24. March 2021 | 09:06 CET
CureVac, Scottie Resources, Newmont - Is the monetary system at its end?
There is a dangerous mix brewing in the international financial markets. With the passage of the new USD 1.9 trillion US stimulus package, whose money will be used primarily to boost consumption, inflation expectations rise. The Fed expects inflation to average 2.4% in 2021. Nevertheless, the Fed intends to continue its path of loose monetary policy, which was accelerated during the Corona Crisis, until at least 2023. In doing so, Fed Chairman Powell violates the basic principle of central banks to take preventive action against inflation. There is a threat of monetary devaluation of historic proportions.
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ISIN: NL0015436031 , CA81012R1064 , US6516391066
"[...] I wouldn't be surprised if the project ends up showing more than 5 million ounces. [...]" Gary Cope, President and CEO, Barsele Minerals
Gold as a profiteer
Rising inflation with interest rates remaining stable at zero percent. Has the Federal Reserve gambled itself away? If so, there is a long-term winner: gold. Until August 2020, when the precious metal price rose above USD 2,060 per troy ounce, it was the safe haven and fear of a prolonged economic downturn due to the Corona pandemic. Then came the correction, driven by hopes of an imminent end due to successes in vaccine development. When Donald Trump was succeeded by savior Joe Biden, who incidentally called Russian President Putin a "killer" last week, everything seemed to be back on track.
The gold price fell to its eight-month low at USD 1,676.00 by March 2021, before currently trading somewhat recovered above the prominent support zone at USD 1,700. In recent months, both private and institutional investors threw out their ETF holdings from their portfolios. Thus, these are already back before the pre-Corona level. Another striking development is that the gold purchases of the central banks have been reduced by 60% compared to the previous year.
Situation tense in the short term
In the short term, caution is still advised when buying the precious yellow metal, although the rule of always having some gold lying around as collateral still applies. Therefore, a short-term dip below the March low and a possible shake-out is entirely possible. In the long term, however, gold is a safe haven that offers security in the event of crises and capital and inflation protection. In addition to investing in the gold price, shares of gold mine producers and mine explorers are particularly attractive. Both the industry giants Barrick Gold and Newmont were able to deliver excellent figures in recent weeks and are fundamentally better off than they have been for a long time due to the past year's strong performance.
Newmont increased the quarterly dividend for the fourth quarter of 2020 alone by 38% to now USD 0.55 after outstanding figures. The full-year 2020, which suffered from the Corona Crisis, was an absolute record result despite reduced production of 6%. Here, the total net profit was USD 2.14 billion or USD 2.66 per share. With USD 5.5 billion in cash and USD 8.5 billion in free cash, the Company is sitting on a mountain of money. It has the flexibility now to expand its portfolio through acquisitions during weaker market periods.
If there is a prolonged upswing in the gold market, companies from the second tier usually perform much better. Therefore, as a speculative portfolio addition, an investment in a gold mining explorer is quite promising. Scottie Resources' share has more than met the ongoing correction and is trading just above its pre-crisis level at CAD 0.20.
This level is also a strong support area. From a fundamental perspective, the mining explorer offers interesting entry opportunities. Scottie's projects are excellently located in the well-known "golden triangle" near Summit Lake in British Columbia. The Golden Triangle is one of the most productive mineralization areas globally and is world-renowned for its abundant deposits. In total, the Canadians own more than 25,000 hectares there. Claims include a 100% interest in the high-grade, past-producing Scottie gold mine and the Bow property located just 2 kilometers northeast of the Scottie mine.
At Bow, the Company obtained excellent assay results for the Blueberry zone late last year. As a result, drilling will continue aggressively in this area, ideally located directly on a road, to determine the full extent of this vast and high-grade system. Encouraging results also came to light from the Scottie Mine last month. Among other things, drill core returned 12.6 grams of gold and 4.4 grams of silver over approximately five meters. With a cash cushion of approximately CAD 3.5 million, Scottie also plans to undertake further drilling here starting in the third quarter. It is a promising Company with an imminent upward movement in the gold price in the long term.
From the background
While you can read about AstraZeneca or BioNTech in the media almost daily, the next vaccine candidate, CureVac, is working more from the background. Now we hear that the Tübingen-based Company is expanding its pivotal clinical trial because of the rapid spread of new coronavirus variants. CureVac confirmed its plans to file for marketing approval in the second quarter of 2021. The Company expects approval by the end of June. The share is currently trading at around EUR 80, where it hangs at the central resistance zone. If the resistance is overcome, the next target price would be the annual high of EUR 109.50.