A turning point for gold? Where the biggest leverage lies – Barrick Mining, Commerzbank, and Desert Gold

Commerzbank: Warning signs for the lending business

Looking at Commerzbank's figures for the first quarter of 2025, one might assume that the German economy is in a robust position: Consolidated net income climbed by 11.7% year-on-year to EUR 834 million – the best quarterly result since 2011. Nevertheless, there is also cause for concern at Commerzbank. Current data from credit agencies show that companies are paying their bills later and later. Outstanding receivables, payment defaults, and ultimately insolvencies are also on the rise. In order to reduce its dependence on interest income, Commerzbank has announced its Momentum Strategy and is focusing on greater efficiency in addition to its commission business. Nevertheless, the bank is likely to be hit by a crisis or even a wave of insolvencies. The importance of the lending business is still too great. Shares such as those of Commerzbank, therefore, remain vulnerable in times of economic uncertainty. The numerous investment programs are a positive factor – when capital flows, banks usually earn handsomely.

Barrick Mining: Strategic plans kill any share price speculation

In times of economic uncertainty, investors like to look to the big gold producers, such as Barrick Mining. The Company focuses on gold and copper projects of outstanding quality and long duration. To this end, the Company also invests in exploration – in 2024 alone, Barrick spent USD 349 million on finding new deposits and ensuring its long-term competitiveness. Analysts like this trend, as well as the latest quarterly figures – the vast majority of analysts rate the stock as a "Buy" or "Strong Buy," with an average price target of USD 41.67 from 21 analysts.

Barrick's strategy of focusing on huge projects with good fundamentals with ironclad cost discipline has proven successful in recent years.
The Company is steadily improving its figures and participating in the development of the gold price. However, during phases in which gold rises sharply and undergoes a revaluation, shares such as Barrick Mining or Rio Tinto often lag behind the performance of underlying assets or smaller stocks. The reasons for this lie in the cautious strategy of the major gold producers: in addition to extremely conservative planning and a high degree of diversification, large producers also rely on firm supply contracts and forward transactions. This means that a sharp rise in the price of gold does not immediately translate into higher earnings for gold producers.

Desert Gold: What is the 2021 multiplier doing today?

The situation is different for smaller producers or development companies. Although these are sometimes traded below the radar, they benefit more significantly from drastic changes in market conditions once their shares have gained momentum. One such stock is Desert Gold. The Company behind the SMSZ project in Mali is currently valued at only EUR 12.6 million. After a volatile price performance, it is now yielding a return of around 30% over a six-month period. However, a look back at 2021 shows what is possible with stocks like Desert Gold: At that time, the major economies were spending billions to combat the pandemic – Desert Gold shares were trading at EUR 0.05, as they are today, and climbed to EUR 0.19 within weeks. The only thing driving this was the hype around rising gold prices, which hit a new all-time high back then. And today? Gold is trading way higher than back then, and government spending is fueling price speculation again. The only difference is that Desert Gold has now secured another project in West Africa with Tiegba.

Tiegba project increases diversification – Will Desert soon generate cash flows?

The deposit in the Ivory Coast offers synergies with the exploration of SMSZ in Mali and improves country diversification. In an interview with GBC Research, Desert CEO Jared Scharf emphasized his intention to significantly advance Tiegba this summer with an exploration budget of only CAD 300,000. To finance the measure, outstanding warrants will be exercised at CAD 0.08 – a fair solution for all parties involved, given the current valuation. Desert Gold also aims to complete a preliminary economic assessment for a small mine in Mali in the second half of the year, which Scharf says could be completed within a few months.

If Desert Gold were to become a producer, this would also change the market's risk assessment: exploration companies are dependent on regular financing. If Desert Gold were to generate cash flows, this would make the entire business model more robust and, given the renewed interest in gold, could be an argument for rising share prices again. While Barrick Mining is a stable tanker in portfolios, it is unlikely to benefit from changes in investor sentiment toward gold in the short to medium term, the situation is different for Desert Gold. Once it has been "kissed awake," a fundamental revaluation could quickly follow. The Company's new strategy underscores that Jared Scharf's team has big plans.