2023 John and 2024 John and this even this year uh look at QQQ just the the NASDAQ right as an example. I'm making 20 25% a year. Why do I need you? Right? And I get that argument. But if we're up 90 and you're up like 60 cumitively, we're already outperforming you over that 2 and 1/2 year stretch and we're doing it with less risk. Right? the beta on our sector. Um, look, at this level there's some there's some risk because we we've gone up a lot, but two years ago there's it was like half the risk of the of the S&P or NASDAQ, I would argue. Well, are you are you adding to your portfolio now or taking profits at current levels? We went uh heavily in again August 1st when we saw the non-farm payroll miss and the revisions down. Um, we also right before the GDX shut up dramatically. Well, only because we talked to traders a lot, David, and and they were all saying copper, silver, and gold were all short that day. Like people were just buying handover fist, right? So, so um because we're not the only ones that see that non-farm payrolls is an important metric to follow. What's the positioning now? So, right now we're frictional cash. I'd say three traders, are they more long or short right now? Um definitely more long. Okay. Yeah, there's still a lot of I mean, silver is like a very thin market, so I think there's still some players that are are short silver waiting to see if it'll crack 42 to 43. If they're wrong, they better cover quick cuz it's going to go to 50 very fast. Well, what are some of the biggest mistakes that people make when investing in the junior mining sector? Oh, yeah. That that's a great question. Um, I said on stage here at Beaver Creek that for me it always starts with people. Most people that I compete with are starting with the project, the jurisdiction. Those are all important things, too. But for me, if you have a great project and it's in a great part of the world like the USA, and you're a liar and you're doing bad things to shareholders, why would I want to work with you? You know, I mean, it's just eventually you're going to do the wrong thing. How would you know they're a liar and they're bad people until you start working with them? Well, so, um, I don't want to out someone, but let's just say that, um, I have a gold stock that I owned, you know, seven, eight years ago. Sure. Um, I went on a plane and went bankrupt when I was on a plane intraday. Like, I've never seen that actually happen. Um, and then I saw that same team, uh, the IR person and the CEO emerge on a copper stock two years ago. So, I sent a note to all my clients and I said, "Look, I'm not defaming these people. I'm just saying invest in your own risk. do you want to see this team again like hit the reset that that company is now bankrupt too. So like sometimes history repeats itself because people are greedy and they do the wrong thing for sure. What are some red flags that investors can get just by looking at the financial statements maybe even lack of cash uh carrying debt? Carrying debt is always a problem for a junior. Yeah, debts. Yeah, I just met with a junior yesterday. He's got 20 million in debt. How do you how do they even get debt? They don't have cash flow. Well, um, let's say you bought equipment during co like Yeah. and and you're still trying to work it off and you know, you have to pay 8% or 10% to some hedge fund or what, you know, there's there's there's there's ways that you timing really like Norwegian Cruise Lines did that same thing. They bought a new fleet right before CO and the stock just went down like 70. I'm just saying how how a junior miner is able to even acquire a debt instrument from a bank in the first place. Oh, I hear I hear what you're saying. Yeah. Well, um, there's other forms of debt, right? Cuz a lot of these CEOs and and and and board members will carry that debt and and what we call bankroll the company through bad times, yet they still want to get repaid their their money at some point down the road. Um, so there's a lot of things to look at. You got to make phone calls to the CEO or the chairman and really ask these kind of questions. What's an appropriate runway for a junior? Like 18 months, 12 months, 24 months. So they're all created differently. Um for me there's three major buckets. One is explorers. Uh those are the most riskiest but also the highest return potential. Uh developers are companies that you know are in that part of the LAN curve that is sort of no man's land. However, as they get closer to production, they start getting bit up. And that's happening with NEXOLD right now. I met with them yesterday. NXGCF in the States, NEXG in Canada. Stocks gone from 51 cents to 90 cents US in uh a month just because they identified some some short sellers and extinguished them. And also they came out with good news about permitting one of their two projects. So I think when you're getting closer to um production, David, and they're not close, I mean it's a couple years away. um investors get more interested in see you know saying hey I can invest in this for a couple of years okay see that through to production the other thing to ask is can you even build the mine right because that team is deep they can build the mine at xold but a lot of juniors sitting here at this conference they have no chance of building it because their team isn't that good um on the uh on the production side let's say you're looking at a big production company or bareric or something of that sort what are the most important metrics you're looking at is it on the sustaining any cost margins? Is it jurisdictional risk, shareholder structure? What's it for you? When when it comes to the producing guys, I'm not as concerned about share structure because I I personally feel there's a lot of liquidity in the sector right now. Okay. But what I do look at is all in sustaining cost is one of the first things I look at. Pneumont, if you if you look at a chart back in Q1, was trading around 35 37 bucks because their all sustaining cost was well above their their biggest peers, Agniko and Bareric. And then uh most recently they've announced that it's just under 1,600 and gold's at 3,600, right? So huge margins and the market's starting to get uh on board with that, right? Like 1,600 isn't so bad. When you see some of these gold miners at the conference here, I'm hearing like 1,100 ASIC. That's really exciting because these these smaller producers can really um have a lot of torque. I met with one last night for dinner called Daenerius Metals. uh DNRSF in the States, DME in Canada. These guys are trading at 37 cents US and they just went into production a few months ago. They've got a second project which was the focus of the dinner in Spain. Yeah. Um you know, good jurisdictions. Uh the chairman's been in one of those two jurisdictions for 20 years with his CFO. So they've been a good team for two decades, right? They've seen a lot of good and bad and ugly in our sector. And so I look for that as well like not just a good person but what's your competency right I'll give you two examples of people who don't like the gold sector for various different reasons so Kevin Olirri famously has said on various media including my own show that hey um he doesn't like the miners because why not just invest in the precious metals directly why be exposed to additional risk from malpractice of management like you pointed out earlier man mismanagement of costs, operational risks, jurisdictional risks, nationalization risk, the host of risk goes on and on. You know, why take that additional risk when you can just have upside from gold? Okay, so I'll answer that. So, if you look at First Majestic again today as our example, the ticker's AG, it's up 9% when we started recording. Silver's up 1.1%. I'm not saying that the ratio should be like 9x, right, to to uh the actual metals performance, but typically it's about three. So, silver's up one, some of the miners are up three, right? That's that's very uh normal in a bull market like 2016 or 2020. So, we're seeing that kind of price action. Again, to answer Kevin's, you know, inquiry, it's it that's that's why you invest in the miners is you're getting triple the upside potentially because of the leverage, the inherent leverage that that stock has to the underlying metal. Um, just to counter that, I could in theory replicate that leverage with a margin account or if I trade gold on margin or leverage. Yeah. Yeah. You could buy a double or triple ETF, GLD, right? Um, that's that's another way to do it. I don't recommend margin to people that can't handle losses because you saw what happened in 2020, right? A lot of people got margined out and they never got back in. It's it's it's scary stuff. So, you have to be a uh you need to assess your own risk tolerance. On the other hand, you've got people like Mark Cuban who's called uh gold a pet rock. Uh Warren Buffett and Charlie Moner have said that they were uh well, they think gold is an unproductive asset. They've never liked gold. It's underperformed the S&P 500. Um if you take a look at um a long time period like over 30 40 years um however Warren Buffett did Berkshire Hathway did buy Bareric in 2020 and owned the stock for a few months. Yeah. Literally like less than a quarter. Yeah. Because they liked the stock. They liked how they were producing free cash flow. They still didn't like the underlying metal itself. How do you respond to the exact opposite of Kevin? Yeah. Um I mean look, Warren Buffett is the man. I mean, he's he's built a tremendous track record in the broad market. Mark Cuban super successful, just left Shark Tank. You know, everyone knows the guy and he may run for for office at some point, right? I mean, these are these are people that uh the hats off to because they they've made money and they've made a lot of money for their followers. So, there's always ways to make money. It's not like we say like mining or else, right? It's there's plenty of ways to make money. I think next year though, David, what you're going to see is it'll be less easy to make money in real estate, less easy to make money in tech, etc. And we're going to see people come around to the fact that we're going to continue to post great quarters in this sector. Well, can you give us maybe one or two names in the mining sector that you like just to illustrate your point about how to pick a stock? Yeah, sure. I'll give you one that um you might you might take a look at yourself because I know that you don't only look at mining, you're looking at tech and some other things. This company is a mining company that got involved with a tech play about a year and a half ago called Pyro Delta. Pyro Delta um has a number of applications. Their last press release a few days ago talked about the $64 billion drone market and how they were going to break into that. This is a six six cent US stock right now. I mean, it's been absolutely pummeled. Um wait, what do they do? They mine. So, they have a couple of mines. They have one in the US and they have one in Canada. And um their focus is tallium, gold, and copper. So tallium is a critical mineral. Um it's about 65% produced in China. Gold and copper. Yeah, they're No, they're mostly an explorer. Okay. They've kind of shifted their focus though to focus more on the Pyro Delta stuff because not only does that have an application for drones and military, it has an application um to uh uh replace alternators in cars. Yeah. So, I mean, like I don't care what happens. This thing at 6 cents has got to go up. Like, it's So, why do you like them? Because they're diversifying into tech. Uh, yeah. I like I like that because, you know, like about a year and a half, two years ago, they said, "Why are we drilling when no one's paying paying us to, you know, they're not the market isn't responding to our results, so let's focus on something else." So, Tai owns about 12% of the stock, him and his uh family. So, I like that, too. Right. He's got skin in the game and um it's a pretty tight share structure when you look at it. Okay. Uh, and um, won't your investors ask you, "Hey, John, why don't you just do a pure play gold company and a pure play tech company then if you want exposure to both?" Sure. I I don't know how to value tech at this point in the cycle. It's so expensive. So, something like this that is tech for real. Um, and you're getting it for pennies on the dollar, it's like really exciting. Um, but I can give you one other if you want. Yeah. So, what's the name of the last one? Yeah, correct. Sure. It's first Toarium. It's uh FSTTF and FTEEL. Do you do you personally own shares in these companies? I do. I do own that one. Yeah. Um I think I disclosed all the other ones. Um and the last one I'll mention um uh so I since we last sat down, I've been really been getting invested in in Tungsten. Um Tungsten has been a huge home run for us this year. Um one that I I still think has a lot of upside is American Tungsten. and they're here at the conference. Uh it's TUNG GF in the States, TUNG in Canada. Um new CEO this year raised a decent amount of money at at a at good valuations. Um they are in the process right now of getting DoD money next year. Um that's a theme that we talked about off camera that I think you're going to see a lot of companies get uh what we call non-dilutive money. Well, did you see just completely off track, did you see it's not called DoD anymore. Trump changed it to the Department of War last night. D. He cited executive Yeah, he cited executive orders changing it back to the Department of War, which apparently is what it was called before the 40s. Anyway, I'm sure that had nothing to do with China and Russia and India getting together two weekends ago. No, anyway, it's uh the Department of War is now looking into uh Yeah. Uh acquiring stakes in critical minerals. Yeah, that's already been happening. Yeah, I think it's going to be a really good um runway here. But um I would encourage people like my YouTube partner Dond Derret is talking about like a decadel long kind of rally and and the US going into a Japanese-like recession. I think everything happens like this now. It's so much faster than people recognize. If you're not an investor or a trader or a portfolio manager where you're looking at it regularly, things happen way quicker than people expect. So I think we'll see a good couple of years in this sector and I'm going to try to take advantage of that while we can. Good talk. Thank you very much. Where can we follow you, John? Yeah, sure. I have a website called fenic consulting.com. We'll have our 10ear uh performance David posted on there. Uh December 31st is our 10 year anniversary. So it's been a a rocky 10 years, but I'm I'm happy to be able to say that we'll probably be top desile in the in the sector. Um and we'll we'll hopefully market that in January. Thanks, John. Appreciate it. Thank you, David. Yeah. Thank you for watching. Don't forget to like and subscribe.