We’ve been keeping a sharp eye on coronavirus here at the Cut.
But don’t worry… We’ve come at it from different angles than you’ll read about in the mass media.
As we showed you on Wednesday, it could trigger the “Black Swan” currency event legendary trader Andy Krieger sees coming in mid-2020.
And the Chinese authorities are clamping down on the use of physical cash there. The official story is that this is to stop the spread of the virus. There may be some truth to that…
But as we covered yesterday, Bonner-Denning Letter coauthor Dan Denning has been warning about something like this happening for years.
If you’ve wondered how we become a fully cashless society, this is one way to do it. Governments say cash is a vector for the spread of a disease and must be replaced with a purely digital system (that can be tracked and traced, of course).
The virus outbreak is something followers of our tech expert, Jeff Brown, have also been thinking about.
And one reader from Down Under wants to know if companies making vaccines against coronavirus make a good investment…
Reader question: Hi, Jeff. I’m an Australian-based subscriber of your excellent publications Early Stage Trader, Exponential Tech Investor, and The Near Future Report. Given the coronavirus (COVID-19) situation worsening globally, I recently learned from the president of Novavax that this biotech company is working feverishly on a vaccine. Should we invest in Novavax?
– Stanley N.
Jeff’s answer: Thanks for being a reader, Stanley. There are investment opportunities in companies that can combat this virus.
As soon as I realized how significant this virus could be, I started researching firms working on potential vaccines. I even put my analyst team on the task.
Novavax was one my team and I researched. The stock shot up 146% from Jan. 14 to Jan. 21. This was a response to rumors that the company was working on a vaccine.
But I won’t be recommending Novavax to my readers. It’s important to consider a biotech company’s entire pipeline when sizing it up as a potential investment target.
And it’s going to take a long time for Novavax to get regulatory approval for a vaccine for COVID-19. Yes, trials might speed up due to the severity of the COVID-19 outbreak. But FDA (Food and Drug Administration) approval won’t happen in 2020. It’s likely to take much longer.
And Novavax recently had some bad news with its lead drug candidate, ResVax. The FDA is requiring Novavax to conduct a multiyear trial for ResVax if it wants to try for FDA approval. And the reality is… Novavax doesn’t have the money to do that.
This brings me to another key consideration for biotechnology companies. What’s the cash position?
Novavax probably has enough money for only another six months or so. This means it will have to have a secondary offering, which will dilute the stock. And with the stock up nearly 100% in the last month, I wouldn’t be surprised to see a major pullback.
Besides, I’ve found a better investing opportunity. Stanley, since you’re a reader of Exponential Tech Investor, be sure you read the edition that came out on Tuesday.
I discussed a bleeding-edge company that is a front-runner for curing COVID-19. As incredible as that may be, it’s only where the story begins. There’s something much bigger at play with this company.
For readers who haven’t joined us, you can become a subscriber today by going right here. I’ll tell you more about Exponential Tech Investor and even reveal another “must-own” biotech company on the cusp of curing a debilitating disease.
Another profit theme we’ve covered this week here at the Cut is the surge in gold to a seven-year high. The press claims it’s all to do with investors seeking a safe haven amid coronavirus fears.
But instead, we believe it has to do with the flood of new central bank stimulus it’s likely to trigger.
That brings us to our next question. It’s for our globetrotting rock hound (geologist), Dave Forest.
Dave heads up our International Speculator advisory, where his mission is to help readers profit from the surge in commodities he and Legacy Research cofounder Doug Casey see coming.
Reader question: Dave, I follow your reports with great interest as you walk about looking for new opportunities. I am a retired nuclear engineer, but also have an interest in geology and metallurgy.
In the International Speculator portfolio, we differentiate between gold explorers and prospect generators. What is the correct understanding of these two terms?
– Tom A.
Dave’s answer: Simply put, explorers are any companies looking to find new mines of gold, copper, cobalt, or other metals. Prospect generators are a special group of explorers. They use other people’s money to pay their costs.
Prospect generators determine where new mineral discoveries could be made. They survey reams of geologic data, go into the field and check the rocks, and then acquire mineral claims where they feel a big find could be lurking below.
Then, they stop. After the initial work, prospect generators present their findings to deep-pocketed backers: investment groups and other junior exploration companies, but most often major mining firms. The goal is to get the big players interested, then do a deal where the big group will pay to “earn into” the prospect generator’s lands.
Here’s how an earn-in works. A major mining firm such as Barrick Gold may agree to spend $5 million to do exploration work on a new prospect. That money would fund geophysics, geochemical analyses, and drill testing. All the cash comes from the big firm’s pocket.
In exchange for spending the $5 million, Barrick might earn a 70% interest in the project. In that case, the prospect generator company keeps 30% – at no cost. They get a free ride, and if there’s a major discovery, their stake can be worth hundreds of millions of dollars.
Prospect generators have very low overheads and ultralow operating costs. They can generate new prospects for years, or even decades, without needing to raise more equity funds (and dilute value for existing shareholders in the process). One of my portfolio prospect generators, Azimut Exploration, just made a major gold discovery in Quebec, after nearly 20 years being at it. Its persistence paid off: The stock rocketed 400% higher in less than 90 days.
Closing out this week’s mailbag edition, we have a question for Will Bonner, son of Legacy Research cofounder Bill Bonner and founder of Bonner Private Wine Partnership.
The Bonner family grows their Malbec grapes on Gualfin, a remote ranch in Northwestern Argentina. It’s hours away from the nearest city… and thousands of feet above sea level. Last Friday and this Monday, we shared a two-part essay about how these unique growing conditions may hold the key to a longer life with less disease… benefits that the wines made from these grapes pass on to wine drinkers.
And readers were eager to test this out for themselves…
Reader question: Just one question: Do you ship to Canada?
– Anna M.
Reader question: Will, I thoroughly enjoyed your writings (as I do your dad’s) regarding your vineyard at “the top of the world.” The Malbec of Gualfin sounds life-changing. Sadly, when I went to join the “club,” I learned being from “Down Under” doesn’t count.
Do you see the day you may be able to send your Gaulfin Malbec east?
– Warrick F.
Will’s answer: Thank you for your interest in Bonner Private Wine Partnership. We are happy to count hundreds of Daily Cut readers as members. But, unfortunately, we cannot accept members in Canada or Australia at this time. Hopefully, sometime in the future we will be able to. We also cannot accept members in the following U.S. states: Alabama, Alaska, Arkansas, Delaware, Hawaii, Indiana, Kentucky, Mississippi, Oklahoma, and Utah.
We can deliver to all U.S. states except those listed above. Deliveries must be signed for by an adult aged 21+.
The Calchaquí Valley Malbec wines from “the top of the world” are driven by truck over the Andes mountains to a port along the Pacific coast of Chile. They are placed on a container ship for a monthlong journey up the coast to San Francisco, California. From there, they go to a distribution warehouse in Sonoma County and on to our members across the country by UPS ground.
As a reader of The Daily Cut, you will receive a special discount of $50 off your first shipment of the Argentina Collection, including the extreme-altitude wines of the Calchaquí Valley, and free shipping for as long as you are a member. As a Bonner Private Wine Partnership member, your satisfaction is 100% guaranteed. You can cancel at any time with no further obligation.
Once you join the club, you will receive your Argentina Collection of six bottles, and then a new collection of six bottles from a different country every three months. These specially curated wines come from hard-to-find producers of delicious “Old World” wines, often from very small vineyards. Beyond Argentina, we’ve already featured collections from Italy… France… Spain… and Australia… with different grapes and different winemaking styles… delivered to your doorstep. There’s a new collection each quarter.
Each shipment comes with a Collection Guide, which details the origin of each wine and accompanying tasting notes.
You will receive two wine guides created by a top international sommelier. You will also have access to insightful and engaging tasting videos for your club wines by French winemaker/influencer Julien Miquel.
Being a member is like going on a worldwide “Grand Tour” of wine that will open your eyes to an exclusive, hidden world that most wine drinkers have no idea even exists. Get all the details here.
That’s all for this week.
Remember, you can always send us your thoughts on these topics… and any other questions you’d like our experts to answer for you… at [email protected].
Regards,
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Chris Lowe
February 21, 2020
Dublin, Ireland