Markets and Metals Weekly Navigator (June 28th, 2020)

COVID-19 Economic Risk Back in Focus

The market sold off last week on the back of renewed COVID-19 concerns in America with investors rushing to precious metals for safety.

With gold and silver up 1.5% and 0.9% respectively, the market bid up gold and silver miners significantly. Senior gold miners were up 5%, junior gold miners up 6% and silver miners up 4%.

America’s low touch approach to the pandemic is now presenting a clear resurgence in new coronavirus cases.  The U.S. and Europe have comparable population sizes, however the EU has clearly done a better job containing the outbreak.

The states that have remained open for commerce during the pandemic are now seeing significant spikes in weekly COVID-19 infection rates.

However the COVID-19 death rate in America has remained low, we believe this is the data series the market will put the most weight on in the coming weeks.

We believe the new Safety & Testing Economy is here for the long-haul, a market that is estimated to be worth $500 billion.

Copper Remains Tight & Sierra Metals Gets a Strong Bid

Even with the backdrop of a pandemic impacting global economic growth, copper has remained well bid.  The market is pricing in the risk of supply disruption from the South America, Codelco (one of the largest global copper miners) last week halted copper processing at a major Chilean mine.

As a result of the tight supply situation for copper hedge funds have cut their bearish bets  to the lowest level since 2018.

Capital 10X had highlighted the copper opportunity in Sierra Metals in our May 18th edition of the weekly.  The shares have rallied 82% since,reaching a peak of up 120% – significantly outperforming all of its copper peers.

On Thursday June 18th, Sierra (NYSE:SMTS, TSX:SMT) announced that it had confirmed a new high-grade silver zone at its Cusi Mine in Mexico.  The shares have risen on the back of a re-rating of the company’s valuation relative to peers and the new upside potential at the Cusi Mine.

Plant Based Protein – Growth Continues

The alternative meat category has exploded globally over the last several years, we have also seen increased interest during COVID-19 as the meat processing industry has faced significant challenges with coronavirus outbreaks.

Beyond Meat is the poster stock for the alternative meat era with sales growing exponentially, the CEO’s goal is to price their plant based protein cheaper than animal protein in the next 4 years.

Capital 10X took a deeper look at Burcon NutraScience Corp (TSX:BU), a company with a portfolio of over 280 patents gained over the last 2 decades.  The company made headlines earlier this year announcing a partnership with Nestle Foods in January.

Sierra Metals is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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