12. July 2021 | 12:22 CET
Barrick Gold, Carnavale Resources, Yamana Gold: Where gold still shines
Public debt in Germany has exceeded the EUR 2.2 trillion mark for the first time, the Federal Statistical Office announced a few weeks ago. Per capita, the debt thus stands at EUR 26,532. Of course, such figures also unsettle investors. If the public sector is so indebted, this could also impact future monetary policy - after all, rising interest rates would significantly increase the cost of refinancing. That is an argument for the ultra-loose monetary policy to continue. That includes all the negative consequences, such as rising prices for tangible assets and products for daily use.
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ISIN: BARRICK GOLD CORP. | CA0679011084 , CARNAVALE RESOURCES LTD | AU000000CAV5 , YAMANA GOLD INC. | CA98462Y1007
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Barrick Gold: Where will it go from here?
There have always been various ways to hedge against rising prices. Germans like to rely on real estate. But these are already expensive and also rare. In addition, owner-occupiers are often willing to pay exorbitant prices, making it even more difficult for investors. The better alternative is shares. These securities securitize shares in companies and thus also the right to participate in future profits. In times of creeping demonetization, such holdings make sense. In the case of companies in the gold sector, there is also the fact that gold is regarded as a substitute currency and crisis metal - and is attracting increasing interest from investors, especially during challenging market phases. One of the best-known gold companies is Barrick Gold.
The Company is active on almost every continent in the world and primarily mines gold. A little silver and a little copper are also produced as by-products. However, these shares are vanishingly small. Since Barrick turns a big wheel with its numerous mines and extracts large quantities of gold from the ground quarter after quarter, these reserves must also be replaced. The market currently has little confidence in the Barrick Gold share. Last year, reports of high free cash flows were even greeted with concern - many investors would probably have preferred the world's second-largest gold miner to invest instead of ultimately paying out a somewhat desperate special dividend. Barrick Gold's stock has lost about 27% over a year. Currently, the value is stabilizing somewhat, but the potential appears limited.
Carnavale Resources: Step by step to success
The chances are better for the shares of Carnavale Resources. The Company explores for gold, platinum and nickel in Western Australia. The flagship is the gold project Kookynie, but also the other properties, such as Ora Banda, Barracuda or Grey Dam, are making progress in 2021. Carnavale's goal is to always be on the lookout for prospective projects. Like a deck of cards, the management team around CEO Humphrey Hale aims to gradually improve the current hand. Humphrey Hale of Carnavale Resources recently revealed how the Company is proceeding and what else is planned for 2021.
The Company currently has around AUD 4 million in its coffers and can use this to fund the exploration program planned for 2021 on all projects. While many smaller companies are only looking for one raw material, Carnavale can take advantage of the fact that gold or nickel and copper are often found in the vicinity of platinum metals. That makes the respective projects more economically robust, as they are not so dependent on developing a single raw material. By September, the Company expects exploration results from the Kookynie gold project, the Ora Banda gold project, and the Barracuda platinum-nickel-copper project. As the share is currently valued at only around EUR 12 million, speculative investors, in particular, should make a note of the value.
Yamana Gold: Size does matter
Investors who want to invest in more than just gold could also consider buying Yamana Gold shares. Silver and copper, after all, account for more than 10% of the Company's shares. From 2024, the share is even expected to increase significantly. Because of the mobility transition, the associated electrification of transport and the high copper demand of electromobility, Yamana's share could be a good choice. But there is a catch: Yamana is a mid-sized producer, so it will be under even more pressure if individual projects run into problems. The Company is not diversified enough to consistently meet the market's high expectations for consistent production numbers. Yamana's share price also shows a loss of more than 28% on a one-year horizon - the stock is not a good alternative.
While Barrick Gold has the problem of replacing reserves but is currently unable to find suitable projects, something can always come up at Yamana. Landslides or strikes have sometimes ruined the quarterly figures of smaller companies. Carnavale Resources is a different story. The Company explores with a small and mighty team and operates in the early stages of exploration. Here, the goal is to gather as much information as possible with few resources that could become important in the future. The Company has several promising projects in its portfolio and pursues a cost-saving and flexible strategy. While the share must be considered more speculative, this also promises more potential for the share price in the best case.