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September 19th, 2023 | 08:25 CEST

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

  • Mining
  • Gold
  • Investments
  • RealEstate
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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

Table of contents:

    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.

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    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on 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.

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    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

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