August 10th, 2022 | 13:40 CEST
Gold? What matters is what you make of it: Barrick Gold, Desert Gold, Amazon
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"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Barrick Gold: Where to put all that money?
If you want to bet on gold, you have all the options: Physical gold or products such as ETCs or certificates. Gold shares are also a good choice. This form of investment is cheaper and more flexible than vaults and safe deposit boxes. Barrick Gold, the world's second-largest gold producer, is particularly popular with private investors. The Company's latest figures show that this choice is a good one. While competitor Newmont weakened, Barrick shone with a quarterly profit of USD 0.24 per share. Consequently, the Company also intends to distribute USD 0.20 per share per quarter. In addition, there is a buyback program for treasury shares.
Such a spending spree could make observers skeptical - after all, successful companies should also invest and not just pay out dividends. The high cash position of USD 636 million also suggests a certain investment backlog. The copper business played a significant role in the good figures. It is precisely in this area that Barrick Gold had announced its intention to grow in the past. Therefore, an acquisition in this area could be imminent in the short to medium term. But even with gold, producers like Barrick must keep adding to their reserves - after all, reserves need to be replaced. Given the current low gold prices, an investment could be worthwhile. Barrick currently offers a high dividend yield and appears cheap. However, the stock is not a high-flyer.
Desert Gold: Drumbeats and good neighbours
Desert Gold has what it takes to be a high flyer. Like Barrick, the Company is active in Mali and operates the 440 sq km SMSZ project there. In the immediate vicinity are the Yatela and Sadiola mines of Allied Gold and Loulo and Gounkoto of Barrick Gold. A little further away, Endeavour-Teranga also operates three projects. A few weeks ago, Desert Gold caused a stir with grades of 12.4 g/t gold over 45 meters on its Barani East zone. Successful drilling was also achieved in other areas. Since then, the stock has recovered a bit from its lows but is still trading low. Desert Gold is considered a gigantic project with excellent prospects. The project has a resource estimate of just over one million ounces of gold.
Desert Gold CEO Jared Scharf sees gold stocks in general as attractive: "Gold has traditionally been a hedge against inflation, but also a safe haven in times of extreme market volatility and uncertainty like we are experiencing today. In general, gold stocks like Desert Gold are a reflection of the price of gold and respond exponentially to the price, both up and down. If you think we are at or near a bottom in the gold price, now is the time to get serious about investing in gold stocks," Scharf said, highlighting the low exploration costs of Desert Gold's SMSZ project.
Desert Gold's stock must be considered speculative given its exploration stage. However, the Company is by no means at the beginning. The resource estimate, the positive drill results and last but not least, the great potential of the enormous property are unique. Should gold rebound, Desert Gold should respond disproportionately, as it did in 2020.
Amazon: Fantasy, yes, but...
While gold stocks react with a time lag to the development of the gold price and have in the past reacted with rising prices during different crises, stocks from the consumer sector are also considered defensive investments. Amazon has become almost the world's first place to shop today.
During the pandemic, Amazon profited significantly. Things have also been going well for the stock recently: positive quarterly figures, the purchase of the household appliance manufacturer iRobot, and the medical services provider One Medical are creating fantasy. But what about the core business? Given rising prices and the upcoming winter in the northern hemisphere, euros and dollars could be a little less loose in the coming months.
With Amazon's stock facing some chart hurdles and being expensive, the air to the upside is getting thinner. Amazon is currently not a conservative crisis investment.
In order to position oneself in the current market environment, several options remain. Investors chase short-term trends, such as monkeypox, or invest with foresight. The latter is best done anticyclically and with a safety buffer. Desert Gold's stock, while speculative, has tremendous potential. It is therefore predestined for small positions and as a portfolio addition.
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.
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