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January 12th, 2022 | 12:08 CET

Barrick Gold, MAS Gold, Deutsche Bank, Commerzbank - Breaking News: FED raises interest rates!

  • Gold
Photo credits: pixabay.com

Loretta Mester, another member of the Federal Reserve, has signaled a key interest rate hike for March. The central bank president of Cleveland spoke to Bloomberg of conditions that led to reconsider the easing measures. It clearly indicates further tapering steps and a turn on the key rate. It would be the first rate hike since the pandemic began. There are enough indications that inflation is too high, as the last price increase for the US was plus 6.8%. Gold and banking stocks should benefit from this decision. We are looking for investment opportunities around inflation.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: BARRICK GOLD CORP. | CA0679011084 , MAS Gold Corp. | CA57457A1057 , DEUTSCHE BANK AG NA O.N. | DE0005140008 , COMMERZBANK AG | DE000CBK1001

Table of contents:


    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited

    Full interview

     

    Inflation and better economy = FED interest rate hike

    Given the current high inflation, Federal Reserve Chairman Jerome Powell is also signaling a departure from cheap money policy in the near future. "Interest rates will likely rise this year," the Fed president told a Senate committee on Tuesday. The fact that consumer prices have shot up so far above the 2.0% target is evidence that there is no longer a need for the ultra-stimulative monetary policy. The markets promptly interpret this as a signal that the central bank is leaving emergency mode and switching to normality. Currently, the key interest rate is still in the range of 0.00 to 0.25%. For the December data due today, experts polled by Reuters expect inflation to rise to 7.0%. Material shortages resulting from the Corona Crisis and skyrocketing energy costs are fueling inflation. Good news for the long-neglected precious metals and a turnaround signal for banks.

    MAS Gold - Promising investment of Eros Resources Corp. in Saskatchewan

    Canadian company MAS Gold Corp. has entered into an option agreement with Eros Resources Corp. The agreement grants Eros the exclusive right to earn a 17.5% interest in all of MAS Gold's current properties in the prospective La Ronge gold belt in northeastern Saskatchewan. In return, exploration expenditures of CAD 3.5 million will be funded over a 6-month period. As a result, a large portion of the drilling plans for 2022 are secured. The transaction is subject to TSX Venture Exchange approval.

    MAS Gold CEO Jim Engdahl commented, "We would first like to thank Eros for this transaction to fund our 2022 winter drill program. This positions MAS well to continue to improve our key assets in 2022." Already 2021 has been a good year for MAS Gold, as the targeted 1 million ounce gold resource moves ever closer as a result of the successful negotiation steps in the estimates.

    The option agreement covers the Preview-North, Greywacke Lake, Elizabeth Lake and Henry Lake properties at 17.5%. These properties total approximately 33,860 hectares and are 100% owned by MAS Gold. MAS Gold also expects to complete the acquisition of the Contact Lake property in early 2022. MAS Gold and Eros have also agreed to conduct a summer exploration program together. The planned work will primarily focus on the Preview-North property.

    The current MAS shareholder structure bodes well for project progress, with gold legend Eric Sprott already on board and maintaining a first-class relationship with existing shareholders. The current 139.9 million shares outstanding add up to a low valuation of CAD 13.9 million under the circumstances. MAS Gold remains a good choice in the junior space due to its good progress.

    Deutsche Bank and Commerzbank - Cerberus exits at a loss

    As Reuters and Bloomberg report, citing the investment bank in charge of the transaction, US investor Cerberus last sold 25.3 million Commerzbank shares and 21 million Deutsche Bank shares. Prior to the sale, Cerberus held a good 5% stake in Commerzbank, or 63 million shares, while its stake in Deutsche Bank was about 3% or about 62 million shares. Cerberus surprised with this action. After all, the fund raised only about EUR 450 million with the sales just at a time when both institutions are reporting significant profit improvements.

    The activist hedge fund had taken a substantial stake in Deutsche Bank in 2017 and was pushing for the merger with Commerzbank, which was also being explored by government agencies. The transaction did not materialize, and since then, it has become quieter around the major shareholder. As the German portal "Finanz-Szene.de" has now calculated, the price of the Deutsche Bank share was EUR 15 when Cerberus entered the market, and the hedge fund bought Commerzbank at a price of around EUR 11. So the investor is lagging far behind in both investments.

    For the invested investors, this is rather good news. On the one hand, the number of loose hands in the heavily fallen financial stocks is decreasing. On the other hand, the shares are now gaining operational momentum because with rising interest rates, the margin in the lending business is also improving. Cerberus probably has other reasons for the exit - for the scolded bank stocks, this could be the wake-up call to get in.

    Barrick Gold - The boss speaks out

    The gold price is slowly starting to take out its resistance at USD 1,820. This week, the line has already been attacked 3 times. Now Mark Bristow, CEO of Barrick Gold, is speaking out. In his view, prices will remain stable or even rise this year. Investors, in his view, will use the precious metal to hedge against inflation. He sees cryptocurrencies as less likely to provide inflation protection.

    Barrick CEO Bristow said in an interview in Riyadh, Saudi Arabia, "I don't think there is much risk on the downside; it is more likely on the upside." Bristow, who has now been at the helm since 2019, is thus much more optimistic than analysts. That is because most experts see gold prices falling as the Federal Reserve is set to raise interest rates this year. According to a Bloomberg survey of analysts and economists, the average gold price is seen at USD 1,683 in the fourth quarter of 2022, which would be about 8% below current levels.

    Barrick Gold's stock was among the losers in 2021. It was down a full 15%, although the gold price was able to hold its ground at USD 1,815 at the end of the year. Analytically, the P/E ratio is now a low 14.5 - net debt fell to zero in 2021. Barrick thus remains a solid gold standard stock. Collect!


    Inflation is the current buzzword on the stock markets. Usually, this means interest rates and precious metals up - but the equation does not seem so simple. Although bank stocks have jumped, precious metal stocks are lagging. MAS Gold is valued low and lures the speculative investor with good deals in Saskatchewan.


    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author



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