June 21st, 2023 | 08:20 CEST
Financial System 3.0 saved? Deutsche Bank, Defiance Silver and Nvidia - Artificial Intelligence conquers the banking world!
We cannot help but feel a little uneasy when we see the capabilities of Artificial Intelligence, even as mere users, as demonstrated, for example, by ChatGPT. However, Big Data and related analysis tools have been used by large IT companies for years and accompany our daily lives in the background. Currently, the behaviour of financial institutions and the actions of central banks are of particular interest. They must pull out all the stops to smooth out the distortions caused by inflation, war and the interest rate explosion. A tried and tested means in the past was the creation of liquidity, but that is no longer working. Where do the opportunities for investors lie?
time to read: 4 minutes
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Author:
André Will-Laudien
ISIN:
DEUTSCHE BANK AG NA O.N. | DE0005140008 , DEFIANCE SILVER CORP. | CA2447672080 , NVIDIA CORP. DL-_001 | US67066G1040
Table of contents:
"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
Author
André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
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High interest rates, little growth
A dangerous situation has now arisen in the capital markets. Due to high inflation, the central banks were forced to implement several interest rate hikes. First and foremost, the US Federal Reserve, which has now carried out 10 consecutive rate hikes. A small surprise was noticeable last week, however, as the US Fed paused its rate hike program at 5.00% to 5.25%. Nevertheless, the so-called Fed dots did not correct significantly, indicating that the market still expects smaller rate increases in 2023, reaching around 5.6% according to the median projection. The Fed members remain hawkish, although quite a few economists had thought it possible that interest rates would not be raised but maybe even lowered this year.
It remains questionable who can afford this high interest rate level because both companies and public budgets have their backs to the wall. Should capital market interest rates correct upwards, the risk for the American banking sector would be almost unbearable since, in this case, there would be the threat of massive write-offs on the already battered bond portfolios. As a reminder: In March 2022, the key interest rate was still just above the zero line. In order to justify all this, the Fed must remain optimistic about the economy, but the important indicators are pointing more to a recession. For example, the Philadelphia Producer Index is at a low of -13.70 points, and the much-watched Chicago Purchasing Managers Index is also on high alert, with a decline from 47.0 to 40.4. This further weakens the US dollar at 1.093 to the euro, bringing gold and silver back into focus. A wait-and-see attitude still prevails here at USD 1,954 and USD 23.9, respectively, but this should not be the case for much longer.
Defiance Silver - Good news from Mexico again
Those still underweight in precious metals should look closer at the Canadian junior Defiance Silver (DEF). The Company is developing several silver projects in Mexico, especially in the Fresnillo Belt. Here, more than 6.2 billion ounces of silver have historically been mined, representing about 10% of global silver production. The focus of the Canadians is the flagship project San Acacio, which is located in the middle of the Zacatecas Silver district.
San Acacio already has an initial resource estimate of 16.9 million ounces of silver and now has new results from 4 of 10 targets drilled. Drilling has encountered the highest grade and broadest mineralization ever drilled on the property. Highs reached as much as 157.30 g/t silver at 41.83 m, including 15.96 m at 379.90 g/t AG. Within this interval is also a 26 cm sub-interval with a bonanza grade of 5510 g/t AG or 6014 g/t silver equivalent. Defiance is encouraged by these results, which confirm the hypothesis that further high-grade mineralization is present in the Veta Grande.
Chris Wright, Chairman & CEO, comments: "We are extremely encouraged by the continued success of our drilling campaigns at the San Acacio Project. As a result of careful target acquisition and modelling work leading to several successful phases of drilling, our technical team has demonstrated the continued potential to outline a large mineral system within the historic San Acacio mine area on the Veta Grande vein system.".
Currently, DEF shares are moving sideways between CAD 0.15 and CAD 0.17. The debt-free company still has a good CAD 5 million in cash and can intensify its explorations. With a market capitalization of less than CAD 40 million, you will not find a comparably cheap silver company with such rich resources. Collect!
Deutsche Bank and Nvidia - Partnership in Artificial Intelligence
On the expiration date last Friday, Deutsche Bank suffered significant losses, falling from EUR 9.85 to EUR 9.35. In contrast, the US technology company Nvidia reached a new all-time high of USD 426. With a market value of USD 1.05 trillion, Nvidia has now entered the Hall of Fame of "trillion dollar companies". There are many indications that the boom in Artificial Intelligence (AI) and, specifically, Nvidia's solutions will continue to receive significant attention.
Deutsche Bank had already considered the AI topic in 2022 and announced a multi-year innovation partnership with Nvidia. With AI and parallel established machine learning, the aim is to accelerate the digitalization and modernization of the financial services sector. With Deutsche Bank's financial expertise and Nvidia's leading position in AI and accelerated computing, various AI-enabled and regulatory-compliant services will be created. The new partnership will also benefit Deutsche Bank's cloud transformation.
"Artificial intelligence, machine learning and the use of data will fundamentally change banking. Our partnership with NVIDIA is further evidence that we are committed to harnessing these opportunities for the benefit of our clients," said Christian Sewing, CEO of Deutsche Bank.
The partnership was preceded by several months of preparation: the companies tested several potential use cases, particularly in three areas: the development of risk models, high-performance computing and the design of a virtual avatar. To enable customers to experience Deutsche Bank in a whole new way, Deutsche Bank is working with Nvidia-Omniverse Enterprise. This is an open computing platform for the development and operation of metaverse applications as well as various AI services. With it, lifelike virtual assistants and digital avatars can be developed. What a new banking world!
While the Nvidia share is still seen as having potential, Deutsche Bank has failed to reach its resistance at EUR 10.50 for the time being.
The DAX blue-chip index is now stuttering at its old high of around 16,300 points. What is striking about this upward movement is that it is only supported by a small number of stocks worldwide. Such situations have already occurred historically. Therefore, caution is advised with technology stocks, while increasing investments in gold and silver stocks may appear to be a good hedge.
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