August 6th, 2024 | 07:00 CEST
Barrick Gold, Prismo Metals, BASF - Precious metals as a safe haven in a crash
Last week, the indices recorded a noticeable decline on Thursday and Friday. The Fear and Greed Index is approaching a state of extreme fear, indicating that market sentiment is dominated by uncertainty and panic. In such times, investors often flee to safe havens, such as precious metals, while selling almost all other assets. This shift can lead to further turbulence on the markets and demonstrates how strongly emotions and risk behaviour influence events on the financial markets. We therefore take a closer look at two precious metal companies and analyse BASF, a stock that has been hit harder by the crash.
time to read: 4 minutes
|
Author:
Armin Schulz
ISIN:
BARRICK GOLD CORP. | CA0679011084 , PRISMO METALS INC | CA74275P1071 , BASF SE NA O.N. | DE000BASF111
Table of contents:
"[...] 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
Author
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.
Tag cloud
Shares cloud
Barrick Gold - Ahead of the quarterly figures
Gold is currently gaining in attractiveness as a safe investment, particularly in light of the Fed's current monetary policy and global uncertainties. Barrick Gold is also in the spotlight as the Canadian company is about to publish its Q2 figures. The combination of a rising gold price and robust business figures could further boost the share price. This offers an attractive prospect for investors looking to benefit from the current market dynamics.
Several factors are driving the gold price upwards. The Fed's recent decision to leave interest rates unchanged has fuelled hopes of a possible rate cut in September, which immediately impacted the gold price. In addition, Newmont, one of the largest competitors, has already shown what the increased gold price is all about with its good figures. If gold surpasses its previous record high of USD 2,484, this could lead to further significant price gains. Gold thus remains on a promising course despite occasional setbacks.
Barrick Gold is about to publish its quarterly figures on August 12. Preliminary reports show that the Company produced 948,000 ounces of gold and 43,000 tonnes of copper in Q2. The market is anticipating positive results, which should continue to support the share price. In particular, higher production rates at key mining sites have contributed to the improvement in production performance. This could help Barrick Gold to achieve its annual targets. Analysts see price targets of USD 18 to 27. The average is USD 21.90. The share is currently available for USD 17.91.
Prismo Metals - Pushing ahead with its projects
Prismo Metals operates copper, gold, and silver projects in Arizona and Mexico, focussing on exploration and discovery. The Company is concentrating on three main projects. Firstly, Hot Breccia in Arizona, which has potential for copper-gold deposits and contains historic drilling by Kennecott and Phelps Dodge. In the Panuco district in Mexico, Prismo is collaborating with Vizsla to produce 15.2 million ounces of silver equivalent, according to the Preliminary Economic Assessment (PEA). Los Pavitos offers great gold potential with unexplored mineralized areas. These projects show promising results and offer further potential.
As of July 12, Prismo Metals has permission for 10 deep drill holes at the Hot Breccia Copper Project in Arizona. This marks a significant step for the Company and enables drilling to explore a promising copper target. The Company is planning a 5,000 m drill program with a CAD 3 million budget to gain meaningful insights. A total of 5 drill holes are to be drilled in the first stage. Drilling is scheduled to commence in Q3. This project follows on from informative geological surveys. It is expected to lead to the discovery of a mineral-rich system in one of the world's leading copper districts just 40 km away.
Work is also progressing on the Palos Verdes property in Sinaloa, Mexico, in partnership with Vizsla Silver. The drill program is scheduled to commence this week with three main objectives, including extending high-grade mineralisation, continuing the vein across a cross-cutting fault zone, and exploring the northeast extension of the Palos Verdes vein system. The planned drilling campaign is targeting high-grade mineralization and will subsequently assist with geological modelling. This guarantees newsflow in the coming months. The share has gained over 70% since May and is currently consolidating. The share is currently trading at CAD 0.22, giving it a low market capitalization of CAD 8.8 million.
BASF - Explosion and weak quarterly figures
BASF shareholders have been seeing a declining stock price since early April. Last week, things took a turn for the worse. On July 29, there was an explosion and a fire at the Ludwigshafen site. Eighteen people were injured, including seven firefighters. Investigations and enquiries have begun after experts assessed the affected building for the risk of collapse. Some areas have been reinforced. The affected factory has since been shut down. Fortunately, there was no danger to the public. At the end of the week, the share, which was still trading at EUR 54.93 at the beginning of April, was dragged down further by the falling indices.
The Company presented its quarterly figures on July 26. Overall, the BASF Group recorded a decline in revenue to EUR 16.1 billion, mainly due to lower prices across all segments, especially in Surface Technologies. EBITDA before exceptionals totalled EUR 2 billion due to increased earnings in some segments, such as Industrial Solutions, Chemicals, and Nutrition & Care, thus reaching the previous year's level. However, EBIT dropped by EUR 458 million compared to the previous year and totalled only EUR 516 million. Operating cash flow also fell by around 10% to EUR 2 billion.
Nevertheless, BASF's outlook for the 2024 financial year remains unchanged: EBITDA before exceptionals will be between EUR 8.0 billion and EUR 8.6 billion, with free cash flow between EUR 0.1 billion and EUR 0.6 billion. Following the mixed figures, there were 4 "Buy" recommendations, 4 analysts recommended "Holding", and Jefferies even recommended "Selling" the shares. The price targets were between EUR 43 and EUR 56. The main reason for the analysts' caution is the weak demand. The share is currently trading at EUR 40.89.
The recent market turmoil has brought precious metals into focus as safe havens. Barrick Gold is benefiting from rising gold prices and positive production figures, which could support the share. Prismo Metals is actively advancing its exploration projects, which promises future growth. BASF, on the other hand, has had to contend with a catastrophic incident and weak quarterly figures, which is putting pressure on the share price. The uncertainties and fears on the markets are causing investors to increasingly invest in more stable forms of investment, such as precious metals.
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.
