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June 1st, 2023 | 07:30 CEST

The breaking point for the dollar - All new for gold? Barrick Gold, PayPal, Tocvan Ventures

  • Mining
  • Gold
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'Dr. Doom' Nouriel Roubini not only predicted the world financial crisis. The Stern School of Business economist in New York also heralded the Corona Shock. Now Roubini predicts the end of the dollar's supremacy. Here is what that could mean and which companies might even have opportunities as a result.

time to read: 4 minutes | Author: Nico Popp
ISIN: BARRICK GOLD CORP. | CA0679011084 , PAYPAL HDGS INC.DL-_0001 | US70450Y1038 , TOCVAN VENTURES C | CA88900N1050

Table of contents:

    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited

    Full interview


    Dollar descent - Do PayPal shareholders need to worry?

    In a recently published interview in Handelsblatt, Roubini announces the end of dollar dominance in the coming decades. However, this would not be about a decline in the dollar zone itself. Rather, the Chinese renminbi would serve as a counterweight. According to Roubini, the Chinese currency does not have to be freely convertible. The growing conflicts between the two economies are the cause of this shift towards a dual-polar world currency system. While the US still imports many goods from China, there is a disconnect in several strategic areas, such as the supply of critical raw materials. Crises are also simmering in both regions, making a focus on home strength more likely - in the US, banks have been tottering in recent months, while in China, the real estate market has been considered troubled for years. Roubini believes that giant empires have been able to mask these problems well in times of unbridled growth, but the situation is gradually becoming more challenging.

    To strengthen themselves internally, autocratic systems like China's have always relied on external demarcation. If the Chinese currency gains the upper hand against the dollar in Asia, this could also affect internationally active payment service providers, such as PayPal. The PayPal share has lost a lot of ground since its high for the year in February. The reason, however, is more likely to be concerns about the burgeoning recession and a reluctance to spend on the part of consumers. As Roubini suggests, an end to the dollar's supremacy is relatively gradual and is unlikely to have any effect on PayPal's share price even in the medium term.

    Is gold becoming more important as a substitute currency?

    On the other hand, stocks from the gold sector could profit. US government bonds have been considered safe havens for decades when it comes to parking capital. This market has a volume of more than USD 15 trillion. In the event of restricted capital movements, not only could it become more difficult for the US to borrow capital from international creditors, but alternative safe havens such as gold could also benefit. While buying gold to park capital in the short term is unlikely to be the first choice of investors even in times of a new world order, even if only a small proportion of investors bet on gold instead of the dollar, it is likely to have an effect. According to the World Gold Council, the value of all the world's gold reserves is just under EUR 2 trillion.

    Barrick Gold or Tocvan Ventures: Gold investments are already paying off today

    Gold should therefore continue to gain in importance in the long term. Despite high gold prices, the shares of the industry leader Barrick Gold are trending sideways at best. For investors with vision, this can be an opportunity. Those who had shares of Barrick Gold in their portfolio yesterday will also receive a quarterly dividend of USD 0.10 in mid-June, putting the dividend yield around 3%. Those who can do without a regular dividend and prefer to take speculative opportunities around gold can take a closer look at the shares of Tocvan Ventures.

    The Canadian company Tocvan Ventures operates in Mexico and is advancing its two projects there, Pilar and El Picacho. Both projects are characterized by low costs for exploration and possible later production, as the heap leach process is standard in Mexico, making major rock interventions unnecessary. At the end of April, Tocvan Ventures also sold a concession area to Cascade Copper and received shares in the Company in return. These shares are now to flow to shareholders as a dividend in kind. As with Barrick Gold, the record date for this was May 31. The special dividend shows that distributions are not only to be expected from gold multinationals like Barrick Gold. Smaller companies also sometimes pass on funds to shareholders. Furthermore, the dividend payout indicates that Tocvan Ventures is solidly financed.

    Tocvan Ventures can surprise positively in terms of earnings

    Operationally, the Company is also doing well. In mid-May, it announced interim results from the testing of a large geological sample at the Pilar project. In the process, 1,000 t of rock are gradually being processed and analyzed. The interim results suggest that the grades for the Pilar project are greater than previously thought. For Tocvan Ventures CEO Brodie Sutherland, the results are "excellent" and indicate a possible production decision.

    Like Barrick Gold, the shares of Tocvan Ventures have not taken off in recent months. However, since the turn of the year, a bottoming out and the beginning of a possible upward trend have been emerging. Tocvan Ventures is speculative because of its early stage, but for investors who can follow such investment stories, there may be disproportionate opportunities in the long run. In times of geopolitical turmoil and the simmering dollar crisis, gold stocks are preferable to stocks in the financial sector, such as PayPal.

    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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    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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