March 15th, 2022 | 10:56 CET
TUI, Desert Gold, Deutsche Bank: Uncertainty as an investment opportunity
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"[...] 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
TUI: Against the tide to success?
While COVID-19 is still spreading furiously in purely statistical terms, the number of people losing their fear of infection in light of mild progressions is increasing. Given low hospital occupancy rates, fewer but effective measures may be more appropriate than the blanket solutions of the past. In general, people have long since grown weary of crises. Companies like TUI stand ready to provide relief. Travel has always been a welcome distraction. After years of deprivation, traveling abroad is now also more fun again - in many places, countries have long celebrated their Freedom Day. For TUI shares, the current situation could herald a furious comeback - were it not for the next trouble spot.
The situation in Ukraine is not only destabilizing a region and preventing some air routes to the east, it is also making flying itself more expensive. High oil prices are also affecting airlines with some delay. Given the uncertain situation due to the pandemic, many tour operators are likely to travel on demand and, unlike in the past, may not have secured contingents early on. That could mean that the rising prices will hit travel agencies in the next few weeks. TUI, on the other hand, is acting differently. The largest tour operator has even more capacity from Berlin than before the pandemic and speaks of 230,000 purchased flights. TUI's calculation could work out if Germans enjoy their new freedom and are not deterred by the war. But the strategy is risky: waves of illness or an escalation of the war could put an abrupt brake on the desire to travel. The TUI share is not yet out of the woods.
Desert Gold: Crisis investment with positive key data
The share of Desert Gold has also been running sideways for many months. The Canadian Company is developing a huge property, SMSZ, in Mali on the border with Senegal. The property has resources of 8.47 million tonnes of gold at grades of 1.14 g/t. In 2022, the Company plans to continue exploring for gold and is optimistic: "This maiden mineral resource is a significant milestone for the Company and represents an excellent starting point. The Company believes that further drilling can significantly expand these resources and develop new resource areas, such as the 1.6km Gourbassi North West discovery. We anticipate a busy 2022 with a planned drill program of over 20,000 meters and high expectations for positive drill results," said CEO Jared Scharff.
In a research article by researchanalyst.com, Desert Gold's stock is considered a potential laggard: "The first-ever determined resource of 1 million ounces of gold is an important milestone given the project's size of 440 sq km and more than 20 zones of gold mineralization. Nevertheless - there will be many more milestones to follow," the authors said. Given the uncertain situation in Ukraine and the alleged call for support from Russia to China, there is a risk that the Ukraine war will cause even more intense international tensions. Gold has always been a crisis insurance policy in such situations. Desert Gold's stock combines crisis-protection qualities with tangible project quality and growth imagination. However, investors should be patient.
Deutsche Bank: Nobody knows what is coming
Investors also need patience with Deutsche Bank. The share has lost rapidly in 2022 but rang in a comeback at the beginning of the new week. Most recently, some analyst houses have given the share further potential. Since the interest rate turnaround seems to be minimally postponed but not entirely canceled, banks can continue to hope for a comeback.
When there are interest rates on the market, the bread-and-butter business with loans picks up again. Deutsche Bank also recently reduced risk and divested its business in Russia. Given the long list of blunders Deutsche Bank has made in recent years, catching sanctions would not have been surprising. This danger now seems to have been averted. However, it remains unclear what will happen to the share. The situation is too uncertain, and too much can happen in one day.
While TUI is putting (almost) all its eggs in one basket these days by making record capacity reservations, Deutsche Bank is following the spirit of the times and is at least not exposing itself to isolated risks. The future of interest rates, the economy and the markets have rarely been more unclear than today. Undecided investors can take a closer look at crisis investments, such as gold. The Canadian Company Desert Gold scores with positive key data and is currently not yet the focus of the market.
Conflict of interest
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