November 13th, 2020 | 12:40 CET
Pfizer, BioNTech, Desert Gold - inoculate portfolios with gold!
After only three days, disillusionment already! The winners of yesterday are the losers of today. Since Monday's vaccination rocket, the markets have been hanging around up there, looking to see if any more buyers have left the sickbed of the last bear market. Unfortunately, no, the case is rather that airlines are, on average, down 5% again and a battered TUI is looking for further state aid which pushes the price back towards 4 euros. The problematic week began as the Dow rose by 4% to a new record high, and yields on ten-year government bonds shot up by almost 17% in a single day as investors relinquished security. Oil prices rose by 8% as people now believe that the stalled economy is coming back to life.
Meanwhile, the US dollar index rose by about 60 basis points, while even some exotic currencies with higher beta jumped too. Of course, some gold and silver enthusiasts wonder if a vaccine is enough to kill both the Covid-19 virus and the bull market in precious metals as gold and silver lost between 5 and 9%. However, if you look at the markets today, the chances are that smart money, in particular, will start to buy the dips in the precious metals.
time to read: 4 minutes
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Author:
André Will-Laudien
ISIN:
CA25039N4084 , US7170811035 , US09075V1026
Table of contents:
Author
André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
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Pfizer - Sell on good news
Pfizer and BioNTech announced on November 9, 2020, that their mRNA-based vaccine candidate BNT162b2 against COVID-19 had demonstrated significant efficacy against CORONA in participants without prior evidence of SARS-CoV-2 infection. This was based on the first interim analysis of effectiveness, which was performed on November 8, 2020, by an external, independent Data Monitoring Committee (DMC) from the Phase 3 clinical trial. The DMC reviewed a total of 94 cases. Case allocation between vaccinated individuals and those receiving the placebo showed a vaccine efficacy rate of over 90%, seven days after the second dose. This means that protection can be achieved 28 days after the start of vaccination, which consists of a 2-dose regimen. This is a real breakthrough in the pandemic and has significantly improved the image of the pharmaceutical industry almost overnight. So far, so good.
However, Pfizer's CEO immediately took advantage of the high share price to sell shares in the Company worth USD 5.6 million. The information about the sale is contained in documents submitted to the US Securities and Exchange Commission (SEC). The media reported very luridly on the subject, but we congratulate Mr Albert Bourla on this good portfolio decision. One sells shares when they are high - CHAPEAU!
The Pfizer share opened at USD 41.94 on Monday morning after the announcement, up 15% from the close of trading on Friday. Since then, the shares have fallen back to USD 37.7. Pfizer's market capitalization is now an impressive USD 212 billion, and the stock is trading near its 10-year high - investors should do the same as the CEO.
BioNTech - Higher, faster, further
Pfizer, the established blockbuster manufacturer, and German junior Company BioNTech SE announced that they have entered into an agreement with the European Commission to supply 200 million doses of their vaccine candidate (BNT162b2) against Covid-19 to the member states of the European Union (EU) with the option to supply an additional 100 million doses. Subject to clinical success and regulatory approval, mass vaccination is expected to begin as early as the end of 2020. That sounds hopeful!
The vaccine doses for Europe will be produced in BioNTech's German production facilities and Pfizer's in Belgium. If the vaccine in question is approved by the European Medicines Agency (EMA), the preparations will be distributed according to the EU distribution key. Namely, to the notified reference countries that have chosen to receive the vaccine under this agreement. BioNTech itself has hardly any products on the market so far but is also very active in cancer research. A unique feature of the corona vaccine is that it has to be cooled at a temperature of at least minus 70 degrees Celsius from production to administration, which still represents a global logistical challenge for corresponding ultra-cool transports. In such cases, we can think of a standard DAX stock: The Linde Group with its industrial gases - this is a strategy that few people have in mind.
As far as BioNTech is concerned, the valuation of the Company's market capitalization shot up from USD 14 billion to USD 27 billion in just 6 weeks, to a price of over USD 110 billion. Interestingly, of the known issuers, there are almost only LONG derivatives on this value if this is not an excellent sign for the exit.
Desert Gold - Rapunzel from the desert
Far from the effectiveness of essential vaccines, there are other exciting supplements for the depot. Because if all that we have heard in the last five days should not happen as positively as the mass of investors probably currently suspects, the gold and silver sector will come out of obscurity again. Yesterday the yellow metal climbed once again to over USD 1,880. Silver is following suit and platinum is also involved this time.
No longer so unknown, Desert Gold Ventures Inc., is a commodity explorer in search of gold in Mali (Africa). The Company's flagship project is the Senegal Mali Shear Zone project, which covers 410 square kilometres in western Mali. The Company for example acquired stakes in the Sebessounkoto Sud and Djelimangara gold projects in western Mali. These are vast areas of land with great potential, as the district is known for its extensive mineral deposits. The Company is involved in the Byumba exploration permits north of Rwanda's capital Kigali, the Djimbala project and the Farabantourou and Segala Ouest projects in Mali. If a larger deposit is discovered in the current drilling operations, Desert Gold could be an exciting takeover target for the re-strengthened majors in the gold industry. Barrick is also looking for further projects in Africa, as production costs are on average 25% lower than in the other commodity continents. For a commodities Company, the valuation of Desert at CAD 20 million is only the blink of an eye in the long balance sheet.
The Desert share currently tends to be highly volatile and is anything but boring. From the end of July to October 2020, for example, it was almost in third place. Since then, it has risen again by more than 50%, with a significant increase in turnover. Anyone who waits here lethargically for the vaccine will overhear the bell for a new start!
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