April 21st, 2021 | 09:30 CEST
Evotec, NSJ Gold, Infineon - The winners of inflation!
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"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
Gold is the first choice
National debt of historic proportions, in addition to the recently approved Corona bailout program for EUR 1.9 trillion, a further planned program to improve the infrastructure in the US in the amount of USD 3.0 trillion. Fundamentally clear signs for the precious yellow metal. On top of that, the falling bond yields and real interest rate of just below 0% are the icing on the cake. Gold should have already completed the correction that has been running since August and trend significantly higher. The price has recovered considerably since the successful test of resistance at around USD 1,680 at the beginning of April and is currently trading around USD 100 higher at USD 1,776.23. However, from a technical perspective, the all-clear should only be given once the downward trend formed since August at USD 1,796.0 has been sustainably overcome. A retest of the old lows at USD 1,680 and a slide below this level is quite possible in the short term. However, from a fundamental perspective, we expect prices to rise in the long term and reach new highs. From this point of view, initial positions should already be established at the current level.
Mines offer leverage
In addition to investing in physical gold, shares in gold mine producers and explorers are an attractive addition to a portfolio. The two most prominent players, Barrick Gold and Newmont, alone have the potential to double in the next 12 months from a chart perspective. As a result of the correction that has been underway since last summer, even second-tier stocks have lost more than half of their market value in some cases and are more than cheap at current levels.
Extremely interesting is the project of the gold explorer NSJ Gold, newly founded by an experienced management team in the areas of financing, exploration, development and mining operations. The Canadians are betting on the past and have secured an option to acquire a 100% interest in the Golden Hills project in Arizona, which hosts highly prospective gold and copper deposits along the prolific Walker Lane Gold Trend.
High-grade copper and gold ore were mined there as early as the 1940s. The property is located 100 miles west of the Kay Mine, owned by Arizona Metals Corp. and 80 miles south of the Moss Mine, currently owned by Northern Vertex Mining Corp. The project consists of 7 patented and 94 unpatented mining claims covering 8.5 square miles. Currently, exploration drilling continues. To date, 5 drill holes have been completed within a radius of less than 100 meters from the previously discovered high-grade gold and copper ore vein zone.
The current Vice President of Exploration, Richard Kern, was responsible for the development of the Moss Mine in 1998 and is currently testing several high-grade targets. Should the nature of Golden Hills be anywhere near as high grade as its neighbors, there is enormous catch-up potential. Northern Vertex Mining, for example, has a market capitalization of CAD 112 million, while Arizona Metals is valued at CAD 200 million. NSJ Gold currently has a market capitalization of only CAD 4.8 million. In addition to Toronto, the stock has also been traded in Frankfurt for a short time.
Favorites in the healthcare sector
In a study, analysts at Barclays name Bayer and Evotec share as European favorites in the healthcare sector regarding protection against inflationary "overheating." The healthcare sector generally offers good protection against inflation, according to experts. Today, Evotec announced expanding its biologics production capacity with a second facility at its Toulouse site. "The ongoing coronavirus pandemic has further underlined the need for flexible and nearby capacity to produce biopharmaceuticals," said Evotec CEO Werner Lanthaler. Evotec estimates the investment volume at EUR 150 million. The French government will support the project with EUR 50 million. The facility will be "Evotec's first commercial biopharmaceutical production facility in Europe. It will provide much needed capacity, flexibility and quality for the development and production of biopharmaceuticals," the Company added.
Chips in short supply
Among semiconductor stocks, Barclays sees Infineon on its list of favorites, along with ST Mirco. According to the analysts, inflation "won't have too much of an impact" on the semiconductor industry, as companies will pass on higher costs to their customers. Thanks to the strength in demand, the sector has once again managed a good start to the year. However, capacity constraints could prove to be a brake in the course of the year. The price target was raised from EUR 37 to EUR 39; the verdict remained "equal weight."
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