04. March 2021 | 09:10 CET
SKRR Exploration, First Majestic, Lufthansa - These values take off!
Once again, a sell-off day for the precious metals! Often observed these days, in the morning, a stabilization of spot prices, US trade hardly sets in: Out with it! All supposed price gains are used on the other side of the Atlantic to sell short again. Yesterday, we started at USD 1,740 and ended up at the low of USD 1,702 - a minus of 2.2%. The strategy makes perfect sense in light of rising yields: Higher interest rates damage gold holdings - but they also indicate burgeoning inflation. And if this ghost continues to sail the halls, there will ultimately be a run on gold and silver. Only, as always, it's not the time yet, but it will not be long either!
time to read: 4 minutes by André Will-Laudien
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
SKRR Exploration - Ahead with Fresh Funding!
A new gold project in Saskatchewan, SKRR Exploration, is attracting attention. The properties are located in the Trans-Hudson Corridor, an under-explored area, but the predominant geological formation is very distinctive. It is reminiscent of many large historical deposits in Canada, such as the Golden Triangle. Some explorers have already moved into the area to conduct initial drilling.
SKRR Exploration recently raised CAD 3.5 million through a private placement to begin exploration. Nearby and with similar geology is the Santoy mine and Seabee mill operated by SSR Mining. Initial SKRR drilling at the Olson project has indicated high-grade gold mineralization, with results pending from 13 drill holes. The recently 100% acquired Manson Bay property hosts the entire Manson Bay Gold Zone, with multiple drill intercepts and maximum mineralization of 15.39 g AU/t. The range of results in the other drill holes varied from 1.09 to 13.80 g AU/t.
A total of 5 projects were acquired in 2020, with work commencing in January 2021 in the Leadland and Olson sections. Here, corresponding quartz veins have already been found near the surface, so it will be interesting to see what the next drillings will bring to light. The conditions in this zone with a total of 23,500 hectares are excellent. The Company currently owns 100% of the Irving claims and under the terms of the option agreement with Taiga Gold Corp., SKRR can acquire an interest of up to 75% in the Leland claims. Enough room to develop accordingly in the future.
SKRR's share price has not yet moved much, but it is trading very stable in the market at CAD 0.25, despite much lower gold prices. When the precious metal starts to fly to new heights, one should take off with this low-capitalized explorer.
First Majestic Silver - Are there short sellers on the way?
Of course, the silver price is once again following gold into the cellar. In February, its little brother has already lost USD 2.5 and is currently struggling with the critical USD 26 mark. The significant momentum in the form of a breakout above the USD 28 to 30 area is not yet ready to materialize, even though the Reddit community launched an attack on silver earlier this year.
Not much has remained of this 2-week euphoria, and the price sank again significantly from USD 30. But if you look at most silver stocks, it seems to be only a matter of time until the metal starts to move up again. In the big chart picture, this would actually only be a pullback to the breakout lines.
In First Majestic Silver, there was a feeling in January that the stock could start to soar after 3 days of short squeeze talk. It catapulted the value up to EUR 21.8 - then yesterday the disillusionment with minus 4% to below EUR 14. Currently, we even suspect that individual silver stocks have fallen into the radar of short-sellers.
Fundamentally, the only thing to report about First Majestic is the tax dispute with the government of Mexico, where a request for arbitration under NAFTA rules was filed. Let's see how that will end up on the bottom line. In any case, First Majestic is one of the most interesting silver stocks with high potential, so take advantage of strong sell-offs to enter the market.
Lufthansa - The end of the lockdown in sight
Little with gold and silver but with good prospects, the crane airline is on the rise again. The main thing here is the hope of a very high COVID vaccination rate in summer in order to receive appropriate bookings for vacation trips. Even though the chart currently looks very good, one must bear in mind that even if 50% of past air traffic is resumed, the German airline will still generate losses of around EUR 1 billion per quarter. The government bailout's financial cushion in 2020 is likely to have already been severely depleted by the lockdown, which has been extended several times. We do not expect any further support from this perspective.
The figures on Lufthansa's balance sheet do not read particularly well either. Equity of EUR 2.5 billion is offset by debt of EUR 11.6 billion, and the book value is only EUR 4.2 per share. No matter how one imagines the world after or with Corona in the medium term, the machine utilization rates from 2017-2019 are likely to be history and will never be reached again. Both business and vacation travel will take place in the future under different rules and the already established social changes. Corona is changing us humans permanently, especially travel behavior.
No matter how the fundamental situation will develop, investors have been buying the Lufthansa share massively since its breakout at around EUR 10.50, and yesterday it was temporarily at EUR 12.8. Admittedly, there is still a long way to go to the old high at EUR 30, but even the golden mean at EUR 15 will already please many momentum traders. From a fundamental point of view, however, the air becomes very thin. According to estimates, the first tangible profit should only occur again in 2023, and we also consider this to be very optimistic. Caution is advised!