09. August 2021 | 11:24 CET
Plug Power, Silver Viper, Xiaomi - The pressure is mounting
The Federal Reserve is in a tight spot. Due to positive labor market data, the US economy has created more jobs in July than at any time in a year; the bulk of market participants expect a swing in monetary policy soon. Due to the fear of interest rate hikes, the precious metals gold and silver fell drastically. But are the monetary authorities even in a position to raise interest rates significantly due to the general conditions? Probably not, which should cause both gold and silver prices to soar in the long term.
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ISIN: PLUG POWER INC. DL-_01 | US72919P2020 , SILVER VIPER MINER. CORP. | CA8283341029 , XIAOMI CORP. CL.B | KYG9830T1067
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
Silver Viper - High demand
The low-interest rates of a historic 0.0%, plus unlimited bond purchases and stimulus packages in the dizzying trillions of dollars - The goal of politicians and economists to prop up both distressed states and companies with subsidies and cheap money is working at the moment. The economy is recovering; the unemployment rate is falling after the impact at the beginning of the Corona pandemic. That does not solve the over-indebtedness; it just pushes the problem back in time. The debt bubble keeps inflating.
Growth and job creation are more important to both the FED and the ECB than monetary price stability. Due to this fact, it is difficult to impossible to end the ultra-loose monetary policy and react with sudden, drastic interest rate hikes. The consequence would be a collapse of several highly indebted countries as well as companies. Therefore, we see attractive long-term entry opportunities for both gold and silver at current levels. Even if there is a downside risk of an estimated 5% from a purely technical chart perspective in the short term, you should add initial positions in gold and silver mines to your portfolio.
An attractive investment opportunity is currently offered by Silver Viper, which is mining for gold and silver in the state of Sonora in northwestern Mexico. The junior explorer, managed by the Belcarra Group, operates the La Virginia gold-silver project, formerly part of Pan American Silver, with more than 6,880 hectares and owns 100% of the concession areas in the Rubi-Esperanza claim group.
The 27,000 m drilling program, with a total of more than 100 holes drilled last year, has expanded the project database acquired from Pan American Silver to a total of 80,000 m. The resource estimate was also significantly increased as a result. Silver Viper now expects resources of 154,300 ounces of gold and 6,929,000 ounces of silver and inferred resources of 246,300 ounces of gold and 12.49 million ounces of silver.
By successfully going to the capital market, where the Company raised CAD 6 million, the "El Rubi Zone", located about 5 km north of the historic mining area, is now to be explored. Experienced management anticipates above-average high-grade discoveries. In addition, it is estimated that the El Rubi zone is open both laterally and at depth and can be expanded with further drilling. A continuous news flow this year should thus be guaranteed. The correction in the share, which is considered a potential takeover candidate in the scene, results in an attractive entry level at CAD 0.50 at the current level.
Xiaomi - Like clockwork
The growth story of the Chinese technology Company Xiaomi continues unabated. Having already overtaken US giant Apple in global smartphone sales last month, Xiaomi knocked the until recently undisputed top dog Samsung Electronics off its throne in the July figures. According to Counterpoint Research, Xiaomi's sales increased by 26% compared to the previous month, which equals a market share of 17.1%. Xiaomi was able to profit mainly due to the problems of the former kingpin Huawei, which only ranks fifth with a drop in sales of 84%.
After successfully testing the resistance at EUR 2.70, the Xiaomi share is on the verge of another buy signal and is currently trading at EUR 2.91. A breakout of the EUR 3.10 mark would open up new potential that should lead to a test of the all-time high at EUR 3.80.
Plug Power - Optimistic about the future
After the quarrels over incorrectly submitted balance sheets, the sun is currently shining again at Plug Power. Market participants also took positive note of the second quarter figures published last week. Although the loss per share of USD 0.18 was higher than analysts' estimates, they celebrated the record sales, which amounted to USD 125 million in the months from April to June.
In addition, the increase in guidance, which now calls for bookings of USD 500 million for the current fiscal year, contributed to the upbeat mood. Plug Power's management plans to continue expanding its business units, projecting gross sales of USD 750 million in 2022. After a strong market opening last Friday, the stock sold off and struggled with support at EUR 25.90. In the short term, we would currently advise against an investment.
Even though the positive labor market report put pressure on gold and silver, we see long-term rising prices for the precious metals. Mining stocks such as Silver Viper should participate disproportionately in the price increase. While the new smartphone king Xiaomi is worth buying, we would wait and see for Plug Power despite the forecast increase.