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May 19th, 2022 | 11:14 CEST

Amazon, Edgemont Gold, Valneva - The real gold wins

  • Gold
  • Inflation
  • Biotech
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Only 'cash is king' seems to be the motto of this stock market week. High inflation is bringing tech stocks to their knees, and heavy artillery is also being brought to bear on Valneva's dead vaccine development front. The EU Commission wants to cancel the preliminary contract if the vaccine is not finally delivered within a month. Depth is also to be expected at Edgemont Gold, only this time, good things are hidden there. The gold exploration company is getting promising results from its third drill hole.

time to read: 4 minutes | Author: Juliane Zielonka
ISIN: AMAZON.COM INC. DL-_01 | US0231351067 , EDGEMONT GOLD CORP. O.N. | CA28008L1067 , VALNEVA SE EO -_15 | FR0004056851

Table of contents:

    Gary Cope, President and CEO, Barsele Minerals
    "[...] I wouldn't be surprised if the project ends up showing more than 5 million ounces. [...]" Gary Cope, President and CEO, Barsele Minerals

    Full interview


    Amazon - Inflation influences share price

    Tech stocks like Amazon (WKN: 906866) have been in a slump for some time. One reason for this is the current inflation rate. Experts estimate it at around 7% in the USA. While the price-earnings ratio (P/E ratio) is often used to evaluate value stocks, analysts look at the value of future cash flows for tech stocks. These values are dependent on interest rates. In order to counter inflation, the US Federal Reserve (Fed) may raise interest rates. Thus, the present value of a future cash flow can change with small increases in the interest rate. Following this logic, future cash flows of tech companies such as Amazon are therefore worth less when interest rates rise, and the value of the stock falls.

    Ex-Amazon chief executive and billionaire Jeff Bezos publicly took issue with US President Joe Biden on Twitter over inflation levels. The spat began last Friday when Biden's account tweeted, "You want to lower inflation? Let's make sure the richest corporations pay their fair share." The White House was referring to an increase in the corporate tax rate for businesses. Bezos called this tweet "disinformation" and "misdirection" and further tweeted, "They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation is at a 40-year high today."

    The Amazon founder is referring to Biden's "Build Back Better" plan. The plan includes measures totalling USD 700 billion: USD 400 billion to boost demand for domestic products through public spending and USD 300 billion for research and development. The goal is to create 3 million jobs. To fund it all, he wants to raise the corporate tax rate from 21% to 28%, but so far hasn't gotten around to it.

    A higher corporate tax would leave companies with less money to invest in additional capacity, economist Alan Auerbach said, according to the Associated Press. Over time, that financial burden would raise their production costs. Inflation is far from under control, and the Amazon share may fall even further in price.

    Edgemont Gold - New drill results inspire optimism

    As an alternative to tech companies in decline, popular commodities like gold remain asset classes that every investor should take a closer look at. Before an ounce is freshly minted and polished over the counter, geologists and researchers are needed to search areas for gold deposits. So that extraction plants can be built there, creating new jobs.

    One company that specializes in exploring for mineral resources is Edgemont Gold Corporation (WKN: A2QCES ), based in Vancouver, Canada. The Company is focused on exploring an area with the project name 'Dungate'. The Dungate copper-gold porphyry project is located 6km southeast of Houston in the Omineca Mining Division in British Columbia, Canada. The property originally consisted of two mineral claims.

    In 2018, Edgemont Gold Corporation acquired an interest in its first claims at Dungate. Today, it owns a total of five mineral properties covering 1,582.2 hectares that can be explored year-round on roads that are accessible year-round. Also, 'Dungate' is a safe, established mining district. Three drill holes have been completed to date. During the most recent drilling, the Company encountered an anomaly in the ground, the discovery of which will allow them to better determine the course of a gold vein. Further information can be found in the latest press release from the Canadians.

    Valneva - Development delay jeopardizes upfront contract

    Doing business with governments is a double-edged sword. On the one hand, government-mandated mass vaccination programs flush a steady cash flow into the coffers of the makers of Covid vaccines. On the other hand, the vaccine must be tailored to the current virus variant in order to be effective.

    Valneva (WKN: A0MVJZ ) is currently feeling the downside of government deals. The EU Commission wants to cancel the French-Austrian biotech company's upfront contracts for its inactivated vaccine. And it has every right to do so. After all, according to the agreement, the Commission has the right to do so if Valneva does not receive marketing authorization from the European Medicines Agency (EMA) by April 30. That date has already passed, and under the contract terms, the group has 30 days from May 13 to obtain marketing approval or propose measures to improve it.

    So in one month, research and development should be pushed hard to meet the contract terms. Shareholders have already punished Valneva: the value of the share fell by around 19% when it became clear that Valneva was experiencing delivery difficulties. The share price currently stands at EUR 10.08.

    "The European Commission's decision is regrettable, especially as we continue to receive messages from Europeans seeking a more traditional vaccine solution. We have started a dialogue with member states interested in our inactivated approach," CEO Thomas Lingelbach commented on the intention. The decision is not yet final. Instead, the EU Commission is putting the gun to the chest of the inactivated vaccine manufacturer with its intention to finally deliver.

    Investors need patience, especially in the biotech sector, because according to Friedrich von Bohlen, Dietmar Hopp's portfolio manager, research and development can easily take ten years. The EU Commission is losing ground because Valneva has not yet delivered its announced inactivated vaccine. Short-term investors have already withdrawn from the share. Amazon has also fallen considerably in price due to inflation and delays in the retail business. On the other hand, Edgemont Gold seems to be making progress. The third drill hole on their project, 'Dungate,' indicates anomalies, which can be used to better determine the course of gold veins there. A change in the current portfolio serves as its own hedge. At the International Investment Forum today, May 19, 2022, there will be the opportunity to meet more companies and their CEOs live via Zoom. Click here to register for free.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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