Shares of BioNTech SE traded 15% higher after the company reported that, together with its partner Pfizer, it has received FDA Fast Track designation for two separate mRNA-based vaccine candidates against SARS-CoV-2.
Clinical-stage biotechnology company BioNTech SE (BNTX:NASDAQ) and pharmaceutical giant Pfizer Inc. (PFE:NYSE) today announced that “two of the companies’ four investigational vaccine candidates from their BNT162 mRNA-based vaccine program (BNT162b1 and BNT162b2) being developed to help protect against SARS-CoV-2 (the virus that causes COVID-19), received Fast Track designation from the U.S. Food and Drug Administration (FDA).” The companies stated that BNT162b1 and BNT162b2 are presently being evaluated in ongoing Phase 1/2 clinical trials in the U.S. and Germany and are the two most advanced vaccine candidates in the collaborative BNT162 program.
The firms explained that the FDA’s Fast Track program is designed to expedite the development and review of new drugs and vaccines and that the Fast Track designation was granted based upon preliminary data from ongoing Phase 1/2 trials in Germany and the U.S. and also from additional animal immunogenicity studies.
The company pointed out that “the BNT162 program is evaluating at least four experimental vaccines, each of which represent a unique combination of messenger RNA (mRNA) format and target antigen.”
Pfizer’s SVP of Global Regulatory Affairs Peter Honig commented, “The FDA’s decision to grant these two COVID-19 vaccine candidates Fast Track designation signifies an important milestone in the efforts to develop a safe and effective vaccine against SARS-CoV-2…We look forward to continue working closely with the FDA throughout the clinical development of this program, Project Lightspeed, to evaluate the safety and efficacy of these vaccine candidates.”
BioNTech’s Chief Medical Officer Özlem Türeci remarked, “We are pleased to have received Fast Track designation from the FDA for two of our vaccine candidates and look forward to working closely with the FDA, along with our partner Pfizer, to expedite the clinical development path forward.”
The company noted that “the Project Lightspeed vaccine development program is based on BioNTech’s proprietary mRNA-based technology platforms and supported by Pfizer’s global vaccine development capabilities.” Subject to regulatory approval, the companies hope to enroll up to 30,000 patients in a Phase 2b/3 trial possibly as early as later this month. If the Phase 2b/3 study produces successful results and the vaccine candidate is granted regulatory approval, the companies stated that they plan to manufacture up to 100 million doses of the vaccine by December 2020 and as many as 1.2 billion doses by the end of 2021.
BioNTech is based in Mainz, Germany, and is focused on providing next generation immunotherapies for cancer and other serious diseases. The firm stated that “its broad portfolio of oncology product candidates includes individualized and off-the-shelf mRNA-based therapies, innovative chimeric antigen receptor T cells, bi-specific checkpoint immuno-modulators, targeted cancer antibodies and small molecules.”
Pfizer is a research-based global biopharmaceutical company headquartered in New York, that is engaged in the discovery, development and manufacture of healthcare products. Its global portfolio is composed of many household name brand prescription medications including Prevnar 13, Xeljanz, Eliquis, Lipitor, Celebrex, Pristiq and Viagra. The firm’s shares trade on the NYSE and it has a market cap of approximately $188 billion.
BioNTech began the day week with a market capitalization of around $16.1 billion with approximately 228.6 million shares outstanding. BNTX shares opened 11.5% higher today at $78.47 (+$8.11, +11.53%) over Friday’s $70.36 closing price. The U.S. ADR stock has traded today between $75.75 and $84.89 per share and is currently trading at $81.19 (+$10.83, +15.39%).
Disclosure: 1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. 6) This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
Troilus Gold’s valuation and similarities to Detour Gold are discussed in a Stifel report.
In a July 7 research report, Stifel GMP stated that Troilus Gold Corp. (TLG:TSX; CHXMF:OTCQB) is one of its “best ideas that offer exceptional torque to a rising gold price,” and the “asset offers one of the best potential replacement vehicles for gold torque since Kirkland Lake Gold’s acquisition of Detour Gold.”
Stifel noted that whereas a $2,000 per ounce ($2K/oz) gold price seemed implausible a year ago, now it is possible. Already gold futures broke through $1,800, and the COVID-19-caused backdrop that is supporting gold, cheap money and extreme liquidity, is expected to remain constant for some time. One of the companies that Stifel believes is “primed to execute on $2,000/oz Au” is Troilus Gold.
When Stifel revised the assumed gold price in its Troilus Gold model to $2K/oz from $1,600/oz, it boosted the Toronto-based mining company’s net asset value (NAV) “by a whopping 49%.” Stifel’s NAV at “$2,000/oz is C$5.78 on a fully funded and diluted basis (conservatively assumes capex is 50% equity funded at C$1.00/sh).”
Currently, Troilus Gold is trading at a significant discount to its peers in Stifel’s coverage universe. This, however, is a gap that Stifel believes will shrink as the development-stage firm “tackles technical questions around geotech, metallurgy, etc.,” the investment banking company wrote.
It pointed out that the similarities between Troilus Gold and Detour Gold include a past producing deposit, a large underexplored existing resource base and a management team that has a fresh exploration plan. Further, just like the design rate for Detour Gold increased to about 55,000 tons per day (50 Ktpd) from 30 Ktpd, Stifel is bumping up Troilus Gold’s projected milling rate to 25 Ktpd from consensus’ estimated 20 Ktpd.
Stifel’s noted that “as a single asset, multimillion ounce Canadian operation with a low permitting hurdle, Troilus Gold is a favorite under $2,000 Au.”
Disclosure: 1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Troilus Gold. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from Stifel GMP, Precious Metals, July 7, 2020
Important Disclosures and Certifications Each research analyst and associate research analyst who authored this document and whose name appears herein certifies that: (1) the recommendations and opinions expressed in the research report accurately reflect their personal views about any and all of the securities or issuers discussed herein that are within their coverage universe; and (2) no part of their compensation was, is or will be, directly or indirectly, related to the provision of specific recommendations or views expressed herein.
Company-Specific Disclosures: 1. Stifel Canada or an affiliate has, within the previous 12 months, provided paid investment banking services to the issuer. 2. Stifel or an affiliate act as corporate broker and/or adviser to the Company. 11. Stifel Canada or an affiliate managed or co-managed a public offering of securities for the subject company in the past 12 months.
Several public health agencies, such as state health departments, have invested resources in YouTube as a channel for health communication. Patients with chronic health conditions especially rely on social media, including YouTube videos, to learn more about how to manage their conditions.
But video recommendations on such sites could exacerbate preexisting disparities in health.
A significant fraction of the U.S. population is estimated to have limited health literacy, or the capacity to obtain, process and understand basic health information, such as the ability to read and comprehend prescription bottles, appointment slips or discharge instructions from health clinics.
I’m a professor of information systems, and my own research has examined how social media platforms such as YouTube widen such health literacy disparities by steering users toward questionable content.
On YouTube
Extracting thousands of videos purporting to be about diabetes, I verified whether the information shown conforms to valid medical guidelines.
Users typically encounter videos on health conditions through keyword searches on YouTube. YouTube then provides links to authenticated medical information, such as the top-ranked results. Several of these are produced by reputable health organizations.
However, when I recruited physicians to watch the videos and rate them on whether these would be considered valid and understandable from a patient education perspective, they rated YouTube’s recommendations poorly.
I found that the most popular videos are the ones that tend to have easily understandable information but are not always medically valid. A study on the most popular videos on COVID-19 likewise found that a quarter of videos did not contain medically valid information.
While videos from sources like the CDC might be the most informative, they are not always the most popular.
The health literacy divide
This is because the algorithms underlying recommendations on social media platforms are biased toward engagement and popularity.
Based on how digital platforms provide information to search queries, a user with greater health literacy is more likely to discover usable medical advice from a reputed health care provider, such as the Mayo Clinic. The same algorithm will steer a less literate user toward fake cures or misleading medical advice.
This could be especially harmful for minority groups. Studies of health literacy in the United States have found that the impact of limited health literacy disproportionately impacts minorities.
We do not have enough studies on the state of health literacy among minority populations, especially in urban areas. That makes it challenging to design health communication aimed at minorities, and interventions to improve the utilization of existing health care resources.
Correcting algorithmic biases and providing better information to users of technology platforms would go a long way in promoting equity.
For example, a pioneering study by the Gender Shades project examined disparities in identifying gender and skin type across different companies that provide commercial facial recognition software. It concluded that companies were able to make progress in reducing these disparities once issues were pointed out.
According to some estimates, Google receives over a billion health questions everyday. Especially those with low health literacy have a substantial risk of encountering medically unsubstantiated information, such as popular myths or active conspiracy theories that are not based on scientific evidence.
The World Economic Forum has dubbed health-related misinformation an “infodemic.” Digital platforms where anyone can engage also make them vulnerable to misinformation, accentuating disparities in health literacy, as my own work shows.
Maurice Jackson of Proven and Probable and the CEO of NV Gold discuss the company’s “step-out” into British Columbia, the headliners on its board and the news that will drive the stock in the coming months.
It’s a real pleasure to speak with you today to share the unique value proposition of NV Gold and to discuss the company’s latest project acquisition. Mr. Ball, for someone new to the story, please introduce NV Gold and the opportunity the company presents to the market.
Peter Ball: NV Gold is an exploration gold company focused on making gold discoveries in Nevada. What we’ve done is put together what we believe are some of the best technical minds in the industry. We’ve known each other for many years. We’re a very tight company. We own a lot of the shares in the company ourselves. We have a very low burn rate. One specific goal is to find gold, reward our shareholders and keep on moving forward.
Maurice: NV Gold has a very robust property bank with 16 projects located in Nevada that already have some of the most highly regarded names in the space, such as legendary investor Eric Sprott, committing millions of their capital into the company. But an opportunity has presented itself from British Columbia that looks to expand the upside potential even further for NV Gold. Mr. Ball, take us to British Columbia and introduce us to the Exodus Gold Project.
Peter Ball: This is a bit of a step-out for NV gold. Again, we’re focused in Nevada. But our technical team, of course, consists of Dr. Quinton Hennigh, who is world-renowned in some of his exploration activities and discoveries; we also have another gentleman, Dr. Odin Christensen, who used to head up the global exploration team for Newmont Corp. (NEM:NYSE) out of the U.S., and two other key individuals, John Watson, who’s made several projects into production and some additional other opportunities in the exploration field, and of course, Alf Stewart. Four highly technical geologists.
We always get presented with opportunities, and we’re always willing to look at what may assist the company to reward our shareholders.
At PDAC, one of the top exploration conferences in the world, we ran into a geologist. He had this exciting project, but it was in British Columbia. We’re looking at British Columbia, going, “Okay, well, hang on here. We’re in Nevada. Why would we ever go into British Columbia?”
Well, here we have a high-grade gold project sitting right next to a highway in an area never explored, with a logging road put right through the middle of it, and multiple vein systems are sitting right under a one to two meters of overburden. The road’s going to put in another 5, 6, 7, 10 kilometers through this area. No one’s been there.
We talked to the geologists, and for the last four months, we’ve been working on taking a look at this project. It’s an extensive gold mineral field that we’ve, to date, after reviewing the project, found multiple vein systems. It’s high-grade gold. They’ve done some trenching. They’ve done some soils since the project’s been at work for about three years. It’s interesting. We had to add it to our pipeline. Here we are.
Maurice: Just to confirm here, this is a greenfields exploration project that has existing infrastructure?
Peter Ball: Yes. It’s been in work since 2017, so there’s nothing around it. It consists of extensive infrastructure within 10 kilometers of a power line, within 40 kilometers of the city of Prince George, British Columbia.
This is interesting. This project in British Columbia we can work every day of the year. We could drive to the site. Some of the projects up in the Golden Triangle, you have to wait for spring to come in, and then you got to get out of there before September, October. We’re good all year-round.
Then there are several other good things about the project. There’s what we call an expiration tax credit we get, so for every dollar we spend, we get $0.30 back, so it’s going to help on minimizing the capital at the project. It’s going to be fun.
Maurice: It certainly sounds like it. Peter, I know that your team is very, very meticulous, and you have an outstanding repute for your business and geological acumen. Why is this an accretive transaction right for NV Gold shareholders, and why now?
Peter Ball: Looking at a project in Canada that we can work all year-round, and when the gold movement. . .whenever you see a project with this high-grade nature that is robustthe land position that comes with this project, I think, is over 110, 115 square kilometers, the packageit makes sense. We want what we can work. We want a project that could deliver a high-grade gold discovery.
We think we’re onto something. For example, from the discovery pit or trench, back in 2017, a new logging road was created over the last winter here 20192020. They did a little bit of exploration, walked a kilometer away, found another rock sample, looks interesting. . .Our guys took a look at it, and when Odie Christensen, Quinton Hennigh, John Watson, and Alf Stewart speak, I listen. I’m an engineer, not a geologist, so I go with them. Should be a good start.
Maurice: What are some of the key highlights of the Exodus gold project that has NV Gold excited?
Peter Ball: One of the main things is a brand-new area no one’s ever explored. It allows us to make a virgin discovery. We think we have this discovery from what the vendors that have let us acquire the project have done work over the last two years. When you find a project that has the infrastructure and access, basically next to a highway, basically next to the power lines, next to a community. . .and one of the key things is where, whenever you work on a project, anywhere in the world, you want to work closely with the First Nations and have some social responsibility in the communities.
We have initiated and have built a good relationship with the local First Nation group; from the vendors there is a good working history on the project over the last three years. Funny thing, I think about June 20, the access road to the project was called, or named, Minesite Road by the local First Nation corporation, which is fantastic. We can hopefully build a great relationship where everyone to have a win.
Maurice: That certainly sounds good. What can you share with us regarding the exploration model?
Peter Ball: What’s been happened to date so far is they’ve been a bit of trenching. They’ve done a few soils. They’ve done some rock sampling. They’ve done an initial looking around on the project over the last three years and delivered a lot of really good, interesting results.
It’s got a lot of the key indicators right now within the story, and what I mean by that is the arsenic and antimony relationship, directly with gold, is correlated perfectly. What you want to find in most gold deposits are some arsenic and antimony, and usually, if you find that, you can lead to some gold. The arsenic and antimony are through the roof, which means we’re onto what we believe a really good system.
The project is what I consider drill ready, but before the executing the drill program, which we believe will be exciting at the end of the summer, we’re going to do likely a property-wide geophysical program, because from evaluating the project over the last couple of, three years, with the vendors who’ve done a lot of work, there appears to be several key large structures and faults, and they happen to coincide directly across the center of the project, and we control it all. We control what we believe is the entire district.
So we’ll do property-wide geophysics. That’ll hopefully assist us in understanding some of the structures to target, or allow us to vector in later this summer for drilling. We’ll do some structural modeling. We’ll bring in some structure guys to take a look at what’s happening here. We’ll do also some comparative modeling to other projects around the world for what this may be. We’ll do some soils, and of course, a lot of trenching.
What I want to do is prep this project for a good program for the winter, and the good thing about this project, we can drill all year-round. We’re not going to stop after the first drill program. We can get back up there in January, February, and keep going right through the winter. It should be a busy year up there. We’re excited.
Maurice: Leaving the project site, let’s discuss your team, and this is an all-star cast. If you’re intrigued about the value proposition of NV Gold’s property bank, let’s introduce your team, because they’re comprised of legendary investors in geologists that have a proven pedigree of success. Let’s find out who they are, beginning with the CEO. Who is Peter Ball, and what makes him qualified for the task at hand?
Peter Ball: No one likes to talk about themselves, but a quick overview of myself, I consider that I’ve been in mining before I was born. My dad was in the mining industry and ran several mining projects. My uncle ran Homestake out of San Francisco, one of the largest gold companies in the world. My grandfather used to work in Africa. My other great-grandfather worked in South America, so it’s in my blood. I love it. I cannot wait to get up in the morning.
I went to school for engineering, so I’m not a geologist, but I took three or four years of this stuff. But I rely on our technical team, which is on our board. I’m an engineer, been in the industry, graduated mining school in 1989, worked for several large companies like Eldorado Gold, Hudson Bay Mining and Smelting, but have been around the juniors for the last number of years. I used to be a broker at RBC Dominion Securities, so kind of a diverse little background. Enough of me.
The main thing to talk about this company regarding our team is our board. The board has been togetherexcept for me and the new board member I brought on, Alf Stewartthe board’s been together since they founded the company because they’ve known each other for years. Their goal as friends was to get together, not to dilute the stock, put some money into their deal, and make the gold discovery, keep the burn rate low, find gold.
We’ll start with the chairman. The good thing about the chairman, the chairman is the largest shareholder of the company. He’s put every single dollar in the company. We didn’t give him free shares. He owns 6.5 million shares. He’s a geologist by trade. He’s been around the industry for 40 years. He is a master’s degree in geology from the Colorado School of Mines. Very smart man. Knows geology. Knows projects, so what’s good.
John Watson, the chairman, is the largest. Eric Sprott is the second largest. On the management team, I’m the third largest of the company and pretty much have the entire shareholder list. We put our money in there.
Let’s dive a little bit deeper into our technical team. Again, one of John Watson’s friendsthey’ve known each other for yearsis Dr. Quinton Hennigh. Quinton Hennigh is one of the most respected geologists in the industry. Currently, he is the chairman and president of Novo Resources Corp. (NVO:TSX.V; NSRPF:OTCQX). I think it’s about three-quarters of a billion dollars focused in Australia. If you don’t know him, google him.
He’s also one of the leading technical consultants for Irving Resources Inc. (IRV:CSE; IRVRF:OTCBB). He’s a technical leading consultant for Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX). He’s on several boards because everybody wants to have the opportunity to have him on hand, and he takes ownership of his participation role in NV Gold. Again, he likes the project in BC. He likes the projects in Nevada. He’s always accessible and a great person to have on the board.
Next layer, Dr. Odie Christensen, ex-chief, senior chief geologist globally for Newmont. He led and assisted Newmont globally on expiration projects. He has a PhD from Stanford. He knows his projects. One of the most respected men in North America when evaluating, looking or helping to assist move projects.
Thirdly, Alf Stewart. When I joined the company, I was a board member for a couple of years, but then John asked me to come on and be president/CEO and bring some more energy and get the company ready for the gold market. Alf Stewart is a geologist also, by trade, but he used to be an investment banker, which is great for the capital markets. He used to be one of the leading brokers in Canada, and he used to be head of corporate compliance for the Vancouver Stock Exchange.
In other words, we also wanted Alf to come on board for corporate governance and audit and to make sure everything’s always running smoothly on the financials, and for our compliance and disclosure purposes to our shareholders.
Maurice: I’m smiling and shaking my head here. These are all wealth builders. I don’t know how you’re able to assemble this team, but kudos on you, sir.
Peter Ball: Well, thank you. They’re great. They are great.
Maurice: Who will be carrying out the commercial and technical work?
Peter Ball: Right now, the interesting thing about the project, if we’re talking specifically about British Columbia, the vendors that we are working and have signed an agreement to acquire the project from, are top geologists, very smart. What we’ve come to agree on is that I want them to help us. They know the project. They’ve been on the project for three years. They’re not going away. They’re not going to leave us stranded. They are going to be there from the first moment when we start to get going on the project here in the next couple of weeks. The permits are in place for trenching and exploration work. We’re finalizing the drilling permits.
So we’re going to have them, and also we’ll bring in a few other consultants. This is a consultant-driven property project. As we get into the geophysics, we’ll hire a physical team and go from there through the summer, and help minimize the burn. We don’t want to just hire a bunch of people and waste our capital. Every part of this project will require specific key professionals, and we’ll engage them at that time.
Maurice: Let’s look at some numbers. Mr. Ball, please provide us with the current capital structure for NV Gold.
Peter Ball: As we run through the share structure, we currently have about 54 million shares outstanding. Then the next part of it, we have the warrants. We have 9 million warrants outstanding. They’re all at $0.20. What that means is they’re all in the money. I think we’re trading in the high 20s, $0.27, $0.28 recently. All the money’s in the warrant, so we have approximately $2 million of the warrants in the money. Options are about 4.5 million, and they’re allocated according to the consultants or part of the team as we do it.
The last two options that we issued to the management team were at a premium to the market. The last one, issued about a month, two months ago, was at a 25% premium. We didn’t try and discount it for ourselves. The one before that, I believe, was issued at a 40% premium.
In other words, we’ve got targets to get to. We didn’t want to get a bunch of cheap shares. If we’re going to get options like most companies, let’s put them at a premium. Let’s hit a goal.
So outstanding, fully diluted if you include the 54 issued, the 9 million warrants that are all in the money, and the options, we have a total of 68 million shares outstanding. Again, as we mentioned, the top shareholders are not only the chairman, not only Eric Sprott, not only myself, but we have some industry investors out there like a good friend of mine Bob Moriarty.
Maurice: Yes.
Peter Ball: Bob Moriarty has put a lot of money in this company. He knows our team. He believes in our team. Again, he understands our goal is to find it, make a discovery. I guess we’ll hopefully make him a lot of money. It’s good to have Bob as a shareholder.
Maurice: Very commendable on the responsible action on the options there. You had a spike this week in the share price. Any comments?
Peter Ball: Yeah, it’s interesting. The markets pushed here over the last few weeks up to the highest price in Canadian history for gold at US$1,800 US or CA$2,2002,300, whatever the math is. That was one of the reasons.
The market does believe or understand that we are moving into our summer exploration. If you go to our website and under investors area, there’s the bottom tab, we have a quick facts area. It shows each year we’ve had really good success in looking for projects, and our stock price goes up. We’re just starting to get the summer program started.
In Nevada, before this British Columbia project, which will hopefully bring some eyes to the story today, is the fact that we have two projects, which is called Slumber Gold Project and another project called Sandy. Both are ready for the summer. Both we anticipate looking to do a drill program on.
Out of those two, I want to focus on, just one for a second, our Sandy Gold Project, just over to the southeast of Reno, Nevada. We have a big database. We went into the database, found a project. No one had it. We staked it for basicallywe acquired it for staking costs. Think it cost us $2,000. Got a good land package based on there was some historical drilling that had good results on it. We staked it.
The next day, a group called Eclipse Gold Mining (EGLD:TSX.V], run by a very reputable group, ended up staking the entire valley the same day we were, except we got our piece first.
A couple of weeks ago, they drilled their project, and they had some good results, but who’s sitting right next to the right, inside their claim block, is our Sandy project. Here we are sitting with an interesting project we got for free. We’re going to take a little look at this one, because it’s sitting right next to their drills. I think that brought some eyes to our story of what’s happening at Sandy.
Maurice: What is the float?
Peter Ball: If you start adding up, out of our entire 54 million shares, I would probably say 30% or 40% is probably the float right now. It’s a very tightly held, controlled company, a lot of investors in our story. Some play for the summer, but a lot of our shareholders are in for the long run.
Again, a lot of the shares are controlled by us, by key people, by key brokers, by key fund managers. We recently had two groups, one out of Boston, in the United States, and one out of Denver, Colorado, pick up a significant portion of our stock, based, again, on our management team, on our structure and our recent financing. We are pleased to have these new groups. These groups are here for the long run.
Our team has expertise. They have experience. They have previous discoveries. People buy our stock for that opportunity.
Maurice: How much cash do you have in the treasury?
Peter Ball: Well, I would say we probably have just over $1 million in the treasury. We just recently completed our financing. We’re fully funded for our Nevada story. We can look at a potentialwhich we haven’t discussed yetpotential flow-through financing, which we historically know you can do at a premium, and the flow-through dollars would be allocated toward British Columbia, which got a lot of interest in our story. So that’s something we’ll look at, but again, otherwise, we’ve got enough cash because we don’t have an office. We don’t fly in fancy planes. We don’t stay in fancy hotels, and really, there’s hardly anybody on the payroll. When we get active, the burn rate goes up, but our burn rate is extremely low.
Maurice: Which was one of my next questions: what is the burn ratebut you addressed that. How about this: how much debt do you have?
Peter Ball: Zero. My goal, whenever running a company, our payables are paid every two weeks. We don’t hold people off on the bills that we get from people. We have no debt.
Maurice: Well, Mr. Ball, I’ve heard nothing but virtues. I haven’t heard one vice yet. All right. Looking forward, multilayered question: What is the next unanswered question for NV Gold? When can we expect a response, and what determines success?
Peter Ball: Good questions, Maurice. This is going to be a very busy exploration a year for NV Gold. Let’s talk a little bit about Nevada, and we’ll dive into BC.
Next thing’s going on in Nevada, we are focused on getting our Slumber Gold Project through what we call the CSAMT survey, which is going to help us vector in and allow us to have our drill program better positioned in August. In July, geophysical survey is likely for Slumber, and we push into August for a potential drill program at Slumber.
Also in Nevada, I mentioned Sandy a few minutes ago. Sandy’s on our radar. We want to stick a few holes in there and maybe do also a CSAMT survey, so we’ll allocate that also for the summer. A lot of news flow on that and mobilizing and preparing for the season in Nevada.
Again, one last thingin Nevada, we have several projects. NV Gold is focused on drilling two to three projects a year, and we dive into our portfolio, our data bank, grab another project, and we’ll do that in another year. We own 100% of them all. We do have some interest in some potential sales of assets to other mining companies, so we’re working on that, so they may add a little bit of extra news flow.
Moving up into BC: BC’s going to go pretty quick. We’re going to look to get on the site here very shortly in July. We’ll be doing site-wide geophysics. We’ll be doing soils, structural review, and again, modeling to lead up to what we will believe a drill program in the latter part of the summerlikely September. We’ll get results from that project probably in October, November, and get the drill rig turning.
Our goal, or my goal, when I spoke to the vendor, is at PDAC next year, in Toronto, which is the Prospectors Developers Association in Canada, is to have drill core highlighting what we believe is the next big discovery in British Columbia.
The great thing about this projectI ran into the vendor at PDAC in March accidentally. He looked like a geologist. I asked him what he had, and he said, “Well, I got a project.” Took a look at the project. Here we are today. I should have never run into him because he was looking for somebody else, with a much bigger name than mine, but I got him, and we’re excited.
Maurice: It was destined to happen.
Peter Ball: Absolutely. Yes.
Maurice: What keeps you up at night that we don’t know about?
Peter Ball: I don’t know. I mean, as a shareholder, large shareholder, of NV Gold myself, my number one goal is to work hard to ensure that we deliver value for our shareholders. I love the market. I wake up at 4:00 a.m., get ready. I’m taking calls from Europe first thing, and I’m into Toronto. I want action on our company. I want to deliver. I do not want to over-promise. I just want to deliver, so every night, going to bed, I can’t wait to get up the next day and see what we can get done.
I’m here for the energy for the company. I got a great technical team. The gold market is strong. We know cycles come and go. I believe that we’re into a good, robust sector for the next couple of, three, years. I believe we’re going to get close to the $2,000/ounce mark or more. The market mentality wants us to go there, so we’re going to get there, and then we’ll see what happens after that. I’ve been in the industry for 30 years myself. I’ve seen a few cycles, and when it’s hot, you got to hit it and get going.
Maurice: These are mutual ethos that we subscribe to here at Proven and Probable. Peter, last question. What did I forget to ask?
Peter Ball: I don’t think you forgot to ask anything.
Maurice: Mr. Ball, if investors want to get more information about NV Gold, please share the contact details.
Peter Ball: Absolutely. My e-mail is [email protected] or you may call me at 1 (888) 363-9883.
Maurice: Mr. Ball, it’s been an absolute delight to have you on the program. Wishing you and NV Gold the absolute best, sir.
NV Gold trades on the (TSX.V: GVX | OTC: GLVLF). NV Gold is a sponsor of Proven and Probable, and we are proud shareholders for the virtues conveyed in today’s message.
Before you make your next bullion purchase, make sure you call me. I’m a licensed representative for Miles Franklin Precious Metals Investments, where we have several options to expand your precious metals portfolio. From physical delivery, off-shore depositories, and precious metal IRAs. Call me at (855) 505-1900, or you may e-mail [email protected]. Finally, please subscribe to Proven and Probable for mining insights and bullion sales. Subscription is free.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
Disclosure: 1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: NV Gold. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: NV Gold is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Lion One. Click here for important disclosures about sponsor fees. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Newmont, Irving Resources and Lion One, companies mentioned in this article.
Disclosures for Proven and Probable: Proven and Probable LLC receives financial compensation from its sponsors. The compensation is used is to fund both sponsor-specific activities and general report activities, website, and general and administrative costs. Sponsor-specific activities may include aggregating content and publishing that content on the Proven and Probable website, creating and maintaining company landing pages, interviewing key management, posting a banner/billboard, and/or issuing press releases. The fees also cover the costs for Proven and Probable to publish sector-specific information on our site, and also to create content by interviewing experts in the sector. Monthly sponsorship fees range from $1,000 to $4,000 per month. Proven and Probable LLC does accept stock for payment of sponsorship fees. Sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
The Information presented in Proven and Probable is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. You should not make any decision, financial, investments, trading or otherwise, based on any of the information presented on this forum without undertaking independent due diligence and consultation with a professional broker or competent financial advisor. You understand that you are using any and all Information available on or through this forum at your own risk.
– Putting a price on carbon should reduce emissions, because it makes dirty production processes more expensive than clean ones, right?
That’s the economic theory. Stated baldly, it’s obvious, but there is perhaps a tiny chance that what happens in practice might be something else.
In a newly-published paper, we set out the results of the largest-ever study of what happens to emissions from fuel combustion when they attract a charge.
We analysed data for 142 countries over more than two decades, 43 of which had a carbon price of some form by the end of the study period.
The results show that countries with carbon prices on average have annual carbon dioxide emissions growth rates that are about two percentage points lower than countries without a carbon price, after taking many other factors into account.
By way of context, the average annual emissions growth rate for the 142 countries was about 2% per year.
This size of effect adds up to very large differences over time. It is often enough to make the difference between a country having a rising or a declining emissions trajectory.
Emissions tend to fall in countries with carbon prices
A quick look at the data gives a first clue.
The figure below shows countries that had a carbon price in 2007 as a black triangle, and countries that did not as a green circle.
On average, carbon dioxide emissions fell by 2% per year over 2007–2017 in countries with a carbon price in 2007 and increased by 3% per year in the others.
Carbon dioxide emissions growth in countries with and without a carbon price in 2007
Emissions are from fuel combustion and include road-sector emissions. Best, Burke, Jotzo 2020
The difference between an increase of 3% per year and a decrease of 2% per year is five percentage points. Our study finds that about two percentage points of that are due to the carbon price, with the remainder due to other factors.
The challenge was pinning down the extent to which the change was due to the implementation of a carbon price and the extent to which it was due to a raft of other things happening at the same time, including improving technologies, population and economic growth, economic shocks, measures to support renewables and differences in fuel tax rates.
We controlled for a long list of other factors, including the use of other policy instruments.
It would be reasonable to expect a higher carbon price to have bigger effects, and this is indeed what we found.
On average an extra euro per tonne of carbon dioxide price is associated with a lowering in the annual emissions growth rate in the sectors it covers of about 0.3 percentage points.
Lessons for Australia
The message to governments is that carbon pricing almost certainly works, and typically to great effect.
While a well-designed approach to reducing emissions would include other complementary policies such as regulations in some sectors and support for low-carbon research and development, carbon pricing should ideally be the centrepiece of the effort.
Unfortunately, the politics of carbon pricing have been highly poisoned in Australia, despite it being popular in a number of countries with conservative governments including Britain and Germany. Even Australia’s Labor opposition seems to have given up.
Nevertheless, it should be remembered that Australia’s two-year experiment with carbon pricing delivered emissions reductions as the economy grew. It was working as designed.
Groups such as the Business Council of Australia that welcomed the abolition of the carbon price back in 2014 are now calling for an effective climate policy with a price signal at its heart.
Carbon pricing elsewhere
The results of our study are highly relevant to many governments, especially those in industrialising and developing countries, that are weighing up their options.
The world’s top economics organisations including the International Monetary Fund, the World Bank and the Organisation for Economic Co-operation and Development continue to call for expanded use of carbon pricing.
If countries are keen on a low-carbon development model, the evidence suggests that putting an appropriate price on carbon is a very effective way of achieving it.
An open-access version of this research is available here.
David Cole, CEO of EMX Royalty, sits down with Maurice Jackson of Proven and Probable to discuss the dynamic value proposition the royalty generator presents to the market.
Mr. Cole, as a very proud shareholder, let me be the first to say congratulations, as EMX Royalty recently rewarded shareholders with a nine-year high. What an accomplishment.
David Cole: Thank you. We have 6X’d the stock price in the last four and a half years. It’s good to see the market recognize the portfolio growth.
Maurice Jackson: Let’s discover what distinguishes EMX Royalty and why, for the second year in a row, I plan to match my bullion purchases with shares in the royalty generator. Mr. Cole, for someone new to EMX Royalty, please introduce the business model and the opportunity the company presents to the market.
David Cole: It’s always good to focus on the business model of EMX Royalty Corp. because it is different than our royalty company peers. The bulk of the royalties in our portfolio were generated using the royalty generation method, which is the prospect generation business model focused on the royalty component.
We acquire large tracks of prospective mineral rights around the world utilizing our geologic talent, add value by building up geologic models to illustrate the prospectiveness, sell those onto an industry that’s hungry for new discovery opportunities for a combination of cash, shares, work commitments, annual payments, and always a royalty on the back-end.
We’ve been doing this now successfully for 17 years. We’ve sold 46 projects, created 46 new royalties, just in the last two and a half years, as an example.
The one thing that I’m proud of about EMX is the deal flow that we have on the generative side, through that royalty generation methodology.
But we don’t stop there. We also buy royalties to augment that portfolio and the integration of generating royalties, utilizing our geological expertise, and having those same entrepreneurial geologists identify royalty acquisition opportunities is very powerful. Some of the key royalties we have in our portfolio we were able to acquire because we found out about it and because we had feet on the ground and ears to the railroad tracks.
The third thing that we do to round out our unique business approach is to make strategic investments, where that same team of entrepreneurs is identifying strategic investment opportunities. Our return on invested capital on our 17-year history is a 40% internal rate of return on invested capital. It’s fantastic. That’s helped maintain our treasury throughout our history, puts us in a situation today where we have nearly as much money in the bank as all the money we have raised in the history of the company, plus 150-some mineral property positions around the world.
Let’s visit some of your projects and find out the latest details that have shareholders excited, beginning in Turkey. Take us to the Balya lead-zinc-silver property and provide us with some background on the transaction. When does EMX Royalty expect to start seeing a sizable royalty payment from the property, and what kind of cash flow are you expecting?
David Cole: That’s a good question, Maurice. We’ve been in Turkey for a long time. We cycled through over 250 licenses in that country, executing our business model, and three mines are being built and constructed on our properties where we have royalties. The most important one is the Balya, as you are highlighting. That one goes into full-scale commercial production in late 2020, so another five months from now. It might go a little over into the first quarter of 2021, but it’s expected to ramp up into 2022 into full production. A 5,000-ton-per-day mill has been constructed, and we’re very excited about this.
We expect to see multiple millions of dollars per annum and cash flow up to 4.5%, depending upon throughput and lead-zinc-silver prices from this asset. This asset alone, which has organically grown through the royalty generation model, will be worth more money than all the money that I’ve spent in royalty generation in the history of the company. It speaks volumes to the astute allocation of capital and intellect that royalty generation is.
Maurice Jackson: If you like the numbers on the Balya, wait till you hear about the Timok copper-gold mine in Serbia. Ladies and gentlemen, this project is a monster. Mr. Cole, provide us with an overview of the Timok and what can shareholders expect to see regarding cash flow in the treasury here?
David Cole: The Timok is the monster in the portfolio, and you mentioned that royalties are phenomenal financial instruments. That’s because of their embedded optionality to the royalty holder that comes at no cost to the royalty holder.
We own a portfolio of royalties in the Timok Magmatic Complex in Serbia, which is Europe’s largest historical copper and gold-producing region and the site of one of the most significant copper and gold development stories on the planet, now being advanced by Zijin, a Chinese company, which has signed a memorandum of understanding with the Serbian government to invest $474 million to put into production the upper high-grade portion of a big deposit that they have found there.
We have a royalty that covers the upper zone as well as the lower zone. In the upper zone, according to the bankable feasibility study that was filed, we will see royalty income flow around $2.5 million per year at prevailing copper and gold prices. However, when they get into the lower zone, which is huge, Maurice, it’s a 1.7 billion-ton resource at 0.86% copper and 0.18 grams-per-ton gold and we have a one-half of 1% royalty on that. You can do the math.
It’s worth a whole lot of money, and that’s the company-making royalty in our portfolio. Not to speak poorly on any of the other royalty assets we have, but this one stands out as an absolute company-maker. We’re very pleased to have the exposure that those are both commodities that we like, and thanks to the most important part of royalty optionality, which is discovery, 12 drill rigs are turning on that property, continuing to delineate more resources to our benefit.
Maurice Jackson: Moving to the United States, take us to the Rawhide gold-silver mine, which is in the Walker Lane gold-silver belt of Nevada. What sort of annual cash flow are you expecting from that investment now and looking into the future?
David Cole: That’s an interesting one. This falls in the strategic investment camp, it’s not royalty. We bought those shares and we’re contributing to gain intellectually, as well as financially, to the success of this mining operation.
We own 19.9% of the private company that is in production, producing gold, currently producing about a hundred ounces of gold equivalent doré per day to double production with the permits that we have in hand to increase our crushing capacity there. We’re very bullish concerning cash flows. We do have a 43-101 report that is in progress and once that’s completed, then I can give specific details about our anticipated cash flow from the property.
But we do expect this investment to have a healthy internal rate of return. We bought that at $1,400 gold and modeled it at $1,400 gold, we mined that model in $1,350, it was a great investment. At $1,750, it’s an absolute cash cow. This will be another multimillion dollar-per-year dividend-paying asset that we have on our books.
Maurice Jackson: Moving up to Alaska, where EMX consummated a strategic investment a year ago that looks very promising in Millrock Resources on the 64North Project, what are the terms on the deal, and do you have any updates for our shareholders?
David Cole: That’s a really good deal. It’s a win-win. We think Millrock is doing a fabulous job. Greg Beischer is running a great ship there. They’ve got their hands on a tiger of a district. We’re very, very pleased with the work they’re doing. We’re happy that we were able to make a positive contribution.
The structure of the deal from EMX’s standpoint is that we invested money into share equity in Millrock and also purchased a block of royalties covering grounds in that district from them and put royalties onto projects that they had to help give them the money to be able to advance that forward, attract a good partner. Now they’ve got drill steel going in the ground and they’re hitting great geology.
Because of the move in the gold price augmentation in the capital markets on the natural resource side, as well as the very favorable geologic indicators that are coming out of the project, their shares have done very, very well. So by the time you factor in the increase in share value, those royalties have a negative cost basis to EMX. So we’re very, very, very pleased. We’re happy to have that optionality of owning the shares in Millrock in addition to 235,000 acre-percent, that’s our percent royalty times acres of which they are applied to, in the Goodpaster district around the Pogo mine.
Maurice Jackson: Speaking of another strategic investment, back in February, EMX Royalty made another remarkable transaction with Ensero Solutions. Can you walk us through, and what is this all about?
David Cole: This is another example of EMX thinking laterally and Ensero Solutions, if they’re anything, they’re just aqueous chemist geniuses. These guys have figured out methodologies for treating acid mine drainage incredibly well and inexpensively, making them very popular with people who are concerned about the environment. They also facilitate social license, and they have a track record of unlocking the mineral value of properties.
We help take them private. They were in a public company, Alexco, where they had an excellent beginning and a huge success story at the Keno Hill property in the Yukon. We provided the funds for them to go private, became a 7.5% equity holder in the company, and also have a preferred share that’s structured similar to a loan, where we put in $3.8 million, you get paid back $8.5 million over seven years, so it’s nice continued income flow immediately into EMX.
But the most important part of the whole deal is that we have a regional strategic alliance to find environmentally encumbered assets with high prospectivity to come in and solve the environmental problems and unlock the mineral potential. We see several different key assets in the West where we can accomplish this.
Maurice Jackson: Switching gears, let’s look at some numbers. Mr. Cole, please provide us with the current capital structure for EMX Royalty.
David Cole: it’s pretty simple and pretty good. We’re sitting here with plus US$45 million in cash, plus US$50 million in working capital and no debt.
Maurice Jackson: Speaking of the cash, what are your plans for that big pile of capital?
David Cole: So we’re going to continue to do what we’ve always done and that’s execute our three-pronged approach and we are continuing to fund our generative business, which is our bread and butter. That’s where the ideas come from for the strategic investments, and that’s where the opportunities come from to buy royalties.
Now, with more money in the bank, we can lever up our strategic investing and royalty purchasing, but not at the expense of our royalty generation business. That’s our core.
Maurice Jackson: Looking forward, multilayered question, what is the next unanswered question for EMX Royalty? When can we expect a response, and what determines success?
David Cole: Well, ultimately success is us continuing to ramp up the value of our portfolio, ramp up cash flow, and see the market recognize that and move our share price forward. I believe that our share price has lagged the growth of the portfolio in the recent past. We’re in the process of people starting to wake up and realize that, realize that we’re sitting on assets, such as the Timok project in Serbia, at the Leeville royalty in Nevada, operated now by Barrick where they’re finding a lot of gold. All these things cumulating up to a portfolio that is enhancing in value continually thanks to the positive optionality of these phenomenal financial instruments.
This is a buy-and-hold business model, and you’ve seen my insider trades, Maurice. You know I’ve been buying for seven years now.
Maurice Jackson: Yes.
David Cole: I haven’t sold shares of stock. I’ve been exercising my options holding them, been buying now at the open market. I accumulated roughly 200,000 shares during the COVID dip, as an example, and ultimately it’s going to be better market recognition of an enhanced value of our portfolio.
Maurice Jackson: Last question, sir. What did I forget to ask?
David Cole: Well, you’re always pretty good at covering things, Maurice, so let me think about that for a second. You always ask me that, so I should always have one on the sidelines.
Maurice Jackson: Well, how about this, has anyone told you that you look like David Letterman?
David Cole: I have heard that before. I had somebody come up to me on the streets of New York and just getting ready to ask me for an autograph and then I think they realized that I was probably a few years younger. But I need to come up with some good David Letterman lines.
Maurice Jackson: Well, one question I forgot to ask is, can you just share with us what is the prime objective of what you’re looking for, the minerals that you’re looking for in the global portfolio?
David Cole: We’ve always loved copper and gold, and we have a lot of geological expertise and our whole business premise starts with people. We have strategic advantage because of their intellect and their experience and then we build on that concerning the business model. We have a lot of geological expertise around the geological trench that hosts copper and gold deposits and a growing amount of expertise around polymetallic systems, volcanogenic massive sulfides.
We do believe that it behooves us to be exposed to copper-cobalt-nickel-PGEs, lead, zinc, other metals as well. So we’re happy to have a diversified portfolio focused on dominantly metal commodities.
Maurice Jackson: Mr. Cole, if someone wants to get more information on EMX Royalty, please share the website address.
Maurice Jackson: Mr. Cole, it’s always a pleasure, and I look forward to speaking to you in the very near future. Wishing you and EMX Royalty the absolute best, sir.
EMX Royalty trades on the (TSX.V: EMX | NYSE: EMX). EMX Royalty is a sponsor of Proven and Probable and we are proud shareholders for the virtues conveyed in today’s message.
Before you make your next bullion purchase, make sure you call me. I’m a licensed representative for Miles Franklin Precious Metals Investments, where we have several options to expand your precious metals portfolio. From physical delivery, off-shore depositories, and precious metal IRAs. Call me at (855) 505-1900, or you may e-mail [email protected]. Finally, please subscribe to Proven and Probable for mining insights and bullion sales. Subscription is free.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
Disclosure: 1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: EMX Royalty and Millrock Resources. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: EMX Royalty and Millrock Resources are sponsors of Proven and Probable. Proven and Probable disclosures are listed below. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of EMX Royalty and Millrock Resources, companies mentioned in this article.
Disclosures for Proven and Probable: Proven and Probable LLC receives financial compensation from its sponsors. The compensation is used is to fund both sponsor-specific activities and general report activities, website, and general and administrative costs. Sponsor-specific activities may include aggregating content and publishing that content on the Proven and Probable website, creating and maintaining company landing pages, interviewing key management, posting a banner/billboard, and/or issuing press releases. The fees also cover the costs for Proven and Probable to publish sector-specific information on our site, and also to create content by interviewing experts in the sector. Monthly sponsorship fees range from $1,000 to $4,000 per month. Proven and Probable LLC does accept stock for payment of sponsorship fees. Sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
The Information presented in Proven and Probable is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. You should not make any decision, financial, investments, trading or otherwise, based on any of the information presented on this forum without undertaking independent due diligence and consultation with a professional broker or competent financial advisor. You understand that you are using any and all Information available on or through this forum at your own risk.
It’s a busy week with a plethora of central bank meetings, rebounding data releases and an EU summit. But the pandemic looms over everything still as US virus hotspots appear to be forcing some states into more stringent lockdown measures once again.
Throw in some US-China geopolitical concerns around South China Sea claims and the markets are under the weather with US stocks opening in the red, but off their pre-market lows so far. US CPI increased in line with estimates, rebounding after three straight monthly declines, but still remains subdued.
GBP is the weakest major on the day as GDP disappointed and a new post-Brexit trade report is suggesting mountains of red tape in the months ahead – clearly a potential drag on sterling moving forward, with the risk of a no-deal still on the table.
EUR summit in focus
The single currency is the major currency outperformer today, as EUR/USD looks to make its way to the June high at 1.1422. Markets are clearly expecting big things from Thursday’s ECB meeting (Lagarde to be less dovish?) and the EU leaders gathering at the end of the week to discuss the Recovery Fund.
Sentiment is evidently constructive, and the world’s most traded currency pair is now just above short-term resistance around 1.1370, which has limited EUR upside over the last few sessions. Key support lies at the trend lines around 1.1275/80 with the pair well bid on dips.
Positioning wise, the Euro is still the most overbought major, but is not stretched so even though positive developments are expected, it is feasible that the EUR could break to new highs on a good outcome. Of course, the market may be left frustrated if the latter part of the week disappoints.
EUR/CAD breaking out of range
Similar to its big brother above, this pair is grinding higher after what looks like a break through the recent peaks around 1.5450. Trend strength oscillators are bullish and having consolidated in a range for over three months since April, prices could potentially see an explosive move higher.
The May high at 1.5533 is the next major target, before testing the 1.58-1.61 range. A false break will see prices back into the most recent range. The market retains a sizeable short in CAD, reflecting the underlying bearish sentiment.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
– The resurgence of COVID-19 in the United States is paving the way to a debt record, even relative to government debt at the end of World War II. The collateral damage in global recovery will be significant.
The delays and containment failures of the COVID-19 in major advanced economies, particularly the United States, are morphing into a faster-than-expected series of economic challenges, including debt crises.
Only two quarters ago, US federal debt hovered around $23 trillion; a stunning 106% as percentage of the GDP. Today – after barely two quarters – that debt is close to $27 trillion (Figure 1). Moreover, as US GDP has drastically contracted, the debt-to-GDP ratio is now closer to 133%; higher than that of Italy in 2018, or Greece prior to its debt crisis in 2010.
But unlike Italy or Greece, US is one of the global anchor economies. Consequently, spillover effects will ensue. Furthermore, both US government debt and the debt-to-GDP ratio will continue to climb.
Figure 1US Government Debt and US Coronavirus cases
Failures in COVID-19 containment translates to…
In early spring, the epicenter of the COVID-19 moved to Western Europe. Then, it exploded in North America. Today, it is rapidly spreading in emerging and developing economies, while accelerating in the United States, again.
The spread in poorer economies was widely expected; the resurgence in the US was a concern, but mainly in late fall 2020 or early spring 2021. Now it is a reality.
The reasons are well known: Despite knowledge about the new coronavirus already on January 3, the Trump administration did not mobilize against it. When the WHO launched its international alert on January 30, that did not result in effective mobilization either. After the WHO finally issued the pandemic alert, the Trump White House began mobilization, but belatedly and ineffectively.
Due to poor crisis leadership and premature exits, the administration is now struggling with the COVID-19 resurgence, while similar failures and spillovers have turned the Americas into the largest regional COVID-19 epicenter (Figure).
Figure 2Confirmed COVID-19 Cases by Regions, through July 11, 2020
Source: WHO
There was nothing inevitable about this trajectory. In January, first virus cases surfaced in both the US and Canada. The former delayed an effective response; the latter mobilized more effectively. By mid-July, US will have close to 3.5 million cases and almost 140,000 deaths; in Canada, the comparable figures are likely to remain lower than 110,000 and below 9,000, respectively.
Due to the central role of the US in the global economy, the pandemic failure will severely compound collateral economic damage – including the coming debt crises.
Federal debt surpassing WWII record
In the past two quarters, the early economic defense has been by the major central banks to cut down the rates, inject liquidity and re-start major asset purchases. Moreover, a rare bipartisan consensus allowed the Congress to pass the $3 trillion stimulus to avoid a more severe collapse in the spring. But another package will be needed later in the summer.
Once again, major advanced economies are hoarding new debt to defuse short-term economic challenges, which will drastically worsen their longer-term debt challenges.
Following the 2008 contraction, US debt-ceiling crisis climaxed in fall 2011. That’s when federal debt was still $14 trillion; now it has almost doubled (!) to $27 trillion.
At the end of World War II, US federal debt-to-GDP ratio was almost 120%. Thanks to the secular growth potential in the US and global recovery, it was reduced relatively fast. Today US debt-to-GDP ratio – if real-time data were to be included – has likely surpassed the wartime record, but in peacetime conditions (Figure).
Figure 3US Federal Debt surpasses WWII record
US economy was in secular stagnation already before the coronavirus contraction. Consequently, it lacks long-term growth potential to reduce that debt. Moreover, the volume of federal debt will continue to climb, and so will the debt-to-GDP ratio.
What are some of the effective implications?
The great coronavirus contraction just got worse
Only a few weeks ago, I projected US second-quarter decline to be a historical -33%. Now, thanks to the COVID-19 resurgence, that contraction could be closer to -53%.
Prior to the COVID-19 resurgence, many observers hoped that US economy had bottomed out in May, which would have kept the full-year contraction at about 5.0%. That’s no longer in the cards. In reality, the plunge could amount to -8% to -9%.
Thanks to the pandemic resurgence, US recovery is likely to prove slower than anticipated. Not only will the recovery linger, it is likely to prove more fragile than anticipated, due to concerns for new COVID-19 waves in the fall and uncertainty about when an effective vaccine, therapies, or both will be available.
Those who hoped US unemployment would remain below 8% may be frustrated. The lingering recovery may keep unemployment rate close to 9% at the year-end, and it may not return to pre-crisis levels until the end of 2023; if even then. In a downside scenario, it would remain closer to 10% in 2020 and improve more slowly.
Despite the jobs liftoff in May, some 20 million jobs have been lost since the pandemic. Many of those jobs may be gone. And since small businesses, which have benefited from the new PPP (Paycheck Protection Program) loans, are obligated to rehire only 60% of their pre-crisis workforce, adequate incentives for full employment are missing.
Thanks to the misguided trade wars plus the coronavirus contraction, trade volumes have collapsed. In turn, a new flare-up of trade tensions – since President Trump has now ruled out a Phase 2 truce – will suppress private investment. That, in turn, will penalize business and residential investment severely
Yet, there was nothing inevitable in the current trajectory that heralds a historical debt crisis in America. It was paved with policy mistakes and unipolar arrogance. It could be corrected with right policies and multilateral cooperation.
Misaligned with all economic realities of ordinary Americans, the White House’s ideological blindness is the fastest way to a historical failure.
About the Author:
Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net
As we can see in the H4 chart, the pair is still forming the ascending channel. After forming a Harami pattern, EURUSD is reversing. Considering the current bullish dynamics, the price may finish the correction and then resume trading upwards to reach the resistance level at 1.1420. At the same time, an alternative scenario implies that the instrument may continue falling to return to 1.1300.
USDJPY, “US Dollar vs. Japanese Yen”
As we can see in the H4 chart, after forming a Hammer pattern not far from the support area, USDJPY has started reversing. At the moment, the pair is moving upwards. The current situation implies that after a slight correction the market may resume the ascending tendency towards the resistance level at 108.08. Still, there is an opposite scenario, which says that the instrument may fall and return to 106.67.
EURGBP, “Euro vs. Great Britain Pound”
As we can see in the H4 chart, the pair is moving inside the rising channel again. By now, EURGBP has completed a Harami pattern, which may signal a new correction. After the correction, the price may resume moving to reach its upside target at 0.9120. In the future, the instrument may continue trading upwards to update the highs. However, there might be another scenario, according to which the asset may correct towards the support level at 0.8989.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
EURGBP is trading at 0.9043; the instrument is moving inside Ichimoku Cloud, thus indicating a sideways tendency. The markets could indicate that the price may test the cloud’s downside border at 0.8995 and then resume moving upwards to reach 0.9135. Another signal in favor of further uptrend will be a rebound from the descending channel’s upside border. However, the bullish scenario may be canceled if the price breaks the cloud’s downside border and fixes below 0.8955. In this case, the pair may continue falling towards 0.8905. To confirm further growth, the asset must break the cloud’s upside border and fix above 0.9080, thus indicating a completion of a Head & Shoulders reversal pattern.
BTCUSD, “Bitcoin vs US Dollar”
BTCUSD is trading at 9157.00; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Tenkan-Sen and Kijun-Sen at 9205.00 and then resume moving downwards to reach 8905.00. Another signal in favor of further downtrend will be a rebound from the rising channel’s downside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 9325.00. In this case, the pair may continue growing towards 9645.00.
GBPUSD, “Great Britain Pound vs US Dollar”
GBPUSD is trading at 1.2542; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Tenkan-Sen and Kijun-Sen at 1.2575 and then resume moving downwards to reach 1.2430. Another signal in favor of further downtrend will be a rebound from the downside border of a Double Top reversal pattern. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 1.2640. In this case, the pair may continue growing towards 1.2730.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
