21. September 2021 | 14:23 CET
Barrick Gold, Tembo Gold, Varta - Where is the crisis gold rally?
A lot is going on in the markets. Asia is stumbling; here, the real estate markets had recently euphorically soared, now there are serious concerns. China has been struggling with high vacancy rates in its industrial cities since the pandemic broke out. People have fled the city for fear of infection and returned to the countryside. The resulting de-leveraging puts downward pressure on prices and, ultimately, with interest rates rising slightly, causing significant skewing in a highly leveraged shadow banking world. The imbalance of China Evergrande shows these excesses in pure form. Yesterday, there were wild price falls. The problem: Evergrande has to make high-interest payments, which are due this week. Some investors think back to Lehman Brothers and press the sell button first. What will the Fed say tomorrow in the USA on this subject?
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ISIN: BARRICK GOLD CORP. | CA0679011084 , TEMBO GOLD CORP. | CA87974N4057 , VARTA AG O.N. | DE000A0TGJ55
"[...] We have a clear strategy for neutralizing sovereign risk in Papua New Guinea. [...]" Matthew Salthouse, CEO, Kainantu Resources
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.
Barrick Gold - The solid rock is cheap at the moment
The world's second-largest gold producer Barrick Gold is not having a good run on the stock market at the moment. Although the gold price of USD 1,760 is also somewhat under pressure, which slightly lowers the mining giant's sales, Barrick had again been able to announce production increases at the half-year. The group is now debt-free on a net basis and is building up further cash reserves from quarter to quarter. The dividend was also raised recently. However, this has not helped the share price, and the gold giant is down 35% over 12 months.
Despite Corona, Kibali is expected to produce between 830,000 and 870,000 ounces of gold this year and is working on further optimizing the mining yield. By mid-year, Barrick had continued to upgrade infrastructure. The average realized gold price in 2020 was USD 1,770 per ounce, up 27% from the average price of USD 1,393 in 2019 and the highest annual average ever in the Company's history. This year, the selling price achieved should be well above USD 1,800.
After a renewed crash to currently EUR 15.5, this line must now prove itself in chart terms. Yesterday, pressure came on the share after the share price could not follow the slightly higher gold price at USD 1,763. Analytically, the Barrick share is now trading at a 2022 P/E of 14, and of the current 22 analysts, 14 recommend entry. If the mark around EUR 15.5 holds, we confirm this view, but if the price also rushes through this line, the share is technically on the way towards EUR 12.50. In any case, add the share to your top watchlist.
Tembo Gold - Rumors about rumors
After 7 years of inactivity, there is news about the Tanzanian gold explorer Tembo Gold. The price jumped from CAD 0.13 to CAD 0.23 in Canada, overtaking observers on the left without any warning. Measured against all trading in the past 6 months, that was almost 30% of total sales in 2021 in just a few trading days. The whole thing happened against the backdrop of a successful financing at CAD 0.15, where the Company did not hand out any options. Relatively unattractive, one would say from the outside, but the new shares found brisk sales and CAD 2.2 million was raised. Immediately afterward, there were options for the management at CAD 0.185 - so again, there are good financing opportunities if demand increases in the future.
Tembo's properties are located in Tanzania near Lake Victoria, a zone with historically eye-catching gold reserves. Its immediate neighbor is Barrick's Bulyanhulu mine with 14 million gold ounces of proven reserves; another well-known player is also AngloGold Ashanti with its Geita gold mine. Tembo Gold has secured over 174 sq km in this geological fault zone and continues to explore in proximity to the two gold mines mentioned above. The potential in this area is good, with recent drilling returning grades ranging from 3.13 g/t AU over just under 36m to 22.81 g/t AU over 15m. Tembo is now preparing on-site to resume a 7,000m drill program in October. We are very excited!
Tanzania has recently seen a significant improvement in the mining investment climate, facilitating the commissioning of several mining projects in the region. David Scott, President and CEO, stated, "This is the opportunity that the Company's supportive shareholders have persistently worked towards, and now is the time to realize the value for all stakeholders." The stock market has been cheering before with a 50% price increase. A persistent rumor also keeps bringing Barrick Gold into play. There would be enough money for a merger deal! One should likely, therefore, secure a few pieces at this level.
Varta - This looks like a sellout
It does not look golden at all with the battery manufacturer Varta. The price has come properly under the wheels. The reason may have been the renewed disappointment that the second attempt to break out above the EUR 165 line failed. When something like this happens, there are not necessarily operational reasons for a more substantial correction because falling momentum attracts new sellers every day. Yesterday, the stock then went into free fall, losing around 6.5% to EUR 112.
Nevertheless, there is an interesting message from an important customer: Apple had presented the iPhone 13 and a new generation of the Apple Watch last week, among other things. However, a new AirPod was not shown at the product show. Previously, there was speculation in the market about the announcement of a new cordless headphone, for which Varta is known as the supplier of the button cells. Those who had hoped for this were probably somewhat blindsided.
We are keeping a critical eye on the Varta share price. Because purely technically, the price is going down a bit too fast right now. In a countermovement, therefore, the upside potential for a good recovery should be paved. Put a few pieces at prices between EUR 100 and EUR 108. This level has already been held in the May correction. In any case, hedge your commitment with a stop at EUR 95 to limit the risk. The overall market does not look good at the moment, especially for the hotly run stock market favorites. In the next few weeks, reasonable buying prices could light up.
There is a sellout mood on the stock markets. Technology and biotech stocks in demand have to make considerable headway. Gold was able to gain a little yesterday, which directs the focus back to interesting entry levels at Barrick Gold, for example. Use this opportunity to also bet on the attractive small neighbor Tembo Gold.