24. August 2021 | 12:46 CET
Gazprom, Central African Gold, Steinhoff: Dynamic opportunities arise here
In July, German consumer prices rose by 3.8%, the highest rate in almost thirty years. The Deutsche Bundesbank expects inflation to climb to around 5% this year. Such a devaluation of capital naturally puts savers under pressure. In addition to the conservative to speculative investments in commodities, which often rise in step with inflation, some investors are also considering speculative gambler stocks. We present three shares and assess their suitability as inflation investments.
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ISIN: GAZPROM ADR SP./2 RL 5L 5 | US3682872078 , CENTRAL AFRICAN GOLD INC. | CA1523761098 , STEINHOFF INT.HLDG.EO-_50 | NL0011375019
"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
Gazprom: Russians with all options
Gazprom's share has been back in stable waters for several months. With the dispute over the Nord Stream 2 pipeline in the Baltic Sea settled and signs of easing tensions between Russia and "the West" in the geopolitical arena, Gazprom shares can once again play to their strengths. These include huge reserves of oil and gas coupled with low production costs. In times when inflation is on the rise around the globe, these are good conditions for investment. Even though the energy turnaround is dominating the headlines in this country, the actual situation is different. Fossil fuels continue to be important - in March, Gazprom's gas exports from Russia to Europe were around 13% higher than a year earlier.
Since the dispute surrounding Nord Stream 2 has been settled, there is no reason to expect these figures to fall in the short term. In addition, Gazprom is intensifying its cooperation with China. One example is the Power of Siberia pipeline, connecting Gazprom's production sites with China's energy-hungry production facilities. Gazprom is a solid stock that benefits from rising prices. It also has an attractive dividend yield of currently around 4.2%.
Central African Gold: Hot bet on DR Congo commodities
Far from a dividend is the Canadian Company Central African Gold. The Company focuses on developing sustainable mining sites of copper, nickel and cobalt in the Democratic Republic of Congo. The management team around CEO Yves Kabongo is well connected in the DRC and works from the ground. Kabongo himself was born in Congo but grew up in Canada. In the past, the country was at times considered politically difficult and corrupt. In the meantime, however, the wind has changed, and exploitative raw material projects are prohibited by law. Central African Gold could hit a nerve with its ESG approach, which brings all stakeholders on board and strongly considers environmental aspects.
The Company is committed to minimizing dilution of outstanding shares through corporate actions. To this end, the Company plans to use its 176 sq km of land, which includes forests, to generate carbon credits. The Company recently completed a private placement of 8 million units for CAD 0.15 each. In addition to the properties named King Luba, whose concessions are 100% owned by the Company, which is very rare in the region, there is also an option to participate in the government-controlled Musefu Gold Project. This project has historical grades of 2.5 meters at 28.4 g/t gold or 11 meters at 8.1 g/t. The Company is located in an early stage prospective region. That is also shown by the market capitalization of about EUR 3 million. Those who believe in rising inflation rates and expect this topic will soon determine the markets again can use such low valuations to build speculative positions. Shares such as Central African Gold behave like a warrant in phases of rising gold prices and offer the chance of disproportionate gains.
Steinhoff: Only for law freaks
Many private investors are also hoping for such gains from Steinhoff. The furniture manufacturer is still in the legal aftermath of an accounting scandal. In recent months, there has been back and forth about possible settlements between Steinhoff and the plaintiffs. The Group recently increased its settlement offer, which has at least made an agreement more likely. Currently, only the consent of a class action group involved in the proceedings is missing to make additional payments by participating insurers irrevocable. What already sounds complicated in the short version is even more complex. After the gain in the share price, there is currently nothing to be said for an investment - the proceedings are too complex to make it worthwhile to invest now.
While Steinhoff is a gamble and Gazprom is a solid but somewhat boring stock, Central African Gold could play to its strengths when commodity prices rise and provide leverage on gold and base metal prices. The Company is still in its infancy, however, which means risk for investors, yet opportunity, even from small investment amounts.