06. July 2020 | 08:48 CET
Desert Gold, Steinhoff, Wirecard - what investors need to know now
Central banks have been printing more money than ever before since the outbreak of the Corona Pandemic. Those who want to escape from money are buying shares or purchasing physical assets such as real estate or precious metals. Gold is the oldest and most secure currency in the world. The value of bars and coins has been rising since the second quarter of 2019 and is increasingly gaining momentum. In the case of Wirecard, the extra time has begun and the fair value will move towards zero after the insolvency filing. What is now going on at Steinhoff? An exciting week has begun.
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ISIN: CA25039N4084 , NL0011375019 , DE0007472060
"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
Gold stock may continue to rise
The Canadian gold company Desert Gold is exploring its more than 400 km2 projects in western Mali on the border with Senegal. The company is focused on gold and in the past, deposits of the precious metal have been discovered in attractive quantities at several locations. The projects are surrounded by mines from renowned producers such as B2Gold and Barrick Gold. In the current and future drilling programs the goal is to discover reserves of up to six million ounces.
According to S&P Global, Market Intelligence, in 2018, acquisitions in Africa paid more than USD 200 per ounce in the ground. At that time, however, the price of gold was largely trading below USD 1,300.00 and is now traded at around USD 1,800.00. Last week Desert Gold acquired another area for projects. As a result, the value of the company has continued to increase and now stands at around CAD 24 million. As soon as positive information from the current drilling program becomes known, the interest in the share should continue to increase.
Is a solution imminent?
The Steinhoff trading group has hit the headlines due to balance sheet manipulation. A high debt burden of more than 10 billion USD is causing management and shareholders great headaches, which may soon be ended by a settlement. In the past financial year 2019, the company increased its sales by 5% from EUR 11,435 million to EUR 11,992 million. The bottom line EBITDA increased by 3% from EUR 771 million to EUR 791 million. In the first quarter of the current fiscal year, sales increased by 7% from EUR 3,214 million to EUR 3,445 million compared to the same period of the previous year.
In light of the fact that the market value of Steinhoff currently amounts to around EUR 263 million, a solution with the creditors will have an enormous effect on the share price. In the coming weeks, the share will probably keep speculators busy more than ever.
Messengers of information ignored
The Wirecard scandal can be viewed from various perspectives. The suspicion of fraud is unprecedented and seems to be hard to beat in its unscrupulousness. The suspicion is now raised that the management was able for a long period of time to bypass the auditors and falsify the balance sheets. This fact in itself is bad for confidence in the capital market and the industry.
However, the whole affair takes on a completely different quality because for many years, market participants have regularly pointed out that Wirecard's figures and development cannot be correct. The allegation of fraud has been flying around for more than ten years. The responsible institutions, organizations and auditors could have averted a great amount of damage if the persons who sent the information had not been ignored or punished, but rather if the controlling institutions had carefully examined the facts of the case. Now the "cat and mouse game" is over - game over. Sorry, no bonus.