December 23rd, 2021 | 09:55 CET
Coinbase Global, Triumph Gold, Barrick Gold: Disruptions ahead - this is how crisis insurance succeeds
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"[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures
Coinbase: Here things get interesting again
Central banks are in a dilemma: On the one hand, the outlook for the economy is becoming increasingly gloomy, while on the other hand, inflation is high, and signs of overheating also appear again and again on the real estate market. Since the monetary guardians are juggling billions, wrong decisions can have far-reaching consequences. Crypto stocks have so far proven to be safe havens only to a limited extent. But what is the reason for this?
Stocks like Coinbase have been heavily hyped in recent months. High valuations always accompany this. In recent weeks, however, Bitcoin and many crypto stocks have crashed. The Coinbase share is currently trading above the EUR 220 mark after the value was still at EUR 300 in November. While there is still some resistance ahead of the stock, recovery is not unlikely. Coupled with the outlook around the new technology, the value could also rebound as turmoil around the pandemic and economy increases. That crypto is an alternative to the existing financial system cannot be denied.
Triumph Gold: Drill results ahead
Entirely without wallets and blockchain, gold has managed for millennia. The precious metal is considered the oldest currency globally and plays a significant role in asset protection today. In case of doubt, a bar or a few coins change hands faster within the family than other assets that entail notary appointments or the services of a tax advisor. No wonder that gold has always been in demand during crises in the past. The record high from 2011, which lasted for many years, fell after the great financial crisis and the sovereign debt crisis phase. With rising interest rates, sovereign debt could become an issue again for the foreseeable future, as it is likely to soon become more difficult for governments to refinance themselves. But which stocks could benefit in this environment?
One stock that has been bobbing along for months is Triumph Gold. The Company has a promising project in Canada's Yukon and has prospects for copper and gold. The Company recently drilled 106.5 meters at 0.76 g/t gold equivalent. The majority of results from this year's drill program are pending. As the Company is at an early stage, resources in the ground are valued at a discount. During periods of dynamically rising gold prices, it is common for this valuation discount to decrease. Shares of smaller gold stocks, such as Triumph Gold, then react like a kind of warrant. At the moment, one has to imagine the stock like a warrant that is quoted well out of the money and makes no move to jump. Those with short-term orientation are unlikely to be interested in Triumph Gold. However, it may pay to be on board with this small gold stock in the long term.
Barrick Gold: The momentum is missing here
Anyone who thinks of gold often thinks of the Barrick Gold share in the second step. The world's second-largest gold producer has not cut a good figure on the stock market in recent years. Upward movements of the title were somewhat sluggish, but when it went down once, Barrick Gold was right there. The Company is currently earning good money and is well equipped for a gold price below the current level. The downside of this is that dynamic upward moves often lack imagination. Moreover, since gold producers sell their production forward, the respective shares often cannot benefit from short rises in the market. The stock is solid, but nothing more.
The coming months should be exciting - it is not yet clear how the central banks will deal with the challenging situation. In the course of this, there may be distortions in the market. Besides cheaply valued crypto stocks, gold remains the classic for turbulent times. Smaller stocks, such as Triumph Gold, are suitable as crisis insurance due to their unique characteristics. However, the insurance premium should not be too high.
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