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February 24th, 2023 | 15:51 CET

Rising interest rates, rising margins: Steinhoff, Desert Gold, Deutsche Bank and Commerzbank - Watch closely!

  • Mining
  • Gold
  • Banking
  • Investments
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In the coming weeks, the moment of truth will strike for the national central banks of the eurozone because 20 years of money printing is taking its toll in the form of billions in losses. The respective state coffers will not only miss out on dividend payments but could even need capital injections. Bloomberg points to this development. The Swiss National Bank already made a start in February with a record write-down of 132 billion francs. The markets are now eagerly looking to the ECB and the US Fed. Incidentally, the taxpayer is liable for the central bank's balance sheet imbalances. If the write-downs on the bond holdings due to the quantitative easing of recent years exceed the equity capital, the member states are threatened with payment obligations. It would be a surprise if gold did not react positively to such news.

time to read: 4 minutes | Author: André Will-Laudien

Table of contents:

    Nick Mather, CEO, SolGold PLC
    "[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC

    Full interview


    Central banks - With their backs to the wall

    Western central banks have trillions of euros of bonds on their books that are yielding too little interest and now require substantial write-downs. As a result, equity could be depleted, and the taxpayer could be called upon. In any case, it will not be possible to make lavish distributions to the states as in previous years. Many a long-dated bond, such as the 100-year Austria MTN, issued in 2017, reached prices of over 200% and is now at around 70%. Another 100-year Austria bond issued in 2020 is trading at only 40%. One might now search for who holds these bonds in their portfolio, but it will not be known. The fact is that even the first subscriber has now lost 30% and 60%, respectively. Time bombs are ticking in the portfolios of central banks, financial institutions and insurance companies, and these bombs are burning brightly at interest rate levels of 5%. It can therefore be assumed that the monetary guardians will be forced to lower the interest rate level very soon.

    Desert Gold Ventures - A zone for millions of ounces of gold

    Gold and silver have so far benefited from the inflationary environment only to a limited extent. After a year-end rally in 2022, prices reached USD 1,950 and USD 24.50, respectively, in January. Currently, the precious metals are on a consolidation course. Of course, precious metals prices also hang on news from the war front. The nuclear threat gestures from Moscow underpin further security investments on the part of unsettled investors. Furthermore, the planned abolition of cash in the background provides reasons for an upcoming gold shortage, if the intentions of the central banks and the erroneous opinions of some politicians become a reality after all.

    Canadian explorer Desert Gold Ventures (DAU) had excellent exploration success at its SMSZ gold project in Mali, most recently reporting a gold recovery rate of 88%. The current resource estimate is 1.1 million ounces of gold. Now drilling continues near its 412,000-ounce Mogoyafara South gold zone in western Mali. Mogo South is located in the southeast corner of the SMSZ project near the well-known Senegal-Mali shear zone, which is a location for 5 active gold mines that produced more than 1.2 million ounces of gold in 2022. This drill program aims to determine the extent to which the gold system at and around Mogo South can be expanded.

    CEO Jared Scharf is confident that a resource of several million ounces can be defined at the end of this exploration. Followers of the stock recently subscribed for another 33.24 million shares at CAD 0.07. In addition, there was a warrant with an exercise price of CAD 0.08 and a term of 3 years. Desert Gold shares are currently available on the stock market at a low CAD 0.06. During the last big gold rally in 2020, the stock multiplied fivefold. The current chart looks as good as it did then.

    Commenting on the outlook at the recent International Investment Forum, Director Don Dudek:

    Deutsche Bank and Commerzbank - Rising interest rates inspire

    There have recently been strong movements at the Frankfurt-based private banks of Deutsche Bank and Commerzbank. The rising interest rate trend is again providing the banks with margins in their lending business, and the flourishing stock market is generating decent earnings in asset management. If only there were not the imponderables in corporate business. The loans from the Corona period must now be gradually repaid. But some SMEs have their backs to the wall because of high input costs and falling sales.

    In chart terms, both banks are currently correcting their excellent performance slightly. Commerzbank, for example, has gained over 70% in just 6 months, while Deutsche Bank has gained 50%. After the burdening years with negative interest rates, the banks can now breathe a sigh of relief and look forward to lush profits after the cost-cutting programs. In 2022, Deutsche Bank had already achieved the earnings power of the pre-crisis year 2007. Analysts now expect an average earnings per share of EUR 1.83 in 2023. Commerzbank is expected to earn EUR 1.46, with profit growth of over 30%. This provides low P/E ratios of 6.3 and 7.3, respectively, and dividend yields of approx. 4%. Continue to buy in weakness!

    Steinhoff - Game over for existing shareholders?

    We take a brief look at the speculative object, Steinhoff. After a lengthy tug-of-war, the terrible truth is now fairly close at hand. Steinhoff seems to be sinking into a gigantic mountain of debt, and despite the sale of the profitable subsidiary Pepco, there is nothing left. A terrible realization, but in the meantime, those responsible have made the way ahead transparent. From the point of view of the existing shareholders, there is no longer any question of a rescue. In December, Steinhoff informed its shareholders that most of the Company's shares would go to the billionaire creditors. 80% of a new company is to flow into their hands. The existing investors will be left with a few crumbs, which will neither be tradable nor embody any voting rights. It is not without reason that market participants are talking about a de facto expropriation. A shareholders' meeting in March has now been postponed indefinitely. The capital invested will no longer be saved. We have often reported on this speculative stock and stick to our conclusion: In roulette, after 20 times black, black can still come or the green zero!

    The stock market started the new year with a lot of momentum. The DAX 40 Index has meanwhile gained a good 11%. Banking, Greentech and industrial stocks are in demand in anticipation of an improved economy in 2023. Those investors who want to sleep peacefully diversify and consider precious metal investments because of the still high inflation.

    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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