Close menu




September 19th, 2023 | 08:25 CEST

Interest rates at a high - What to consider now: Deutsche Bank, Vonovia, Viva Gold

  • Mining
  • Gold
  • Investments
  • RealEstate
Photo credits: pixabay.com

The European Central Bank (ECB) recently raised interest rates by 25 basis points. For many market observers, this could mean that the benchmark interest rate within the Eurozone has reached its peak. In the US, the signs also point to a pause in interest rates. Here, we explain what this means for various asset classes and how investors should navigate the high-interest rate environment. Additionally, we will explore an interest-free alternative that has its merits for various reasons.

time to read: 3 minutes | Author: Nico Popp
ISIN: DEUTSCHE BANK AG NA O.N. | DE0005140008 , VONOVIA SE NA O.N. | DE000A1ML7J1 , VIVA GOLD CORP. | CA92852M1077

Table of contents:


    Nick Luksha, President, Prospect Ridge Resources
    "[...] As we look at four or more zones in more detail from the beginning, investors can expect a continuous news flow that will underscore our vision of the Holy Grail project as a giant opportunity. [...]" Nick Luksha, President, Prospect Ridge Resources

    Full interview

     

    Deutsche Bank and Co.: Fixed deposit back in style

    Will it drop, or will it stay? This is the question many investors are currently asking themselves in light of inflation. The reason: If inflation remains above the 4% level, the current interest rate level is not a good investment. However, if inflation falls in the coming quarters, as expected by official sources, fixed deposits, in particular, could become interesting - more than 4% beckons, for instance, on the portal Weltsparen. In addition to several German providers, European banks are also enticing savers on Weltsparen. Thanks to the European deposit insurance, the investment of money via Weltsparen is also considered especially secure. Institutions like Deutsche Bank also offer customers access to special fixed deposit conditions.

    Real estate investors and home users should also keep an eye on the current interest rates: First, at the top of the interest rate pyramid, the prospect of interest rate cuts is already beckoning again, and thus, better conditions for anyone who wants to buy real estate. Secondly, even negative real interest rates on fixed-term deposits could be attractive if, for example, you want to set aside capital for unscheduled repayments and the interest burden on the current annuity loan is significantly below the current interest rate level**. Anyone who has financed up to 2021 can make their mortgage loan "interest neutral" with around a quarter of the remaining debt.

    Vonovia: The big interest rate turnaround is unlikely to materialize

    Although shares, such as those of the real estate company Vonovia, have rallied during the past few weeks, industry representatives remain skeptical given the probable interest rate pause. Handelsblatt quotes representatives of the financing broker Dr. Klein in its Monday edition to the effect that long-term real estate financing is likely to remain within a corridor of 3.5 and 4.5% interest rates for the foreseeable future. Significant movements in either direction are considered less likely.

    Growth stocks like Viva Gold with an exciting starting position

    For equities, the interest rate high is nevertheless good news. As the US Federal Reserve is expected to cut interest rates again for the first time next year, equities will likely be the investment class that reacts first to the new interest rate outlook. Growth companies and stocks with higher financing requirements, in particular, will breathe a sigh of relief when financing costs fall. However, since interest rates will remain at current levels for the time being - the ECB, for instance, intends to put a lasting stop to inflation - this effect is unlikely to materialize immediately.

    Viva Gold's stock may have a special perspective in the current interest rate situation for several reasons. The Canadian company, which is currently valued at only about USD 12 million, plans to conduct a feasibility study on its Tonopah project in the US state of Nevada as early as this year. Such studies aim to demonstrate the economic viability of mining projects and thus convince investors or potential partners. In the past, the team behind Viva Gold has already drilled grades of 15.7 g/t gold and 16.4 g/t silver. On one hand, the stock could benefit from increased interest in the stock market due to the anticipation of interest rate cuts. On the other hand, it could also benefit from Viva Gold's status as a growth company.

    What if everything turns out differently? Gold as crisis insurance!

    If the central banks' battle against inflation is not successful or new crises shake the world, the value of gold could also gain support due to its role as a crisis insurance. Despite the interesting profile of Viva Gold, investors should be aware that the small cap is currently not profitable and cannot be compared with standard stocks. Conversely, this is precisely why the share offers the opportunity for dynamic price gains.


    In the current situation on the interest rate market, investors should keep a cool head. Those who expect inflation to fall or have existing mortgages on good terms can take advantage of fixed deposit offers and commit to a term of two, three or even more years. On the other hand, the times when real estate investors could build up an extensive portfolio quickly, thanks to low interest rates, are unlikely to return. It makes more sense to overweight stocks. In this asset class, the interest rate fantasy will likely take effect first. Growth stocks like Viva Gold also offer additional arguments for speculatively oriented investors.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author



    Related comments:

    Commented by André Will-Laudien on April 18th, 2024 | 07:15 CEST

    Attention Nvidia! The turnaround check for Nel ASA, Saturn Oil + Gas, Lufthansa and TUI

    • Mining
    • Oil
    • AI
    • Travel
    • renewableenergies

    It looks like a peak is forming in Artificial Intelligence. The most prominent share here is Nvidia. With a spectacular rally, the value has surged by over 100% in just 6 months. However, the share price is now stuttering, and there have been no new highs for days. The charts for TUI and Lufthansa also show an upward reversal. The latest wage negotiations have tightened the cost structure considerably. Also, a significant amount of revenue has been lost due to the numerous strikes. And now the Middle East crisis is flaring up, making the entire region a risk for holidaymakers. However, the rise in oil prices is giving oil companies a new lease of life. Here is a list of interesting investments.

    Read

    Commented by Armin Schulz on April 17th, 2024 | 06:45 CEST

    Barrick Gold, Globex Mining, BP - Commodities In the spotlight: Supercycle started?

    • Mining
    • Gold
    • Silver
    • Commodities
    • Oil
    • Gas

    Global demand for commodities is reaching new heights, partly driven by increasing geopolitical tensions. The exchange of attacks between Iran and Israel is a case in point. This conflict, deeply rooted in religious and political differences, continues to escalate and could have far-reaching consequences for international stability and commodity markets. With this latest escalation of the Middle East conflict, security aspects in the global competition for important resources such as gold, silver and copper are taking center stage. China is demonstrating its hunger for resources. However, the price of oil has also risen recently. There has long been talk of a commodity supercycle. Perhaps it has now finally begun. Where should one invest now?

    Read

    Commented by André Will-Laudien on April 17th, 2024 | 06:30 CEST

    Discount battle over: Commodities on the counter-offensive! Rheinmetall, Power Nickel, BASF and Varta in focus

    • Mining
    • Nickel
    • Commodities
    • Gold
    • Silver
    • Defense

    Since the bombing of Israel by Iran, the clocks are ticking differently in the Middle East. The next stage of escalation has been reached. If Israel now uses the right to defense as an opportunity to initiate something bigger, it is here: the conflagration. Gold and silver are shining as safe-haven currencies and pulling long-neglected commodity shares through the roof. Now is the time to keep the sails in the wind and ride the long-awaited upward momentum. In the energy transition, strategically safer jurisdictions that can safely serve the growing hunger for commodities are still in demand. We highlight a few opportunities.

    Read