April 12th, 2023 | 10:31 CEST
Deutsche Bank, Desert Gold, Barrick Gold - Gold price on the way to an all-time high
After the collapse of Silicon Valley Bank and the rescue of Credit Suisse through the merger with UBS, the great trembling has begun. In the 2008 financial crisis, the FED fired up the printing press to stabilize the banks. In order to avoid inflation, the banks were paid to park their money with the FED. Thus, there is USD 5.7 trillion at the FED, on which interest of more than USD 700 million is due every day. That drives up the money supply and inflation. It is no wonder that alternatives to fiat money are booming. The gold price is already above USD 2,000, and cryptocurrencies have also rebounded. We, therefore, look at two gold companies and analyze Deutsche Bank.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
DEUTSCHE BANK AG NA O.N. | DE0005140008 , DESERT GOLD VENTURES | CA25039N4084 , BARRICK GOLD CORP. | CA0679011084
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Deutsche Bank - Repays bond early
Trust in the financial system can crack very quickly, as seen in the example of Silicon Valley Bank. After the CDS (credit default swaps) at Deutsche Bank suddenly shot up with just one trade, panic reigned on the markets, and the Deutsche Bank share lost almost 15% in a single day. The stock has not really recovered since then, but at least the losses have been made up. At the end of the week, three major financial institutions - JPMorgan Chase, Citi and BlackRock - will be in the spotlight when the figures for the first quarter are published.
CDS values have fallen again after the rapid rise, and some calm has returned for the time being. On 24 March, it was announced that a subordinated bond maturing in 2028 was repaid early. This move symbolizes strength, as it involves USD 1.5 billion. The bank also recently raised interest rates on overnight and term deposits for all customers. At the upcoming annual general meeting on 17 May, a dividend increase from EUR 0.20 to EUR 0.30 will be voted on. After the best business year since the 2000s, there had already been speculation about an increase.
Since the share's crash, there have only been 2 analysts who have looked at the share. Berenberg rated the share as "Hold" and gave it a price target of EUR 11. Goldman Sachs took a much more positive view of the stock, setting a target price of EUR 19 and recommending a "Buy". Currently, the price per share is EUR 9.51. That puts the dividend yield at 3.15%, provided shareholders approve the increase.
Desert Gold - Update on the drilling programme
Rising gold prices always arrive with a delay at gold explorers. This is also true for Desert Gold this time. So far, the share has hardly been able to profit from the rise in gold. The Canadian company is active in Mali, Africa, where it owns the SMSZ project, one of the largest gold exploration projects in West Africa. The property is 440 sq km and is located on the Senegal-Mali shear zone. There are 4 Tier-1 gold mines in the vicinity, such as Barrick Gold. The mineral resource estimate is about 1,080,000 ounces of gold measured and inferred. On 13 February, this year's drill programme started with 2,500 m in 325 drill holes.
On 21 March, there was an update on the drilling programme. This saw 445 drill holes completed for a total of 2,067m over the Mogoyafara South and Gourbassi West North gold zones. Samples were sent to SGS Laboratories in Bamako. During the work, 3 new artisanal mining zones were discovered. One is located about 500m south of the Mogoyafara South gold deposit. The 2nd artisanal mining zone has opened up about 1,000m east of the Mogoyafara South trend. In addition, another informal mining area has been found about 2 km east of the Kolon zone. Jared Scharf, the CEO, expressed his delight: "I am always pleasantly surprised when new artisanal mining sites turn up on our SMSZ property."
The Company plans to release the analysis results as soon as possible. If the results are positive, takeover fantasies would also get new fuel. Most recently, B2Gold acquired the gold explorer Oklo Resources. Above all, the low costs speak for gold exploration in Mali. Further information can be found on researchanalyst.com. The share is currently available for CAD 0.06, which is only slightly above the low for the year of CAD 0.045. If the gold price continues to rise, the shares of gold explorers will follow sooner or later.
Barrick Gold - Porgera Mine to be reopened
The rising gold price is, of course, ideal for one of the largest gold producers like Barrick Gold. As a result, the overall costs, which have risen due to inflation, no longer carry quite as much weight. In addition to the fear of a financial crisis, the gold price is also helped by the increased interest of central banks, which bought over 1135 tonnes of gold in 2022 - a new record. According to the World Gold Council, this trend will continue in 2023, but it is uncertain whether a new record will be set. Despite the gold production in 2022, Barrick Gold was able to increase its gold reserves.
On 30 March, the Company announced that it had reached an agreement with the government of Papua New Guinea to resume gold production at the Porgera mine. The mine had been idle since 2020. The mineral resource estimate there is 10 million ounces plus 3.4 million inferred. Annual production is expected to be 700,000 ounces. When the Reko Diq project in Pakistan is fully operational, it will increase gold production and almost double the current copper production.
There is also news at Kibali, Africa's largest gold mine, which has spurred economic growth in the North Eastern province of the Democratic Republic of Congo. Kibali has become a pioneer in renewable energy, with 80% of its electricity coming from renewable sources. It is extending its Tier 1 production profile to 2033, with another solar power plant due to come on stream there in 2025. Since 9 March, Barrick's shares have peaked at almost 30% and are currently trading at USD 19.46. The next figures will be presented on 3 May. On 13 April, there will be preliminary data on production, sales and costs.
If confidence in the financial system cannot be restored entirely, demand for gold will remain high. This is, first and foremost, good for producers like Barrick Gold, which can significantly increase their profits as the price of gold rises. In a second wave, the shares of explorers like Desert Gold will be bought because the identified gold deposits will become more valuable. Then there may also be takeovers by large producers. Deutsche Bank is already trying to rebuild confidence, but the markets are still nervous. At the end of the week, there may be new impetus with the quarterly figures from the banks.
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.
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