April 9th, 2022 | 07:27 CEST
BioNTech, Triumph Gold, Rheinmetall - Uncertainties everywhere
The ongoing fighting in Ukraine and concerns about an escalation of the situation are worrying capital markets worldwide. Nevertheless, the leading stock market barometers were able to distance themselves significantly from their lows. Now, the next blow has followed with the publication of the FED's meeting minutes. The US Federal Reserve wants to accelerate the reduction of its balance sheet total and let bonds worth up to USD 95 billion expire without buying again. In doing so, the monetary authorities are hitting technology stocks in particular, which have already been in a sharp correction since the beginning of the year. Gold, on the other hand, is barely reacting despite the expected interest rate hikes, a strong sign for the precious metal.
time to read: 3 minutes | Author: Stefan Feulner
ISIN: BIONTECH SE SPON. ADRS 1 | US09075V1026 , TRIUMPH GOLD CORP. | CA8968121043 , RHEINMETALL AG | DE0007030009
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Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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Inflation keeps the stock markets in suspense
A decision will be made at the beginning of May as to whether the Federal Reserve will massively reduce the size of its balance sheet. Due to the high inflation, which amounted to 7.9% in the USA in March, a tightening of monetary policy is more than overdue. Per month, bonds worth up to USD 95 billion will expire without buying new ones, according to the FED minutes published yesterday evening. After the key interest rate was already raised by 0.25% at the meeting on March 16, several steps are likely to be taken this year due to the continued high inflation rate. In addition, the Ukraine crisis is expected to fuel inflation further due to rising commodity and energy prices. The question is whether the central bankers will still manage to contain inflation or whether inflation rates have already gotten out of hand. Already last year, we were very skeptical of the statements of the monetary guardians that inflation was only temporary in nature.
Gold is still "the" inflation hedge
Admittedly, one would have expected higher prices for gold already last year due to the general conditions with low interest rates, high inflation rates and uncertainties in geopolitics. Even after Russia's invasion, the gold price briefly scratched the all-time high of USD 2,070.18 per ounce, only to be sold off again. Gold has become the plaything of the political powers; a high fluctuation range can therefore not be ruled out. However, should the price correct even in the short term towards the uptrend at USD 1,680 per ounce, it should achieve significantly higher prices in the medium term.
So, in addition to buying physical gold in the form of coins or bars, shares in gold producers or exploration companies such as Triumph Gold make sense to protect one's assets from the threat of devaluation. The formula for portfolio diversification is to invest about 10% in gold or silver stocks. The Canadian company, listed in Frankfurt and Toronto, has consolidated around 70% since the all-time high of the base price in August 2020 and has been working on bottoming out at CAD 0.10 for months.
The Canadians' focus is on developing the Freegold Mountain project in Canada's Yukon using multi-disciplinary exploration and evaluation technologies. The 100% owned project is equipped with world-class infrastructure and hosts three National Instrument 43-101 compliant mineral deposits, Nucleus, Revenue and Tinta Hill. In addition, the exploration company owns 100% of the Big Creek and Tad/Toro copper-gold properties near the Freegold Mountain project.
The Canadians reported good results from the 755.90m drill program in two holes at the Nucleus deposit at the Freegold Mountain project. Highlights include 4.50m at 2.00 g/t gold and 1.57 g/t silver within 46.28m at 0.54 g/t gold and 0.53 g/t silver in N21-02 in the Oxide Zone, which returned a gold recovery rate of 83%. Brian May, Triumph Gold's CEO, is extremely positive about the results and expects to define additional oxide gold zones in the future. Triumph Gold's market capitalization is approximately EUR 9.69 million.
Correction of the crisis profiteers
Be it Corona or the current Ukraine crisis. Besides many losers, led by our society, there are, of course, also winners. While at the time of the virus, it was mainly the vaccine producers around BioNTech, Pfizer & Co. that were the winners, the increase in the budget for the German armed forces is driving Rheinmetall investors to jump for joy. But caution is advised. BioNTech was able to recover somewhat in recent days after the slide. However, the stock did not have the strength to close the price gap at USD 194.61 and turned south again. Important now is the upward trend formed since September at USD 160.47. Should this fall, a further sell-off to the next prominent support area at USD 131.00 would be possible.
In the case of the Rheinmetall defense share, a strong sell-off occurred after a new high of EUR 209.70 was reached; in addition, the trend-following indicators turned downward and showed a sell signal. In the short term, the correction potential is initially EUR 180.
The markets remain depressed and turned down again due to the FED meeting minutes. As diversification, an investment in gold mining stocks such as Triumph Gold offers itself in the long term. Extreme caution is advised with the crisis winners BioNTech and Rheinmetall.
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.
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