A wake-up call for gold - China as an indicator: Deutsche Bank, Alerio Gold, JinkoSolar

Deutsche Bank: Remains cautious with gold forecast

Mark Bristow, the CEO of Barrick Gold, recently let it slip: China's central bank has been buying gold "by the ton," according to the head of the world's second-largest gold company. Other monetary guardians have also taken a hearty bite out of the precious metal. A few months ago, the World Gold Council (WGC) expected central banks to demand more than 300t of gold a month. In its annual outlook, the WGC emphasizes that the general conditions for gold are consistently positive - only in the rather unlikely event of a soft landing of the economy the sentiment around gold could cloud over. If there were a significant recession and economic stimulus in China, the WGC sees considerable upside potential for the gold price. If there is a mild recession with inflation rates halving, the outlook for the precious metal remains neutral to slightly optimistic.

But how will 2023 turn out? The experts at Deutsche Bank expect the recession in 2023 to be relatively mild. But there are greater risks in the eurozone than in the USA and China. However, unlike in the US, where inflation could halve, inflation in the eurozone is "here to stay," the German bankers said in their annual outlook. The bank sees gold at USD 1,850 per ounce and oil at USD 100 by the end of 2023. That puts the analysts at Blaubank within the range that many other bankers have also forecast for commodities by the end of 2023 - as usual, one does not want to go too far out on a limb.

Alerio Gold: Exciting niche investment

Nevertheless, Deutsche Bank also emphasizes that gold remains interesting as an admixture and portfolio hedge. As is always the case with insurance, it makes sense to take positions in gold today. Why? If you position yourself now while the big players on the market are still waiting, you can get in calmly and do not have to chase the prices. An alternative to physical gold are shares of smaller gold companies, such as Alerio Gold. The Canadian company operates in Guyana, South America. The English-speaking country is characterized by an Anglo-Saxon legal system and democracy: The country still scores 73 out of 100 on the Freedom in the World Index. Alerio Gold operates three projects, Tassawini, Harpy and Puruni, the first of which is the most advanced and offers significant upside potential in addition to a historical resource of 499,000 ounces of gold.

With the gold price having already made significant gains, Alerio Gold's stock has been slow to gain momentum. Larger companies, such as Barrick Gold, have recently been able to send the first positive signals. For investors who want to jump on the gold bandwagon but first want to undertake thorough due diligence, stocks like Alerio Gold are ideally suited. Above all, studying Alerio's corporate presentation is worthwhile - compared to market peers in Guyana, the share seems moderately valued. Since the Company can grow intrinsically, thanks to its exploration work, and is also likely to be "kissed awake" by rising gold prices, the stock may offer itself to experienced investors.

JinkoSolar: PV stock as gold indicator?

Another factor influencing the development of precious metal prices is the development of the solar industry - silver, in particular, is used in PV panels. But in early 2023, gold investors can also look at the PV industry's biggest players, such as JinkoSolar. The leading companies in the sector come from China. There, the central government has just relaxed the Corona rules in a 180-degree turnaround. Currently, the country is being hit by a Corona wave. Clinics are overcrowded. At the same time, the economy is ramping up again, and the first companies in Germany report that supply chain problems are increasingly easing. As noted in the WGC's Gold Outlook, growth in China could encourage a soft landing for the global economy and pose a risk factor for gold prices. Stocks like JinkoSolar can also be a kind of indicator for gold investors. The share price is rising steeply at the moment, but over six months, it has lost around 36% - which is weak in view of the special economic situation surrounding renewable energy. So the indicator for gold continues to shine green.

This presents even more reason to look at the precious metal at the beginning of the year and explore possible investment opportunities. After many blue chips have already risen at the beginning of 2023, gold stocks offer catch-up potential. There is a good chance that the share of Alerio Gold, for example, can outperform both Deutsche Bank and JinkoSolar by the end of the year.