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February 9th, 2023 | 19:47 CET

Banks and their risky gold bets: Credit Suisse, PayPal, Desert Gold

  • Mining
  • Gold
  • Banking
  • Investments
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Credit Suisse will publish its quarterly figures on Wednesday, February 15, and answer analysts' questions. The market is looking very closely at the details of the crisis bank, which is in trouble because of the bankruptcy of Greensill Bank and the implosion of a hedge fund in 2021. Now stress is also looming around Credit Suisse's gold exposure. Reason enough to raise awareness of risks and highlight opportunities!

time to read: 3 minutes | Author: Nico Popp

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    Brodie Sutherland, CEO, Tocvan Ventures
    "[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures

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    Credit Suisse and the gold business: Paper gold equivalent to 5,000t?

    On average, analysts expect losses of CHF 0.317 per share at Credit Suisse for the fourth quarter of the past calendar year. Sales could slump by around 30% compared to the same period last year. The solution now is to be a radical restructuring of the group. The new CEO Ulrich Körner took office last August and wants to turn the tide. Those familiar with the bank see the measures as the last chance for Credit Suisse. The bank is now even facing headwinds in its home market.

    As became known a few weeks ago, the US bank JP Morgan Chase wants to expand its involvement in trading with Swiss precious metals. Until now, the business had been shared between the two local heroes, UBS and Credit Suisse. Now the world's leading bank in precious metals trading wants to profit from Switzerland's good image and its proximity to Eastern Europe and several gold refineries. Only recently, it became known that large US banks recently held gold derivatives with an equivalent value of 5,000 tons. At the top of the list: JP Morgan Chase.

    The new competition for Credit Suisse could additionally weaken the Swiss institution. It has been known for some time that the Swiss want to downsize their investment banking and sell parts of the business with securitized products to the Allianz subsidiary Pimco. For the gold business, in which derivatives play a significant role, these are not perfect conditions. The road ahead for the Credit Suisse share remains rocky even after the quarterly figures.

    Desert Gold: Real gold deposits are undervalued here

    The small Canadian company Desert Gold could also benefit from growing speculation around the precious metal gold. The gold prospector operates in Mali near the border with Senegal and runs its SMSZ project there, which covers an area of about 440 sq km. Various gold producers are already operating successfully in the neighborhood. These include Barrick Gold and B2Gold, among others. The latter company has only recently acquired in the region and swallowed the small competitor Oklo Resources. The so-called shear zone in the region is considered a popular deposit for gold and stands for production costs of only around USD 800 per ounce. With its resource estimate of 1.1 million ounces of gold and further exploration potential on a huge property, Desert Gold could move into the focus of large producers.

    While, according to, the proximity of a project of Oklo Gold to the existing Fekolo open pit mine might have tipped the scales in favour of B2Gold, Desert Gold could also be of interest to major players who are yet to get their foot in the door in the region. The experts at, for example, see large cash reserves and comparatively low takeover activity at Barrick Gold and Newmont. Desert Gold, meanwhile, has time to develop new resources. Any further successful drilling should strengthen the position for shareholders. Interested investors can ask detailed questions online during the 6th International Investment Forum (IIF) on February 15. CEO Jared Scharf will present Desert Gold.

    Gold multinationals like Barrick Gold need to replace reserves. Source: Barrick Gold

    PayPal: Do the quarterly figures give hope?

    The market will likely have many questions for PayPal: The payment service provider presents quarterly figures today. The price has stabilized recently but is still far from the level of a year ago. Analysts expect an average profit of USD 1.20 per share. Three months ago, PayPal had still warned about the final quarter and identified a weakening consumer sentiment as a risk factor. In the meantime, however, the fourth quarter should have turned out better in important regions of the world. PayPal could therefore provide surprises. In addition, the share is benefiting from the new tailwind for digital business models. A turnaround is in the air.

    Even though tech stocks have performed better recently, the markets are not yet back in safe waters. The example of Credit Suisse shows that legacy issues still burden companies' balance sheets. Exogenous shocks can also still become game-changers - the geopolitical situation, but also, the derivatives gambles of large banks have explosive power. Shares like Desert Gold, which as small caps promise leverage on the gold price, can be considered crisis insurance in the current environment. Moreover, since the latent takeover fantasy is spreading in the gold sector, the insurance premium currently appears favourable.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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