A change of energy paradigm is underway, and Tesla is the protagonist, as in early July 2020, the market value of Tesla Inc. surpassed that of ExxonMobil Corp.
At AXL Capital, we believe that gold will NOT steadily decline until the COVID-19 vaccine passes Phase 3 and is approving by the FDA, then, the aftermath of the pandemic will continue, and companies-and countries-will face the big issue of their high debts. In the words of investment guru Ray Dalio, the big challenge is to achieve beautiful deleveraging.
By: Yro Sune Cortez Ramos,
April 2020.
The purpose of this analysis is to assess the current context, market capitalization, risks, the performance of its share price, and, in general, the challenges facing the Minas Buenaventura company due to the diversification of its production in precious metals and base metals. It has a "natural" hedge to the volatility of the price of metals, an essential requirement to reduce risk in any investment portfolio, and it could also have a higher bullish momentum of its share price in the following months.
Will Gold repeat or exceed the prices of the last recession of 2008? How will this increase the cash flow of the Gold mining companies, strengthen their financial position, their reinvestment options, their long-term strategies, and their benefits for their stakeholders and the joy of their shareholders? Gold has benefited from global uncertainty and risk aversion mainly due to the Washington-Beijing trade war and fears of the end of one of the longest bullish business cycles. The price of gold has risen by more than 16% this year. The big beneficiaries? Gold miners could see their income for this second semester (H2) of 2019 increase by 25 US $ million for every 100 KAuoz of production, considering a budget of the Gold price for 2019 at 1,200 US $ / Auoz and price of the final sale of US $ 1,450 / Auoz. In other words, for every 1 Million Auoz produced for this H2, income would rise by 250 MM the US $, only due to the effects of Gold prices. “Nice dilemma” for Gold miners, thinking of alternatives to distribute to their shareholders via dividends, buybacks, or reinvesting in the business internally or externally. Also, more efficiently managing your debt or provisions for your mining liabilities. The following graph shows the increase in gold prices in July 2019.
The Latin American wealth of its metals
Investors love the Latin American wealth of its base metals and precious metals. The blessed regions are Chile, Peru, Brazil, and Mexico. According to US Geological surveys, Chile has the largest copper and lithium reserves and is the seventh-largest in silver reserves. Peru has the largest silver reserves, it is the third world in copper and zinc reserves. Fourth largest in Nickel reserves and fifth largest in Gold reserves. For its part, Mexico has large reserves in fourth place for Zinc, fifth for lead and sixth in reserves for Copper and silver, likewise, Mexico is within of the 10 largest gold producing countries. Finally, Brazil has the second-largest reserve of iron minerals, a third-largest reserve of nickel, fourth largest reserve of tin, and seventh-largest reserve of gold.
