Close menu




March 27th, 2023 | 09:28 CEST

Barrick Gold, Globex Mining, Deutsche Bank - Banking crises fuel investments in gold

  • Mining
  • Gold
  • Commodities
  • Banking
Photo credits: pixabay.com

In recent weeks, two major banks, Silicon Valley Bank and Credit Suisse, have caught the attention of investors as both institutions struggle with various problems. These developments have rekindled fears of a possible banking crisis, prompting investors to seek safe havens. One of the winners of this development has been the price of gold, which has surged in recent days. So today, we look at two precious metals companies and Deutsche Bank.

time to read: 4 minutes | Author: Armin Schulz
ISIN: BARRICK GOLD CORP. | CA0679011084 , GLOBEX MINING ENTPRS INC. | CA3799005093 , DEUTSCHE BANK AG NA O.N. | DE0005140008

Table of contents:


    Barrick Gold - Profits from the rising gold price

    Barrick Gold, the world's second-largest gold producer, reported its Q4 financial results in February. Despite the weak gold performance in 2022, analysts' expectations were exceeded. Adjusted net income was USD 0.13 per share, one cent above estimates. Of note was the increase in gold production in the last quarter, which should be a positive going forward at the current gold price of nearly USD 2,000. This year, Barrick plans to produce 4.2 and 4.6 million ounces of gold and has announced another share buyback program of up to CAD 1 billion.

    There are several factors currently in Barrick Gold's favour. The recent bank failures and geopolitical tensions have led to increased investment in gold and silver. As long as this uncertainty remains, gold should benefit. In addition, the US Federal Reserve may feel compelled to rethink its interest rate policy. Lastly, the copper business offers significant growth potential, as the decarbonization of the global power grid should significantly increase demand for copper.

    The group is expected to report its Q1 figures on May 17. Profits should be higher due to the increased gold price. This could also lead to another increase in the dividend, which stood at USD 0.10 after Q4, excluding the performance dividend component. Barrick has been in rally mode since March 9. The stock climbed from USD 15.48 at the peak to USD 18.67. The share price is currently at USD 18.52.

    Globex Mining - Magusi project expected to go into production

    Globex Mining should be pleased with the rise in gold prices, as the exploration and development company has a diverse portfolio of 221 projects, of which 114 alone host precious metals, 62 host base metals and polymetals, and 45 specialty metals and minerals. The business model is unique. Globex acquires mineral properties at low cost and upgrades them through exploration. Subsequently, the properties are optioned. Option partners assume the exploration risk and pay with cash, shares and royalties if production is started. Globex remains the owner of the properties in most cases.

    Due to the large number of projects, news is constantly breaking. On February 23, it was announced that Emperor Metals plans to start a drill program on the Duquesne West/Ottoman Gold Property in Q2 2023 to expand the gold zones. Just 4 days later came news that the Magusi Project, operated by Electro Metals and Mining (EMM), is expected to go into production. In addition to CAD 6.5 million in cash, 7.5 million shares of EEM also accrue to the Company at a 3% metal royalty, 1.5% of which can be redeemed for CAD 2.25 million. In March 2023, Globex announced that the Company's two royalty agreements with Radisson Mining Resources Inc. are increasing in value due to significant increases in indicated and inferred resources at both projects.

    At the Kewagama Gold Mine, Globex will receive 2% of gross profits, while at the New Alger Gold Mine, it will be 1%. If a partner fails to meet its obligations, the project is returned to Globex and is then further explored, which promotes the value of the property. In all these years, the number of shares has hardly changed. There are about 58.2 million fully diluted shares, which are currently traded at CAD 0.72. This gives the Company a market capitalization of CAD 41.9 million. As of the end of September 2022, there is CAD 10.8 million in cash and another CAD 10 million in shares and warrants. The latter value should increase significantly as the gold price rises. The stock appears significantly undervalued at over 200 projects.

    Deutsche Bank - Strong rise in CDS causes downward slide

    On Friday, all eyes were on Deutsche Bank. Already Thursday, the cost of insurance against the risk of default (CDS) had skyrocketed from 142 basis points to 173 basis points, the largest increase in Deutsche Bank's CDS in one day. This raised concerns among market participants about the overall stability of European banks and Deutsche Bank in particular. On Friday, credit-default swaps continued to rise to over 205.

    The situation seemed so threatening that German Chancellor Olaf Scholz felt compelled to make a statement. Scholz said, "Deutsche Bank has fundamentally modernized and reorganized its business model. It is a very profitable bank. There is no need to worry about anything." He sees the European banking system as stable and robust. These statements helped Deutsche Bank shares pull away from their lows at EUR 7.95.

    Since the beginning of the month, the stock has lost 33% from its peak. On Friday, it exited Xetra trading at EUR 8.54. There was panic on Friday. Now we have to wait and see if there are new reports on Monday or if the situation calms down. Moody's warned that in an uncertain economic environment and with investor confidence still fragile, there is a risk that policymakers will not be able to contain the current turmoil without prolonged and potentially severe repercussions within the banking sector and beyond.


    The woes of the banking sector are the joy of the precious metals companies, as people want to hedge their money. Now that billions are again being made available to banks, investors fear for their deposits. Investments in precious metals, on the other hand, are relatively stable in value. With its gold and copper production, Barrick Gold is well positioned for the coming years and is benefiting enormously from the increased gold price. So should Globex Mining, which is debt-free and has over 200 projects in its portfolio. The next royalties are likely to come from the Magusi project. Deutsche Bank is in trouble due to the increased CDS. Here, calm must first return before one could consider an investment.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author



    Related comments:

    Commented by André Will-Laudien on March 28th, 2024 | 09:00 CET

    Attention: Uranium despite the energy transition! Does this fit together? Plug Power, Nel ASA, Kraken Energy and Renk Group in focus

    • Mining
    • Uranium
    • Energy
    • renewableenergies
    • nuclear

    It feels like a paradox. The EU aims to be largely climate-neutral by 2050. The main focus is on mobility, heat and energy generation. As a core country of the EU, Germany is taking the political lead in the necessary measures. While France, Poland, Finland and the Czech Republic are actively expanding nuclear energy, this form of energy is virtually taboo in many other countries. Germany has been able to increase its renewable energy sources to over 50% with billions in subsidies at the expense of the taxpayer and the price of energy. Yet, Berlin still has to buy cheap electricity from abroad and also use coal and gas to stabilize the grid. It all sounds kind of crazy, but it gets really interesting when the wind isn't blowing and the sun is only to be found behind the clouds. Which shares should be considered in this mixed situation?

    Read

    Commented by Juliane Zielonka on March 28th, 2024 | 08:50 CET

    Rheinmetall, Almonty Industries, Bayer AG - Arming up for defense with these stocks

    • Mining
    • Tungsten
    • armaments
    • Pharma

    The European Union is providing the defense group Rheinmetall with a total of EUR 130 million for ammunition production. The German company is one of six EU projects that are being funded in a special program to stockpile enough artillery pieces and secure supply chains. Here, Almonty Industries comes into play. Almonty specializes in the exploration, extraction and production of tungsten in two European countries, including Spain and Portugal. Tungsten is used in particular for ammunition. Almonty Industries also operates five mining projects, one of which is the largest tungsten project in South Korea. The increasing demand for the critical metal will soon cause the price of tungsten to skyrocket, as defense is becoming increasingly important for the countries and continents involved in the face of geopolitical tensions worldwide. Defense is also a topic at Bayer. The cancer drug Nubeqa supports the body's immune system in the fight against prostate cancer. Following the recent pipeline flop with Asundexian, the drug has great blockbuster potential and could bring billions of euros into the Company's coffers. Read more about why this is so important for Bayer at the moment.

    Read

    Commented by Fabian Lorenz on March 27th, 2024 | 08:45 CET

    Shares in Focus: TUI, Rheinmetall, and Defense Metals with good reasons for price increases

    • Mining
    • RareEarths
    • armaments
    • travel

    The TUI share was one of the top performers on the German stock market yesterday. The EUR 7 mark was exceeded, making things exciting on the chart. Analysts expect significantly higher prices for the tourism group. Rheinmetall shares are among the top performers of the year. An end to the price increase is not in sight. The armaments group has announced a new order worth billions. The manufacture of armaments, aircraft, cruise ships and numerous other high-tech products would not be possible without rare earths. However, most of these come from China and Russia. This makes the Defense Metals share interesting. The Company is making great strides with its rare earths project in Canada. The share should also benefit from this progress.

    Read