Steinhoff, Triumph Gold, JinkoSolar - On a knife-edge

Gold remains in the corridor

Supporters of precious metals are currently experiencing difficult times. Gold as crisis currency or inflation protection? Historically, at least, this was the case, but nowadays, this legend no longer seems to apply in the age of historic sovereign debt, rapidly growing inflation rates and outbreaks of new virus variants. The movement last Friday was striking when Dow, DAX and Co. slid down after the panic-like announcement of the Omicron variant spreading from South Africa to the whole world. Investors who have been dealing with gold for a longer time would have expected an explosion of the base price, especially on that day. However, the result was a paltry gain and a short-term move above resistance at USD 1,800 per ounce, which was then sold off again in the course of trading.

Temporary becomes permanent

No, the chart of the precious yellow metal is not yet clear. In the short term, should gold again fall below the mark of USD 1,750 per ounce, the test of the annual low at USD 1,680 threatens. The asset class currently still leads a shadowy existence. According to investors, a greater return can be achieved with equities or cryptocurrencies. But beware, the picture is likely to change in the long term - at the latest when the central banks change their choice of words from "temporary" or transitory to "permanent" inflation. The room for maneuver of the monetary guardians is limited. Interest rate hikes on a larger scale that could curb price increases are hardly possible; this scenario would be equivalent to a collapse for indebted countries or institutions.

For these reasons, investors should keep a close eye on the market and build up counter-cyclical positions in physical gold or gold mining stocks if the gold price continues to fall. In the long term, analysts and industry experts see the precious yellow metal rising to new highs. The largest producers Newmont and Barrick Gold, are among the basic investments. The exploration Company Triumph Gold offers an interesting rebound opportunity after the massive correction of the last three years, especially because the recently published results are more than optimistic for the future. The stock market value of the Canadian company is just EUR 11.82 million.

Solid development

The main focus of operations is in the mining-friendly Yukon. Led by experienced management, Triumph Gold is actively developing the Freegold Mountain project using multi-disciplinary exploration and evaluation technologies. The 100% owned project is equipped with world-class infrastructure and hosts three NI 43-101 compliant mineral deposits, Nucleus, Revenue and Tinta Hill. In addition, the exploration company owns 100% of the Big Creek and Tad/Toro copper-gold properties near the Freegold Mountain project.

Back in September, Triumph Gold completed a ten-hole drill program totaling 6,615m of drilling. The first published partial results are optimistic for the future. The four holes evaluated have a total drill depth of 2,154m, and the best result was found in the drill core of hole RVD21-03. The chemical evaluation came from the ALS Global laboratory and determined gold equivalents of 1.98 g/t over a very long drill section of 80.5m. These gold equivalents consist of 1.52 g/t gold, 3.74 g/t silver, 0.18 g/t copper and trace amounts of molybdenum and tungsten.

A total of 8,000m of drilling are planned for the full year. In addition, the remaining results from the missing six drill holes should be announced. Triumph Gold is currently receiving little attention from investors. In the event of a sustained rise in the gold price, it is precisely such stocks that could have the opportunity to outperform the general gold market.

Hope dies last

The Steinhoff trading group is also doing solidly in operational terms if one looks at the latest quarterly results of its subsidiaries such as Pepkor. However, legacy issues still threaten the existence of the German-South African company. The uncertainty is also reflected in the highly volatile share price. After peaking at EUR 0.23, the stock fell back to its breakout level again. The reason was the application of the former Tekkie Town owners for liquidation of the Steinhoff Group.

Due to the application for liquidation, the decision on the settlement at the Western Cape High Court is suspended until the end of January. However, the strategy announced yesterday by the Supervisory Board concerning management remuneration gives existing shareholders hope that things are looking up for the beleaguered retail group. The Supervisory Board wants to propose an option program with Steinhoff shares for the management at the next general meeting. It will only make sense for the new management if these shares have value at some point. In case of failure, the new management would thus go away empty-handed.

Stock option program or not. The court in South Africa will make the decision. Liquidation yes or no. As a result, an investment in Steinhoff still resembles a game of chance.

After the sell-off, the DAX turned around just in time before the EUR 15,000 mark; the chart picture brightens up again about a conciliatory end of the year. Gold could not benefit despite good conditions but should prevail in the long term. Barrick Gold as a producer and Triumph Gold offer good opportunities for outperformance here. Steinhoff remains a gamble.