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September 5th, 2023 | 08:10 CEST

Gold rush mood at NVIDIA and Desert Gold - Concrete gold share Vonovia crumbling

  • Mining
  • Gold
  • RealEstate
  • AI
Photo credits: NVIDIA

Stock market darling NVIDIA is behaving bullish again after a moderate decline. Over 50% of NVIDIA's buying comes from S&P500 heavyweights like Microsoft, Google and Amazon. All these companies invest heavily in GPUs to develop AI models. The rising importance of Artificial Intelligence (AI) and the increased use of GPUs in this industry contribute to the increased demand for gold and other commodities used in the manufacture of GPUs. Desert Gold, an exploration and development company in Mali, is benefiting from this trend. Its main project, the SMSZ project, covers 440 sq km and has proven and indicated gold resources of 8.47 million tons with a grade of 1.14 g/t gold. The venerable concrete gold real estate market is currently experiencing severe dislocation. 31% of project development volume in Germany is experiencing delays in residential construction. We look at what investors should do now to protect their portfolios.

time to read: 5 minutes | Author: Juliane Zielonka

Table of contents:

    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] 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

    Full interview


    NVIDIA share after moderate decline: Software industry and AI sector continue on growth trajectory

    According to a survey of 39 analysts, NVIDIA's stock is currently recommended as a buy by 37 analysts, while 2 experts recommend holding the stock. The average price target for the NVIDIA share is USD 621.92, while the current share price is USD 491.41. These estimates suggest significant growth potential.

    Stefan Slowinski, Global Head of Software Research at BNP Paribas Exane, also predicts bright times for AI in general and companies like NVIDIA in particular, in an interview with BNN Bloomberg, addressing investors. He explains the demand as follows.

    According to Slowinski, over 50% of NVIDIA's purchases are from so-called hyperscalers, including Microsoft, Google, Oracle and Amazon. These companies are investing heavily in GPUs to develop large-scale language models to support both their own services and enterprise customers. This trend is expected to fuel the growth of companies like Alphabet's Google, which is also investing in the AI space.

    Slowinski highlights the growing importance of Artificial Intelligence (AI) to Google. The recent Google Cloud Conference in San Francisco emphasized how critical AI is to the cloud business. Google plans to introduce new products and services with AI technology to differentiate itself from the competition. This could help Google generate higher profits from its cloud business in the coming year. The impact of these AI initiatives on Google's stock price will be keenly watched by the entire industry.

    NVIDIA is the darling of investors and the flagship stock on the booming AI theme. Rosenblatt Securities analyst Hans Mosesmann even forecasts the stock to reach USD 1,100. The 6-month rating trend of NVIDIA's stock also points towards "Buy," further emphasizing the confidence of experts in the future performance of the share.

    Desert Gold provides the valuable raw material in AI GPUs

    It is impossible to imagine the global economy without semiconductors, and the rise of Artificial Intelligence is consolidating this position. A recent indicator of this is the unstoppable rise of the NVIDIA share and its financial report from August 24, 2023. GPU components are held together by aluminum and copper, with gold, silver, zinc and tin used for switches and interconnects. Therefore, according to the report, commodity suppliers like Desert Gold are also benefiting from the boom in Artificial Intelligence.

    Desert Gold is an exploration and development company focused on exploring for gold reserves in Mali, Africa. Mali is a landlocked country in West Africa with an area of approximately 1.24 million sq km and a population of approximately 19.55 million.

    Desert Gold's main project, the SMSZ project, covers 440 sq km in Mali and overlies a 38 km section of the Senegal Mali Shear Zone. This zone is associated with four world-class gold mines and has proven and indicated mineral resources of 8.47 million tonnes grading 1.14 g/t gold, for a total of 310,300 ounces of gold. With over 20 open gold zones and untested targets, the SMSZ project is one of the largest gold exploration projects in West Africa, with potential for significant gold deposits.

    Recently, the Desert Gold team discovered a new zone of gold deposits in this very area. This zone is approximately 500 m south of the current "South Mogoyafara" gold deposit. This deposit contains an estimated 412,800 ounces of gold. The new zone being explored by the exploration team is approximately 400 m long and 50 to 75 m wide.

    Recently, the Desert Gold team has enlisted professional support. Mr. Doug Engdahl is assisting the Board. Engdahl has more than 20 years of corporate management experience and more than 15 years of geological experience in both the junior and mining and exploration sectors in North America and Africa. His extensive mineral exploration experience focuses on data compilation and interpretation, drill target generation and drill program management, and resource and mining modeling with an emphasis on structural geology and resource calculations. Investors can, therefore, look forward to seeing how Mr. Engdahl's expertise will accelerate Desert Gold's progress.

    Concrete gold share Vonovia in decline

    Real estate groups such as Vonovia, Adler Group and Deutsche Wohnen are facing enormous challenges. Increased construction costs due to the war in Ukraine, supply bottlenecks and the rapidly rising interest rates of the European Central Bank make it almost impossible for companies to build new apartments or renovate existing properties.

    The tight market situation is also making potential buyers cautious, shrinking the groups' operating cash flow. Large real estate deals have become rare, fueling further uncertainty in the real estate market. According to information from analyst firm bulwiengesa, the total project volume in Germany by the end of June stretched to around 183 million sqm, covering various sectors such as residential, logistics and retail and at various stages of planning, construction or completion. The data also reveals that delays have occurred in approximately 31% of this project development volume, which is a worrying signal for residential construction in particular.

    The current challenging phase of pricing, which involves establishing an appropriate spread between initial yields on new real estate investments and risk-free fixed-rate government bonds, is expected to persist in the market until at least the end of the current year. Tenants are also likely to be affected by this development, as real estate companies may face financial pressure and seek to raise rents to cover their costs. No proposed rent cap by the Social Democratic Party in Germany will help here; on the contrary, such a political measure would further exacerbate the situation. Instead of investing in concrete gold, investors should take an analytical look at commodities or the semiconductor industry.

    The NVIDIA share remains attractive thanks to its strong position in the AI sector and high analyst recommendation rate. The Company is benefiting from the growing demand for GPUs in the AI industry and has the potential for further growth. Explorer and developer Desert Gold is benefiting from the ever-increasing demand for AI technology as a raw material supplier for the semiconductor industry. The discovery of new gold deposits, together with the addition of expert Doug Engdahl, is accelerating the Company's progress. Concrete gold real estate companies such as Vonovia are facing challenges due to increased construction costs and interest rate hikes. Investors should closely monitor the Company's performance in this challenging market environment and consider alternative investment opportunities.

    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.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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