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August 28th, 2020 | 06:30 CEST

Commerzbank, Desert Gold, Deutsche Bank - Money supply increases significantly

  • Monetary policy
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There are various financial indicators in an economy that allow assessments of the current state. An important indication is, for example, the amount of money supply and its change. However, the amount of money is still divided into three classes according to its availability. The narrow money M1 is cash and account balances with immediate access. M2 are money deposits with a maximum term of two years and three months' notice. The broad money M3 comprises the total available money as well as debts and securities. The European Central Bank published the latest data on the accelerated increase on Thursday.

time to read: 2 minutes | Author: Mario Hose
ISIN: DE000CBK1001 , CA25039N4084 , DE0005140008

Table of contents:

    Peak values on increase

    Yesterday's announcement of the money supply by the European Central Bank in Frankfurt should not have surprised anyone. In the fight against the consequences of the Corona Pandemic, politicians and central banks have initiated extensive measures that will also result in an increase in the money supply. The narrow money M1 has increased by 13.5% in July 2020 compared to the same period of the previous year. In the previous month this rate was still 12.6%. The broad money M3 rose by 10.2%, reaching its highest level since May 2008, compared with 9.2% in the previous month.

    Wealthy people change into gold

    The European Central Bank is buying securities and government bonds on a large scale to combat the consequences of the spread of Covid-19. Commerzbank and Deutsche Bank can benefit from the fact that long-term loans in the Eurozone have become extremely cheap. Bank lending to private households increased by 3.0% year-on-year and corporate lending grew by 7.0%. The consequences of the increase in the money supply and loans are not yet foreseeable, however. For this reason, wealthy investors have been fleeing into other asset classes, such as gold, for several months.

    Successful financing completed

    There are attractive opportunities in the gold sector. Two weeks ago the Canadian gold company Desert Gold Ventures announced the largest financing since its foundation. The management had the goal to raise CAD 6.5 million from investors for the further growth of the company. Around two weeks later, Desert Gold was able to announce that the placement was completed successfully and oversubscribed for CAD 6.83 million. The Company has previously announced that the results of the completed drill program will be released shortly.

    Takeover candidate with potential

    Desert Gold has built a portfolio of more than 400 km2 gold projects in West Africa and is now focusing on data acquisition through further exploratory drilling. The primary goal is to find out how large the already discovered gold deposits are and where further deposits of the precious metal could be located. Management has ambitious goals and is looking to discover up to six million ounces of gold on the properties. In 2018, acquisitions in Africa were paid at over USD 200.00 per ounce in ground. Desert Gold currently has a market value of around CAD 30 million and therefore has corresponding price potential. There will probably be no shortage of potential buyers, as the company is surrounded by producers such as B2Gold, Barrick Gold and Iamgold.

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    Der Autor

    Mario Hose

    Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.

    About the author

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    Commented by Mario Hose on November 20th, 2019 | 11:47 CET

    Allianz, Deutsche Bank, Triumph Gold - ECB warns against own interest rate policy

    • Monetary policy

    Luis de Guindos, Vice-President of the European Central Bank (ECB), presented the semi-annual stability report this morning. In view of the continuing economic weakness and extremely low interest rates in the eurozone, the ECB warns of the dangers to the stability of the financial system. High debt levels and budget deficits in some eurozone countries could once again come to the fore in the market. Low interest rates also increased the willingness of investment and pension funds and insurers to take risks in order to generate returns on risky transactions. Unexpected price corrections in investments can thus have consequences for the entire financial system.