Alarm bells ringing for GOLD and DEFENSE: RENK, Barrick Mining, and comeback story AJN Resources

AJN Resources: Buy into the comeback story now?

The price of gold is unstoppable. After jumping above USD 3,000 per ounce, many experts predicted a prolonged consolidation. However, this did not materialize. After a brief pause, the precious metal traded at USD 3,433 per ounce on Friday, again bringing it closer to the USD 3,500 mark.

With the gold price at record levels, AJN Resources shares could become the comeback story of the year in the commodities sector. The Company has decided to put its lithium project on hold due to low prices and focus entirely on its exciting gold projects. AJN Resources is currently valued at only around CAD 5 million. This could change quickly. The Company is led by CEO Klaus Eckhof, who has been active in the gold sector for over 30 years. Among other things, he founded Moto Goldmines. The project in the Democratic Republic of Congo was purchased for USD 500 million following a feasibility study by Randgold Resources. Today, it is one of the largest gold mines in Africa.

Now Eckhof and his team want to really step on the gas. They are pushing ahead with several exciting projects. First, the Canadians are developing the Dabel Gold Project in Ethiopia. It covers an area of 672 sq km in the Adola Gold Belt. The area is also home to Lega Dembi, the country's largest gold mine.

Most recently, the Company acquired a majority stake in another project in the region - Okote. The previous owner (Godu General Trading S.C.) had already drilled nearly 14,000 meters on the 42.8 sq km site in 2019. This revealed mineralization between 1.6 and 8.7 grams per ton. The next step is to confirm these findings. The potential is estimated at several million ounces of gold. Details will be provided in a mineral resource estimate.

There should be more exciting news in the coming months, and the downside risk for the stock appears to be limited.

Barrick: A winner in a horror scenario

AJN Resources and the entire industry are likely to receive an additional boost from possible turbulence in the gold market. This could lead to a short squeeze. Experts at the European Central Bank (ECB) believe this is possible. The consequences could be massive: the global financial system could be shaken. ECB experts are warning of this in view of current developments on the futures markets. The sharp rise in the price of gold since 2023, most recently fueled by geopolitical uncertainties and trade policy risks, has led to more and more market participants insisting on physical delivery instead of settling for cash settlement as they have done in the past. This issue is exacerbated by concerns that Donald Trump could push through US tariffs on gold trading.

This creates a problem: As with other commodities, a growing proportion of gold demand is traded on the futures market. In futures contracts, the seller undertakes to deliver a certain amount of gold at a fixed date and a fixed price. Conversely, the buyer must purchase the gold at the specified price on that date – or pay the difference.

The result: Bottlenecks on the Chicago futures exchange and significant price differences compared to the spot market in London. If there is a short squeeze, i.e. a forced repurchase of short positions when goods are in short supply, banks could be forced to procure gold at extremely high prices – with potentially existential consequences. The bullion banks, which store large quantities of physical gold in London and have to meet futures obligations in the US, would be particularly affected. Some institutions have already had to ship gold across the Atlantic to meet delivery obligations – an expensive undertaking that has led to prices in Chicago being temporarily USD 50 higher per troy ounce. Experts are sounding the alarm in light of these developments: a price slump or delivery failure could lead to massive margin calls, which in turn could trigger liquidity bottlenecks and shock waves throughout the financial system. The situation is being monitored with growing concern by regulatory authorities.

Industry heavyweight Barrick Mining could also benefit from the rising gold price. The stock has gained around 18% in the past four weeks and is trading at USD 21.59. This is the highest level since the beginning of 2022. The market capitalization is back above USD 37 billion.

RENK: Is the stock heading back toward an all-time high?

Is the consolidation of defense stocks such as RENK, Rheinmetall, and others already over due to the escalating conflict between Israel and Iran over the weekend?

Last week, for example, RENK shareholders saw their shares fall by 7%. From its high of EUR 85 at the beginning of June, the Company's stock, known for its tank transmissions, has lost around 15%. Nevertheless, it still boasts an impressive gain of around 280% for 2025 so far.

JPMorgan certainly believes that RENK shares will soon return to their all-time high. Analysts recently raised their price target from EUR 70 to EUR 87.50. Due to the rearmament cycle that has begun, RENK, like other German defense companies, should see exceptionally strong development in terms of revenue, margins, and cash flow through 2030.

RENK also recently announced another new order. The RENK subsidiary in the US received an order worth over USD 99 million from a long-standing customer in the defense sector. The order includes the delivery of new engines and the overhaul of systems already in service. "We are an important factor in the performance of ground vehicles worldwide," said Ian Pain, CEO of RENK America. "We are proud to continue our decades-long partnership and support our customers and partners with technologies and in-service support that keep their armed forces moving." Although the volume of the order is not large, it shows that RENK is not solely dependent on defense spending in Europe.

AJN Resources shares are attractive for purchase. The market capitalization still appears to be based on the lithium project. The decision to push ahead with the gold projects now seems strategically sound and could mean a comeback story for investors. Barrick Mining remains a core investment in the gold sector. However, the giant has some home-grown issues. At RENK, the correction in the share price could be over after a short time. The valuation is certainly ambitious, but the Company can grow into it, and in the current geopolitical environment, other factors appear to be more important for investors.