Gold stocks to post ‘tremendous numbers’ says Feneck

The gold price is experiencing a “healthy pullback” from record levels of over US$2,650/oz, John Feneck, founder of Feneck Consulting, told Kitco Mining’s Digging Deep program. “A pullback, even to $2,500/oz would be healthy. I’d be concerned if we break $2,250-2,300/oz to the downside because that is the new floor. It has held that level for weeks and weeks now,” said Feneck. With metals prices running high, Feneck said he is surprised that gold equities are not doing better, although with companies reporting September quarter financials in a few weeks, that could change. In particular, Feneck is looking at the potential impact the results of Newmont (NYSE:NEM), Agnico Eagle Mines (NYSE:AEM) and Barrick Gold (NYSE:GOLD), the top three holdings of GDX, the largest ETF, will have. “I’m shocked, as I sit here right now that we’re not seeing more upside in some of these gold stocks, especially with earnings around the corner. … I’m going to argue that they’re going to put up tremendous numbers because they’ve been trending at a much higher gold price, yet their costs haven’t elevated much at all. … With a higher gold price, you’re clipping a higher margin, and that’s really important for investors to know,” said Feneck. Feneck said he believes Coeur Mining’s (NYSE:CDE) $1.7 billion all-stock deal for SilverCrest Metals (TSX:SIL) is accretive to both companies’ shareholders. “The [22%] premium is a little thin, and I would have liked to see Silvercrest maybe go a little bit longer, but it is accretive for both. [Coeur] has tremendous torque to the silver price,” said Feneck.