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June 23rd, 2022 | 10:14 CEST

ThyssenKrupp, Desert Gold, Bayer - Waiting for the turnaround

  • Gold
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After a strong start to the week for the DAX and a high of 13,444 points, the leading German index ran out of steam. Due to increasing fears of a recession and concerns about continued enormously high inflation rates, the stock market barometer again fell below the psychologically important mark of 13,000 points. The speech of the head of the US Federal Reserve, Jerome Powell, should therefore be enormously important for the further course and provide for volatile markets. A decision is also likely to be made soon on the gold market based on the strategy of the monetary guardians.

time to read: 3 minutes | Author: Stefan Feulner

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


    How far does the Fed stretch the bow?

    Currently, the precious metals are suffering due to the change in strategy of the US Federal Reserve and the now proclaimed more restrictive monetary policy. The goal is to curb rampant inflation. Thus, the gold price, after it had risen to USD 2,070 per ounce due to Russia's invasion and was only a total of USD 4 away from a new all-time high, slipped more than 10% and is currently trading at a level of USD 1,837 per ounce. Technically, another test of the range between USD 1,600 and USD 1,680 per ounce would be possible. If this happens, it should represent an excellent long-term entry opportunity.

    Even at the current level, selected stocks of gold producers and exploration companies offer attractive entry opportunities. The share of Desert Gold Ventures, for example, has an excellent risk-reward ratio after a correction of 75%. With the SMSZ project in Mali, the Canadians own one of the largest non-producing land areas in West Africa, with 440 sq km. In close geographic proximity are several producing Tier 1 gold mines, including those of Barrick Gold, Allied Gold, Endeavour Mining, and B2 Gold.

    One of the most interesting explorers

    The results of the first three core holes in the Gourbassi West North Zone were recently announced. All three holes intersected zones of gold mineralization. The top intercept at 124m assayed 1.08 g/t gold, including 1.85 g/t gold over 41.1m and 0.7 g/t gold over 30.6m. In addition, the data show that gold mineralization extends to a depth of at least 175m. Previously, only a depth extension of 35m was documented.

    President and CEO Jared Scharf commented: "This is a fantastic start to our 2022 drill program, intersecting thick zones of gold mineralization starting at or near surface, indicating the potential to delineate a significant gold deposit with good economics. Hole DD009 returned approximately 160m of near continuous gold mineralization. These initial results are particularly encouraging as the Gourbassi West North zone is a new discovery in a previously unexplored part of the concession area. Gourbassi West North has the potential to significantly expand the existing resource at SMSZ as we continue to flesh out this objective."

    Desert Gold's market capitalization is currently EUR 10.71 million. With a bullish gold market, such exploration companies have significant leverage over the peer group and are likely to outperform the market.

    Further setback for Bayer

    The glyphosate legal dispute knows no end. This time, the Leverkusen-based company failed with a planned glyphosate appeal before the US Supreme Court. The Supreme Court announced that it would not accept the request for an appeal. The pharmaceutical and agricultural giant will thus have to pay USD 25 million.

    The legal dispute over alleged cancer risks of the weedkiller glyphosate was considered groundbreaking. In detail, the application to the Supreme Court was about the review of a judgment in favour of the plaintiff Edwin Hardeman, who had blamed glyphosate-containing Monsanto products for his cancer. He had ultimately been awarded a reasonable USD 25 million in damages in 2019 following a court case. The possibility of a swift end to the dispute over the legacy issues is thus diminishing.

    Despite the negative news, various analysts were optimistic about Bayer shares. The major Swiss bank UBS, for example, continues to rate the Leverkusen-based company as a "buy" and reiterated its price target of EUR 96. By contrast, Barclays gives Bayer AG an "overweight" rating and sees a price target of EUR 90 even after the failed appeal to the US Supreme Court.

    Difficult times for steel

    The US investment bank JPMorgan expects difficult times for Europe's steel sector, although the economists of the US bank do not expect an imminent recession in the industrialized nations. Thus, the analysts downgraded Salzgitter AG from "neutral" to "underweight" and reduced the price target from EUR 44.00 to EUR 31.60. The experts also rate the shares of Austria's Voestalpine as "underweight" and lowered the price target from EUR 42.50 to EUR 27.50. ArcelorMittal was downgraded from "overweight" to "neutral", and the price target was reduced from EUR 48.00 to 32.50.

    Meanwhile, ThyssenKrupp AG's stock is not analyzed by JPMorgan; however, the major British bank Barclays is negative on the stock due to an imminent postponement of the IPO of the hydrogen division Nucera. The verdict was left at "underweight" with a price target of EUR 9.

    The market is nervous due to recession fears and skyrocketing inflation and is struggling at the 13,000 point mark. Both Bayer and ThyssenKrupp are struggling. The share of Desert Gold Ventures is attractive in the long term at a reduced level.

    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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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