August 3rd, 2022 | 13:53 CEST
Desert Gold Ventures, Deutsche Bank, Barrick Gold - Is the bottom in sight?
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
Desert Gold - Correction well advanced
As a long-term investor, one may sum up: The exact low point for purchasing a share can never be found. However, after sharp corrections of up to 80%, gold stocks already show attractive entry opportunities, which makes the risk-reward ratio appear positive in the long run. In general, gold stocks like Desert Gold reflect the precious metal price and react disproportionately to its change, both upwards and downwards.
The Company's CEO, Jared Scharf, provides the advantage over the competition: "From an investment perspective, we are trading at a steep discount to our peers based on the market price per ounce of gold. If you look at the way we spend our investors' dollars, Desert Gold has by far one of the lowest, if not the lowest, discovery costs per ounce of gold."
With the SMSZ project in Mali, the Canadians own one of the largest non-producing land areas in West Africa at 440 sq km. In close geographic proximity are several producing Tier 1 gold mines, including those of Barrick Gold, Allied Gold, Endeavour Mining, and B2Gold. In a bull market, the share price would probably have gone through the roof after the latest results, but in the current gold slump, such strong results attract little attention.
The first drill hole in the Linnguekoto West zone already detected a very good 1.83 g/t gold over a distance of 27m, including 2.25 g/t over 20.7m and 26.5 g/t Au over 1.0m. The true width is estimated at 13 meters. The Linnguekoto West zone is located in the south-central portion of the SMSZ property, and the total drill program is expected to extend to 20,000m this year. Desert Gold Ventures is an exciting stock and should be one of the outperformers if the gold market is strong.
Deutsche Bank - The patient is recovering
For almost 10 years, the Frankfurt-based bank was virtually in intensive care. Plans to join the ranks of the world's largest banks failed. The share price was a proud EUR 86 in May 2007. Then, the financial crisis began, and both the costs and the earnings fell into the bottomless pit. Currently, the share price is at EUR 8, and the restructuring measures are taking effect, making Deutsche Bank one of the undervalued shares in the financial sector with a P/E ratio of just 5.
The figures for the second quarter once again showed that the management around CEO Christian Sewing is on the right restructuring path. Analysts were expecting a profit of EUR 788 million, which the group was able to pulverize to the tune of EUR 1.05 billion. In particular, the businesses of the retail bank and the corporate bank performed better than expected. However, the Company sees some storm clouds gathering for the second half of the year. Due to increased inflation and other influences, CEO Christian Sewing is becoming more cautious about the year as a whole. He said the environment would make achieving an 8% return on tangible equity more challenging.
The voices of analysts were mixed in the wake of the forecast, with price targets diverging widely. The major Swiss bank Credit Suisse reduced its target price from EUR 11 to EUR 10 after the quarterly figures. In contrast, the US investment bank Goldman Sachs upgraded the share to "Buy" and raised the price target from EUR 18.80 to EUR 20.10.
Barrick Gold - Development like Newmont?
Excitement is building for the publication of the figures of the world's second-largest gold producer on August 8. The number one in the industry, Newmont, disappointed weeks ago with a profit significantly below expectations. Newmont reported earnings of USD 0.46 per share, USD 0.15 less than forecast. In addition, production guidance was capped at 6 million ounces, and 2022 costs were revised up to USD 1,150 per ounce.
From a chart perspective, the Newmont debacle dragged Barrick's stock down with it. Thus, investors may have already priced in the possible weaker quarterly figures. It is important now to hold the established upward trend, which currently runs at USD 14.59. Should this be broken, the low from 2002 at USD 12.31 would be at stake.
The gold price could now have reached a long-term turning point. Desert Gold Ventures offers great opportunities after the substantial price decline. At Barrick, investors are eyeing the publication of the quarterly figures. Deutsche Bank is on the right track and cheap compared to the sector.
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.
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.