September 12th, 2023 | 08:25 CEST
Wirecard 2.0 for AI industry? Deutsche Bank, Commerzbank, Desert Gold
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"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
NVIDIA, Magnetar and CoreWeave: What is behind it?
For years, Jochen Stanzl has been commenting on the markets for broker CMC Markets. At the end of last week, the market expert published a video that is not about central banks or inventories of crude oil. Most recently, Stanzl devoted himself to the chip giant and AI profiteer NVIDIA. His thesis: the record sales of the chip manufacturer are primarily based on the order of a company that virtually no one knows: CoreWeave. The Company was founded by former hedge fund managers. These managers have dabbled in various industries in the past where there was money to be made, including "mining" cryptocurrencies or trading in natural gas. Immediately after CoreWeave was founded, the Company received various payments - including from Magnetar Capital. Magnetar had been thick in the structured mortgage products business during the Great Financial Crisis some 15 years ago. At the time, observers equated those products with "weapons of mass destruction," among other things. In total, hundreds of millions of USD had flowed to CoreWeave in the quarters following its founding - from Magnetar and even from NVIDIA itself.
But that is not all. On August 8, CoreWeave received a loan of USD 2.3 billion and is said to have deposited chips from NVIDIA as collateral for it, according to Stanzl - of all things, the H100 chips that are currently in such high demand. While several NVIDIA insiders have sold shares of their company in the past weeks and months, the Company itself has taken a bold step: NVIDIA has invested a whopping USD 25 billion at a price of USD 499 per share(https://www.reuters.com/technology/nvidias-25-billion-buyback-a-head-scratcher-some-shareholders-2023-08-25/). According to Stanzl's research the day after the publication of the figures for the 2nd quarter is a good time for this. This order should have drastically increased the liquidity of the already briskly traded stock. While the connections between all of these events may be purely coincidental, the purchase of its own shares by NVIDIA does raise questions. Typically, companies buy back their own shares under different market conditions.
What will become of the comeback of Deutsche Bank, Commerzbank and Co.
Within the financial scene, investors are already actively discussing the possible connections of the mentioned companies. Whether NVIDIA has fudged its sales with the help of hedge fund managers remains speculative despite the facts at hand, but the story is still causing a stir behind closed doors. Especially considering the high market capitalization of NVIDIA, which currently stands at over USD 1.1 trillion, and the numerous financial industry lenders to CoreWeave, a chain reaction is not ruled out. Investors positioning themselves long on stocks like Deutsche Bank or Commerzbank in light of their recent friendly chart patterns should at least keep this story in mind. As of today, it is nothing more than that.
Microcap Desert Gold as the Anti-AI Stock
While AI stocks are rushing from one valuation high to the next, and it seems like no startup can do without smart algorithms these days, the crisis insurance gold is quoted at around USD 1,920, below the highs for the year. If an unforeseen event were to shake the stock markets, gold would likely be a safe haven alongside government bonds with good credit ratings. The Canadian gold company Desert Gold jumped from EUR 0.05 to EUR 0.19 within three months of the pandemic year 2020. At that time, governments and central banks opened the money floodgates. After the collapse of US regional banks in March of this year already caused frantic action at the US Federal Reserve, further measures cannot be ruled out against the backdrop of the current speculation.
Desert Gold is advancing its SMSZ property in western Mali in close proximity to companies such as B2Gold and Barrick Gold. B2Gold made a successful purchase in the region just this year. Meanwhile, Desert Gold continued its exploration activities, bringing on board Doug Engdahl, an experienced mining and exploration specialist. Among other things, Engdahl runs Axiom, a service provider specializing in advanced exploration methods using drones, satellite photography and AI. While many business models around AI have yet to prove themselves, Axiom's involvement is already helping small businesses cut costs and operate even more efficiently.
While stocks like NVIDIA are expensive regardless of speculation about the latest quarterly numbers, and the charts of financials no longer look so promising even from a medium-term perspective, Desert Gold's stock is at rock bottom. Given the low liquidity of the share and gold's role as a crisis hedge, the value could suddenly become exciting - investors who are then already positioned would have an advantage. Nevertheless, the value remains extremely speculative: a market capitalization of only CAD 7.8 million speaks volumes.
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