May 19th, 2022 | 11:14 CEST
Amazon, Edgemont Gold, Valneva - The real gold wins
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"[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures
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.
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
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