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March 8th, 2023 | 16:27 CET

Banks have a problem: Commerzbank, Deutsche Bank, Desert Gold

  • Mining
  • Gold
  • Banking
  • Investments
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Bank shares have done well in recent months - the turnaround in interest rates has been good for many institutions. In the meantime, more and more analysts are giving banks the thumbs up. But what if currencies like the euro or the dollar lose influence? We shed light on secret trends emanating from Asian central banks, which at least argue for not investing all funds in traditional currencies.

time to read: 3 minutes | Author: Nico Popp

Table of contents:

    Gary Cope, President and CEO, Barsele Minerals
    "[...] We are convinced that we could already leverage significant potential with a drilling program of around 35,000 meters. However, to finance this, we need a decision. Fortunately, there are already interested parties who can imagine advancing Barsele together with us. [...]" Gary Cope, President and CEO, Barsele Minerals

    Full interview


    Commerzbank: DAX climber has done a lot right

    The current week started well for the shares of Deutsche Bank and Commerzbank: UBS issued buy recommendations for both financial institutions. The target prices are both well above the current price. But how promising are the shares really? In addition to the interest rate turnaround, both stocks have recently been boosted by austerity measures. Commerzbank, in particular, has been cutting costs and is now being rewarded with a promotion to the DAX. Linde is being relegated to the second tier, the MDAX. At Commerzbank, net interest income already rose significantly last year. This year, the results should also be within expectations, giving the bank room for a dividend for the first time in a long time. The bank plans to distribute around one-third of its profits to shareholders. The stock currently looks promising: At almost every time level, the Commerzbank share is reaching a new high.

    The performance of Deutsche Bank has also been positive recently. The stock is now trading only around 8% below its five-year high and, like Commerzbank, could leave the share price weakness of recent years behind. At Deutsche Bank, too, profits are rising - thanks in part to investment banking. However, analysts continue to criticize the poor returns. Volatile exchange rates could also become a burdening factor for banks in general. In recent months, Commerzbank, for example, posted short-term book losses due to loans in Swiss francs, but thanks to positive market developments, these ultimately did not have an impact.

    Is confidence in leading currencies continuing to wane?

    Even if the outlook for banks seems generally positive, there are also negative signals for the business of traditional financial institutions. The major central banks, such as the ECB, are increasingly in the red because of rising interest rates and the numerous bonds with low coupons on their balance sheets. This is weighing on the major leading currencies, as is the loss of confidence in Asia: many observers, such as Ronald Stöferle from the asset manager Incrementum, see currencies such as the euro under pressure. The reason for this is the frozen Russian currency reserves, which are causing Asian economies, in particular, to doubt the security of such reserves. Gold, in particular, has benefited in recent months - gold reserves at central banks are currently at 35,500 tons, as high as they were in the mid-1970s. Surveys among central banks also indicate that the monetary guardians see gold as a solid substitute currency in the coming months.

    Desert Gold: Share price down - drill results ahead

    Instead of jumping on the bandwagon after months of gains in bank stocks, investors may also be targeting gold. Canadian company Desert Gold operates in Mali on the border with Senegal, where it is developing the huge SMSZ property. Existing mines, such as those of Barrick Gold, B2Gold and Allied Gold, are in the same geological trend. Desert Gold has already drilled diligently in recent years and now reports more than one million ounces of gold in a resource estimate.

    In February, the Company started a drilling program to raise further potential on the 440 sq km property. This time, the main target of the drilling is the Mogo South area in the southeast of the property. "The drill program at Mogo South is the first step in trying to answer one of the most important questions regarding the SMSZ project: does Mogo South have the potential to become a multi-million ounce gold deposit consistent with regional gold occurrences near the Senegal-Mali shear zone?" commented Desert Gold CEO Jared Scharf. Desert Gold's share price is at year-to-date lows. Experienced investors with staying power may want to take a closer look. If precious metals pick up, the share should benefit disproportionately. A good overview of the Company can be found in the latest company presentation, available as a video.

    For several reasons, it could be likely that gold will soon continue its upward trend, which was dominant at the turn of the year: Inflation remains high in many currency areas. In the 1970s, too, the gold price climbed only with a delay after inflation had already picked up significantly before. The support from central banks for precious metals is also likely to support the prices of gold and Co. In addition, the mood on the stock market is also brightening - gold stocks such as Desert Gold could, therefore, soon wake up from their deep sleep. Given the low liquidity of the shares, however, investors should work with tight limits and not pay any premiums to the leading exchange in Canada.

    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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