Steinhoff, Silver Viper, BYD - Buy when the guns are thundering!

Metal with double function

In contrast to its big brother, silver plays a dual function. On the one hand, like gold, it is considered a crisis currency and protection against inflation. Due to the current circumstances with high inflation rates, excessively rising national debts and interest rate levels at historic lows, it belongs as an admixture in every diversified portfolio for this reason alone.

However, due to the acceleration of the energy transition in the next few years, silver has another ace up its sleeve as a strategic industrial metal. The demand from the electric car industry alone is enormous. According to estimates by the Silver Institute, between 0.5 and 0.9 ounces of silver are used in vehicles with an internal combustion engine. Purely electric cars already use more than 3 ounces of silver. According to estimates, demand for silver from the automotive industry is expected to grow strongly in 2021 compared with the previous year, rising to 61 million ounces according to conservative calculations. By 2025, this demand is expected to increase by more than 44% and reach 88 million ounces.

Great potential in Mexico

By contrast, the market for pure silver producers is manageable. The central part of silver production mainly occurs as an additional product in gold mining or the mining of industrial metals. A Canadian junior exploration company has the best prerequisites to achieve the title of a significant silver producer. On the one hand, Silver Viper is led by highly qualified managers of the Belcarra Group. On the other hand, the projects in the state of Sonora in northwestern Mexico have great potential. Besides the management, which owns 23% of the Company, mainly institutional investors believe in this potential. More than 80% of the shares are held by funds or family offices.

The La Virginia gold-silver project, which formerly belonged to Pan American Silver, covers 6,880 hectares. In addition, Silver Viper owns 100% of the concession areas at La Virginia and has signed an option agreement regarding the acquisition of all shares in the Rubi-Esperanza claim group, which is located within these concession areas.

A total of 27km of program completed with over 100 drill holes has expanded the database established by Pan American Silver to 80km and significantly upgraded the resource estimate. The plan now calls for 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. With a whopping cash cushion from raised funds of CAD 6 million, the next objective is to explore the El Rubi zone, located 5km north of the historic mining area. Above-average high-grade discoveries are expected here.

Silver Viper should be able to come up with more positive results soon. The analyst firm Red Cloud Securities issues a buy recommendation with a target price of CAD 1.30. On the stock exchange, one pays just CAD 0.54 for a share.

Further participation to go to the stock exchange

The share of the German-South African trading group Steinhoff delivered a huge turnaround yesterday on the stock exchange. After the stock posted a daily low at EUR 0.1479 in the wake of negative market sentiment, the share turned back into the green by the close of trading and closed at EUR 0.1780.

The reason was positive news from the United States. The investment Mattress Firm is in the starting blocks for an IPO. According to an announcement by the Company, a registration statement on Form S-1 has been filed with the US Securities and Exchange Commission (SEC). Further data on valuation and time frame are not yet known.

Still hovering over everything, however, is the hopefully soon to be concluded settlement. The Amsterdam District Court has now announced a decision on the Dutch settlement agreement, which was accepted by the majority of creditors for September 23.

Steinhoff remains threatened with bankruptcy even after the successful outcome of the settlement. In addition to the settlement, there is another open flank. The former Tekki Town owners recently filed for liquidation before a chamber of the Western Cape High Court. We recommend serious investors avoid the share.

China continues to regulate

Even the electric car market is not immune to regulation in China. According to the government, there are too many domestic manufacturers in the Middle Kingdom. Now the market is to be consolidated. According to the government, this could be achieved through mergers. Indeed, more than 500 automotive companies in the NEV sector is a bit too high, even though the segment is growing at an incredible pace.

In the first eight months of this year, 1.64 million vehicles with alternative powertrains were sold in China, 222% more than in the same period in 2020. This growth was driven primarily by manufacturers BYD, Tesla and SAIC-GM-Wuling. In addition, in August alone, China's production of storage batteries to power NEVs rose 161.7% year-on-year to 19.5 GWh.

Silver is a sleeping giant, and its hermaphroditic nature will make it a long-term positive. Triumph Gold is promising as an exploration company but is still in the early stages. In contrast, BYD has already established itself in the Chinese electric car market. Steinhoff remains tight despite some positive news.