WINDSOR, ON / ACCESSWIRE / May 11, 2016 / The Wealthy Biotech Trader (or "WBT"), an investment newsletter focused on showing everyday investors new opportunities in rapidly growing, little-known, biotech, pharma and medical device stocks making news and subsequent market moves, would like to discuss why this is the right time to short gold stocks and also highlight the prospects of biotech stocks, especially those that have highly innovative technologies.
Biotech stocks have hit a rough patch. The pressure on these stocks has been created by nervousness over possible regulatory policy changes affecting drug pricing. Many experts believe the risks have been misunderstood, since the policy changes being discussed by the media are unlikely to materialize in the coming years. On the other hand, the fundamentals of the biotech sector remain robust, and growth prospects are bright. In fact, analysts are most bullish about biotech companies pursuing breakthrough treatments and those focusing on rare diseases.
Take Endonovo Therapeutics (OTCQB: ENDV) for instance. This innovative biotech company focuses on regenerative therapies for treating rare diseases. Endonovo has been developing devices based on the Time-Varying Electromagnetic Field Technology (TVEMF) system, which uses technology developed by NASA scientists. The Immunotronics™ platform is a non-invasive and non-pharmacological bio-electronic device for vital organ failure. The Cytotronics™ platform expands the use and effectiveness of low-volume cord blood units, otherwise known as stem cells.
RIGHT TIME TO GO LONG ENDONOVO STOCK?
In April, Endonovo provided a corporate update in which it indicated the buyback of $154,303 in convertible notes, in an attempt to preserve shareholder value as well as position the company to attract institutional investors.
On March 30, Endonovo announced that it has received a Notice of Allowance from the US Patent and Trademark Office for a patent application entitled "Biological Molecules Produced by Electromagnetically Stimulating Living Mammalian Cells." The patent application covers the production of biological molecules in adult stem cells, which can be used to produce human proteins. The Notice of Allowance indicates that the company could receive a US patent in the near future. Going by CEO Alan Collier's comments, Endonovo may license this technology or partner with a larger pharmaceutical company to develop it.
In February, Endonovo filed the paperwork to obtain an orphan drug designation for Cytotronics™. The orphan drug status, granted by the FDA, would entitle the company to a 7-year period of marketing exclusivity in the US for the treatment of Graft-Versus-Host Disease (GVHD).
ANOTHER BIOTECH STOCK IDEA
ImmunoGen, Inc. (NASDAQ: IMGN) is a clinical-stage biotechnology company that develops targeted anticancer therapeutics using its proprietary ADC (antibody-drug conjugate) technology. The company's lead product candidate, mirvetuximab soravtansine, is in Phase 2 testing for the treatment of folate receptor α-positive ovarian cancer. ImmunoGen has been delivering consistent revenue growth, and reported a profit in F2Q16. The company has $106.60 million in total cash and no long-term debt. Shares started the year at above $13, but have been on a downturn since, losing 32% year to date.
INVERSE RELATIONSHIP WITH THE DOLLAR
In 2008, the IMF estimated that around 50% of the moves in gold prices are dollar-related. Investors lean towards gold whenever the value of the US dollar declines and vice versa. This inverse relationship has two primary reasons - (1) A falling greenback means an increase in the value of other currencies, which boosts the demand for commodities, including gold. The increase in demand increases prices; and (2) When the dollar loses its value, investors look for alternative sources to store value, and gold is seen as a good alternative.
PERFORMANCE FROM 2014 THROUGH APRIL 2016
The US dollar index, or DXY, rose steadily from below 80 in early-2014 to reach a 5-year high of 100.33 in March 2015. Overall, the DXY rose 7.3% over 2015. Gold prices fell from $1,317 in early 2014 to close the year at $1,175. The yellow metal remained under pressure through 2015, and closed the year at $1,068.
The trends got reversed this year, with the US dollar declining 4.1% so far in 2016, on the Fed's continued accommodative monetary policy. The DXY declined from 98.68 on January 1 to 94.82 on April 22. As expected, gold prices rallied, starting the year at $1,060 per ounce and surging to $1,249 by April 21, 2016, up 17.8%.
TIME TO SHORT GOLD?
The US dollar is expected to strengthen over the coming months due to the following factors:
- One rate hike by June-July of this year by the Federal Reserve
- Outperformance of US growth among all the advanced nations
- Continued weakness and uncertainty in China
- Continued low inflation/disinflation trends- gold is traditionally used as a hedge against inflation, but in the current environment, this is not a useful strategy
The dollar's strength will again lead gold to weakening, as investors will leave gold for the security of US Treasuries. Hence, now is a good time to short gold, when gold prices are at a temporary high.
GOLD MINING STOCKS TO POTENTIALLY SHORT
Here are some gold mining stocks that have climbed year-to-date and jumped in the past month; and seem ready to be shorted:
Pretium Resources Inc. (NYSE: PVG) - This company is advancing construction of its 100%-owned Brucejack Gold Project, with production slated for 2017. Shares initially rose slowly this year, from $4.12 in January to $5.12 in March, and then jumped 43% from March 24 to $7.36 on April 22.
Integra Gold Corp. (OTCQX: ICGQF) - This is a junior gold exploration company advancing projects in Val-d'Or, Québec, one of the world's top mining jurisdictions. Shares have risen 46% since March 24, and are up 100% YTD.
Eastmain Resources Inc (OTCMKTS: EANRF) - This Canadian exploration company has a 100% interest in the Eau Claire and Eastmain gold deposits, both of which are located within the James Bay District of Quebec. Shares have climbed 40% since March 24, and have advanced 62% YTD.
Adventure Gold Inc. (OTCMKTS: AGONF) - This mineral exploration company is focused on discovering and developing high-quality gold deposits in the Abitibi region located in eastern Canada, among the world's richest gold mining areas. Shares spiked 83% in April, and have surged 200% YTD.
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