23. June 2020 | 07:54 CET
Desert Gold Ventures, First Majestic Silver, K+S - Resources with potential
Many commodities are currently experiencing a price increase. The precious metals gold and silver are in demand above all because central banks and governments are increasing the money supply with their stability actions, thus creating the need for inflation protection. While gold is largely an independent currency, silver is not only an investment object, but is also used industrially. The energy sector has also calmed down and the price of oil is rising. Copper has recovered from its lows in March 2020. Rising prices mean higher margins, now timing is key.
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ISIN: CA25039N4084 , CA32076V1031 , DE000KSAG888
In the centre of West Africa
The price of gold has been rising continuously since summer 2019. In the meantime, the troy ounce of the precious metal already costs more than USD 1,750.00. At the beginning of September 2018, the price per ounce was still quoted at less than USD 1,200.00. For the coming year Goldman Sachs sees a price potential up to USD 2,000.00 and Bank of America even considers a rise to up to USD 3,000.00 possible.
Investors who are interested in value creation and would like to be involved in the early stages should take a look at Desert Gold Ventures. The company has projects with a size of about 400 square kilometers and is surrounded by renowned gold producers as well as mines with more than five million ounces of gold reserves each. The management has acquired the large portfolio over the past ten years and can expand the amount of gold discoveries with planned drilling programs.
An exploration company can usually be expected to be taken over by a major producer. The market value of Desert Gold Ventures is approximately CAD 21 million. In 2018, acquisitions in Africa were paid around USD 200.00 per ounce in ground and Desert Gold Ventures' management is targeting the discovery of up to six million ounces.
Focus on silver production
The price of silver has also been extremely volatile in recent weeks. Thus an ounce of gold still cost around USD 18.00 at the beginning of the year and then plummeted to almost USD 14.00 in March. Meanwhile, the price is once again trading in the region of the year's highs, which is playing into the hands of companies such as First Majestic Silver. The higher the price, the more the company can earn. The market value is currently around CAD 2.5 billion and experts believe that silver will catch up in the shade of gold.
German Global Player
At K+S, potash (Kali) and salt (Salz) are not only behind the name, but are the focus of corporate development. Over the past three years, the market capitalization has fallen by more than 75% to EUR 1.15 billion. As stock market wisdom has it, the tide is lifting all boats, and this was also the case with the K+S share over the past few weeks. The share rose from EUR 5.20 to over EUR 7.30. In the meantime, the shares are changing hands again at about EUR 6.00.
It is currently unclear how management will deal with the expected market changes. Conversely, the extent of the cuts in social life will have consequences for the economy. Now it depends on how well K+S can adapt.