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February 10th, 2022 | 10:32 CET

The 100% interest winners: Allianz, Commerzbank, Deutsche Bank, MAS Gold - The precious metals are coming!

  • Gold
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For a long time, the Bund Future had been able to hold well above 170. The 10-year Bund contract even reached prices above 178 points at its peak. Since mid-December 2021, however, the tide has turned. The German 10-year yield literally exploded from -0.30 to +0.27%. Some observers will say, "Nothing much has happened!" Wrong - the time of negative yields is history. Long-term mortgage rates also rose by a full 70 basis points during the same period. This marks the end of the phase of ultra-low interest rates, and it also puts real estate financing in an entirely new light. And the accompanying high inflation has many investors looking to precious metals - they are seen as a hedge against inflation. Which stocks are winning in this environment?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: ALLIANZ SE NA O.N. | DE0008404005 , COMMERZBANK AG | DE000CBK1001 , DEUTSCHE BANK AG NA O.N. | DE0005140008 , MAS Gold Corp. | CA57457A1057

Table of contents:

    Rising interest rates boost banks and gold

    Following a plus of 4.6% in December, the current monthly rate for food rose by a remarkable 5.9%. That is the highest increase since 2008. Core inflation in the EU retreated slightly to 2.3%, mainly due to base effects from the strong increases in 2021. Both interest rates and precious metals have implemented these signals. The Bund Future suffered its most significant monthly loss in 7 years with a full 10 points, and gold was able to successfully turn upward at the USD 1,780 mark. Who are the profiteers of this rising price scenario?

    MAS Gold - Over one million ounces in Saskatchewan

    Gold could now become really exciting. At the beginning of February, gold overcame the technically important USD 1,820 mark, and commodity companies are now attracting sales again. For a possible explorer investment, we find an attractive property in the Canadian part of Saskatchewan under the traded Company MAS Gold (MAS). The Company has reached an agreement with the government to acquire a 100% interest in the approximately 463-hectare Contact Lake property, including the former producing gold mine operated by Cameco Corp. in the La Ronge greenstone belt from 1994 to 1997.

    In total, the Company's properties cover more than 34,700 hectares and provide medium to near-term production targets and access to processing facilities and associated infrastructure. The Greywacke North deposit, for example, has a resource averaging more than 4 grams per tonne (g/t) gold, while the Company's newly acquired Contact Lake property has historical production of more than 188,000 ounces of gold at an average grade of 6.2 g/t.

    The current 8,000-meter drill program has commenced at the North Lake deposit and will include drilling at both the Preview SW and Point deposits as the program progresses. Further, the potential exists to identify unmined, historically defined resources. MAS is subsequently targeting the completion of a consolidated resource report and preliminary economic assessment (PEA) in 2022.

    Mining veteran Jim Engdahl believes the 1 million ounce resource can be expanded to approximately 5 million ounces of gold in the medium term. He has already been able to bring Sprott Global Securities on board and is intensively looking after his investors. With a share price of CAD 0.10, very few shares are currently in circulation. The total of 126 million shares currently leads to a very low valuation of CAD 12.6 million. When MAS Gold delivers the first drill results, there could be a quick value upgrade because the historic gold mine was already working with gold prices of about USD 300.

    Allianz - New annual high and quarterly outlook

    The Allianz share started 2022 with a 10% gain and reached a 20-year high of EUR 230.50. One reason for this is likely to be the improving interest rate environment, which is providing the big money managers with an additional profit. Expiring bonds can now be exchanged for new interest-bearing securities with higher coupons.

    In this environment, the statements of Allianz management on the last quarter should be interesting. Europe's largest insurer is expected to hold its regular financial conference on February 18, 2022, where it will publish its figures. According to analyst consensus, earnings per share should average EUR 5.66. Allianz generated earnings of only EUR 4.39 per share in the same quarter of the previous year. Sales are expected to increase by 6.7% to just under EUR 38.0 billion, compared with EUR 35.6 billion previously.

    At the bottom line, annual earnings per share are expected to explode from EUR 16.32 to EUR 21.38. And then, there is also a payout of an estimated EUR 10.68, which corresponds to a dividend yield of 4.6%. These figures speak for themselves: Buy! Of the 21 analysts surveyed, 15 recommend buying, and only 6 are neutral with an average target price of EUR 250.29 - there is no sell recommendation.

    Commerzbank - In the slipstream of Deutsche Bank

    Commerzbank has gained a full 28% since the start of 2022, which is only 3% behind the performance of Deutsche Bank. Since the interest rate turnaround, both institutions have been flying high and rushing daily from one high to the next. For both values, there is now a 4-year high on the chart. The valley of tears seems to have been crossed.

    The ECB has consistently ruled out a quick interest rate hike for the eurozone so far. But since the last meeting, the market has been expecting the opposite. Some analysts and central bank observers even think that a twofold increase would be possible in 2022. Of course, a turnaround in interest rates would also be positive for Commerzbank. The bank is heavily involved in the traditional banking business and could benefit significantly from a higher interest margin. The issue of minus interest rates for customers should also soon be off the table - one less public bone of contention.

    The Company is currently still in the middle of restructuring, but almost all restructuring costs for the reorganization have already been booked. As equity capitalization stood at 13.5% according to the latest figures from the end of September, the bank sees no need to make any changes to its core capital ratio. Thus, the time of constant capital increases should also be history. An update on business development in 2021 will be provided on February 17. A big surprise would be a distributable net profit, and thus a return to the dividend payments suspended since 2018. The CBK share is already practicing its climb!

    The specter of "inflation" is making the rounds. While precious metals markets are jubilant, interest rates are making a decent move higher. Bank stocks should be able to profit from a higher interest margin. On the other hand, Precious metal stocks hang on the medium-term bullion prices. Those who smell speculative opportunities in gold can confidently take a few pieces of MAS Gold.

    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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