The gold price has taken a hit this past week, but John Feneck, portfolio manager and consultant at Feneck Consulting, believes the market is due for a sector rotation that could stoke investor interest in the yellow metal.
Feneck has been saying for some time that the US Federal Reserve is serious about curbing inflation, and he hasn’t been surprised to see the central bank hold true to its higher-for-longer strategy. However, he pointed out that elevated interest rates are affecting many levels of the economy, and are setting the US up for a recession next year.
‘Gold is going to do extremely well in that kind of environment,’ Feneck said, noting that high-net-worth individuals haven’t forgotten the banking crisis earlier this year. With those two factors in mind, they may seek protection in hard assets.
He used September 15 as an example, saying that as the broad market went down as consumer confidence dipped; meanwhile, gold, silver and the VanEck Gold Miners ETF (ARCA:GDX) saw gains.
‘That’s the kind of price action we need to see more of, which is what we would call a sector rotation — money that’s in technology, in biotech starting to move from those riskier sectors into something like metals and mining,’ Feneck explained.
Aside from the gold market, he spoke about his recent visit to Ascendant Resources’ (TSX:ASND,OTCQB:ASDRF) Lagoa Salgada project in Portugal, and gave updates on the following stocks: Golden Minerals (TSX:AUMN,NYSEAMERICAN:AUMN), World Copper (TSXV:WCU,OTCQX:WCUFF), Vortex Metals (TSXV:VMS,OTCQV:VMSSF), Guanajuato Silver (TSXV:GSVR,OTCQX:GSVRF), Spark Energy Minerals (CSE:EMIN,OTC Pink:MTEHF), Canadian Critical Minerals (TSXV:CCMI,OTCQB:RIINF), Platinex (CSE:PTX,OTCQB:PANXF), First Tellurium (CSE:FTEL,OTCQV:FSTTF) and Forum Energy Metals (TSXV:FMC,OTCQV:FDCFF).
Watch the interview above for more from Feneck on gold, other metals and the companies mentioned above.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.