(Kitco News) - President Donald Trump's return to the White House has ignited a wave of optimism in the U.S. mining sector, with his administration's focus on domestic energy and critical mineral production, according to John Feneck, founder and CEO of the Feneck Commodities Report, who sees “a lot more coming from his office."
John Feneck, founder and CEO of the Feneck Commodities Report, noted in a recent interview with Kitco Mining that Trump is "right in line with what we expected,” and to prepare for additional moves, particularly regarding U.S. projects and "U.S. domination."
Feneck highlighted the significance of the new administration's stance, stating that "we're in a protectionist kind of environment right now." This shift is expected to benefit companies focused on producing defense minerals like antimony and tungsten, where China currently dominates production.
Feneck pointed out that China produces "80 to 90 percent" of these minerals, while the U.S. lags far behind with "zero to 5 percent" production in 2024. He anticipates a surge in funding from the Department of Defense and the Department of Energy to address this imbalance.
Gold market's complexities
Despite gold prices trading near $2,800 per ounce, Feneck observed a disconnect between gold prices and gold stocks. "You're looking at gold [at] all-time highs, yet gold stocks are really struggling," Feneck said. He believes that a price point of "$3,000 plus gold" may be needed to "ignite the sector."
Feneck's preferred large-cap gold stock is Agnico Eagle Mines, citing its strong performance and momentum. He also mentioned smaller companies like First Nordic Metals and Mandalay Resources as potential opportunities for investors. "Mandalay... you could see that stock really fly because if you pull up a 10-year chart, over $3.40, there's really no overhead resistance for a while," said Feneck.
M&A and strategic pivots
The mining sector is also seeing significant movement in mergers and acquisitions. Discovery Silver's recent acquisition of the Porcupine gold mine from Newmont for up to $425 million marks a major strategic pivot.
This deal allows Discovery Silver to transition into a mid-tier gold producer, and it is expected to produce over 285,000 ounces of gold annually over the next 10 years. The company's move away from open pit mining in Mexico, where there is "uncertainty surrounding the permitting," is a way to "sidestep that prickly issue," said Feneck.
He also noted that Newmont’s divestiture program will likely spark M&A activity in the sector, as many companies were unsuccessful bidders for Newmont assets.
Tech sell-off and sector rotation
The recent sell-off in the tech sector, which saw leading U.S. tech indices lose significant market capitalization, may influence investment in other sectors. Feneck noted that "when those stocks start to sell off a bit, you're going to start to see a sector rotation."
He suggested that a move away from tech could benefit the mining sector. "I think part of that can come from energy and mining," he said.
Special thanks to our sponsor, Revival Gold, for making this coverage possible. Visit www.RevivalGold.com to learn more.
Subscribe on Apple Podcasts, Amazon Music and Spotify. You can also add the RSS link to your favorite podcast player: LINK