Non-Performing Miners / Why Pension Schemes Matter

Good Morning Ladies and Gentlemen

“We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.”

Alan Greenspan

Why miners are not performing

Ladies and Gentlemen, we were asked why miners were not performing. You know, we, too, are unhappy about the performance of mining stocks – especially regarding an okay-ish gold price. We believe that the weakness in miners stems from a combination of cost inflation (personnel, energy), significantly higher capital costs and a lack of risk appetite (due to higher opportunity costs).

Global pension schemes

Do you know that global pension schemes are the most significant contributors to liquidity in financial markets? Every month, billions of dollars (worldwide) of retirement money are collected and allocated in cash, investment funds, mandates, direct investments, bonds, equities, real estate, etc.

Why pension schemes matter

Solid pension funds are essential for several reasons at an individual and societal level. Stable pension funds play a vital role in ensuring the financial well-being of individuals in their retirement years, reducing the strain on public resources, contributing to economic stability, and serving as significant investors in the financial markets. Governments do not want to see millions of people without sufficient pensions starving to death.

Retirement security for individuals

Pension funds provide individuals with a stable source of income during their retirement years. This helps retirees maintain their standard of living and cover essential expenses like housing, healthcare, and daily living costs. A solid pension fund allows individuals to plan for their retirement more confidently. They can estimate their future income and make informed decisions about when to retire and how to manage their finances.

Reduced dependency on social welfare programs

Solid pension funds reduce the reliance on government-sponsored social welfare programs and lead to less strain on public resources. Individuals with sufficient retirement savings are less likely to depend on public assistance, which helps governments manage their budgets more effectively.

Economic stability

Retirees with solid pension funds are more likely to have disposable income, contributing to consumer spending, which stimulates economic growth and helps maintain a stable economy. Adequate pension funds can contribute to lower poverty rates among the elderly population. When retirees have enough income to cover their basic needs, they are less likely to fall into poverty, reducing the overall burden on social support systems.

Employment attraction and retention

Employers offering solid pension plans can attract and retain talent more effectively. Employees often consider retirement benefits as a crucial factor when evaluating job opportunities. A competitive pension plan can be valuable to an overall compensation package.

Investment in capital markets

Pension funds are significant institutional investors. They pool the savings of billions of individuals and invest them in various financial instruments such as stocks, bonds, and real estate. This capital injection into capital markets can contribute to economic development.

Financial market stability

Pension funds are long-term investors, and their stability helps counter short-term market fluctuations, which can contribute to the overall stability of financial markets.

Inter-generational equity

Pension funds enable the transfer of wealth across generations. Individuals can pass on accumulated assets to their heirs by saving for retirement, promoting inter-generational equity.

Conclusion

In summary, solid pension funds play a vital role in ensuring the financial well-being of individuals in their retirement years, reducing the strain on public resources, contributing to economic stability, and serving as significant investors in the financial markets.

Your point of view

Ladies and Gentlemen, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to:
smk@incrementum.li.

Many thanks, indeed!

I wish you an excellent start to the day and a wonderful weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li