22. June 2021 | 14:07 CET
Steinhoff, Barsele Minerals, Bayer - This is explosive for the stock markets
Will the central banks change their direction, or will "the policy of cheap money" remain in place with unlimited bond purchases and zero interest rates to benefit growth? Last week, the markets were already caught on the wrong foot after the FED forecast two interest rate hikes for 2023. Then, the President of the St. Louis Fed, James Bullard, added even more salt to investors' wounds. He sees an accelerated tightening of monetary policy as a normal reaction to economic growth and rampant inflation in the wake of the economy's return from the Corona shock.
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ISIN: NL0011375019 , CA0688921083 , DE000BAY0017
Losses across the board
Markets around the world fell sharply on fears of an earlier-than-expected turnaround in interest rates. The US Dow Jones and the market-wide S&P 500 indices posted their worst week since October of last year, and the Asian stock markets also fell, with a disproportionate drop of almost 4% yesterday. Already in the run-up to the FED meeting last Wednesday, the precious metals corrected sharply. If the gold followers were still hoping for a breakout above the striking resistance at USD 1,920, the positive picture from a technical perspective was negated with a sell-off to the USD 1,764 mark.
From a technical perspective, this sharp correction makes it likely that the price of the precious yellow metal will once again test the double bottom formed in April at USD 1,680. However, in the long term, the fundamental facts, such as the escalating national debt, offer good anti-cyclical opportunities to participate in the rising gold price. In addition to an investment in bars or coins, stocks of gold mine operators in particular offer opportunities for above-average price gains.
Pure gold in Europe
If you ask investors about the best gold deposits in the world, the answer is South Africa, the USA or Australia. Hardly anyone has the Scandinavian countries on their radar. Yet Sweden is considered one of the safest and best gold sites globally because of its long mining history. About 500 km from the capital Stockholm, the Canadian exploration Company Barsele Minerals has a treasure in its hands with an exploration potential of no less than 3.5 million ounces of pure gold. The Barsele Project is nearly 47,000 hectares in size and is located in the Fennoscandian Shield that intersects the historically high-grade "Gold Line."
Previously, Barsele Minerals held a 45% interest in the eponymous project, with the majority 55% held by industry giant Agnico Eagle, which has been the lead exploration program manager in recent years. Over the past six years, nearly 156,000 meters and 404 drill holes have been completed. Last month, a letter of intent was signed between the two parties whereby Barsele will acquire the 55% of Agnico Eagle by paying USD 45 million to become the sole owner. The exclusivity period runs until July 30, 2021, and can be extended for another 31 days under certain conditions. The transaction is to be financed through the issuance of a convertible bond. At the final closing, Barsele will also grant the contractual partner its own shares with a volume of 14.9% and 6 million warrants.
Two years ago, an independent appraisal produced a resource estimate of 2.5 million ounces. A further 30,000 meters of drilling are now planned over the next two years. The target of the experienced management is 3.5 million ounces. Should the estimate only come close to being realized, the shares of Barsele Minerals have multiplication potential. Currently, the stock market value is around CAD 90 million. In addition, if the results continue to be positive, the project should be a potential takeover candidate for the major gold producers. Act counter-cyclically!
Steinhoff subsidiary with results
Steinhoff Investment Holdings, a subsidiary of Steinhoff International, reported an operating profit of ZAR 5.2 billion after material expenses in the six months to the end of March. This, compared with an operating loss of ZAR 10.6 billion a year earlier, after foreign exchange gains and a strong performance from Pepkor Holdings, supported the result. Sales from continuing operations increased 8% to ZAR 36.5 billion. Realized foreign exchange gains were ZAR 3.7 billion, compared with a loss of ZAR 4.8 billion in the same period last year.
Provisions for the litigation settlement proposal were increased from ZAR 9.4 billion to ZAR 10.6 billion, resulting in an additional expense of ZAR 1.2 billion. A dividend of 292.43 cents per preferred share was also declared.
Positive voices for Bayer
According to analysts at Deutsche Bank, record prices for agricultural commodities should give Bayer AG's results some room to run. Thus, analyst Falko Friedrichs left the pharmaceutical giant's shares with a price target of EUR 66.
Another positive was a study by the European Food Safety Authority (EFSA), which considers the controversial weedkiller glyphosate harmless and favors a renewed approval. Animal studies, epidemiological studies and statistical analyses have shown that the product is neither carcinogenic nor mutagenic and therefore poses no risk to consumers. The testing authorities reached this concordant assessment in France, the Netherlands, Sweden and Hungary, which EFSA had commissioned.