Stöferle argues that gold is poised to move explosively higher. He sees a new bull market beginning for the precious metal — one likely to quickly build momentum as the impending recession arrives and the world’s central banks revert to extreme easing policy measures.
Tag: Inflation
Gold `In a Renaissance’ After Fed Makes Rate Policy U-Turn
Ronald Peter Stöferle in a discussion with Bloomberg: Gold’s poised to rally if it breaks through long-standing resistance levels as the Federal Reserve’s
U-turn on monetary policy will weaken the dollar.
Japanese conditions – low inflation is going to stay for some time!
Dear Ladies and Gentlemen
Japanese conditions in global government bond markets are more and more likely. But what does it mean for our investors with reference currency Euro or Swiss Francs, if Germany’s 10-year government bond yields 0% or almost 0%, Switzerland’s 10-year government bond even yields -0.75%. What does it mean, if central banks own large portions of their countries’ government bonds (the Bank of Japan owns 49% of Japanese government bonds, the European Central Bank owns 20% of European government bonds and the U.S. Federal Reserve System owns 13% of U.S. government bonds)?
The answer is not so trivial and since we do not have any long-lasting experience in this, we cannot really know where the situation is heading. One thing is certain though, as long as central banks are buying government bonds in the primary (direct at source) or secondary (at exchanges) markets at current or even increased rate, government bond markets will not become free markets (free in an economic sense) but stay manipulated. Manipulated may be a strong word for one or the other of you and I am not judging, but let’s face it if in any market of any product in the world one single buyer buys all the “leftovers” there will never be a fair price defined by offer and demand for that very product. In the case of government bonds one would assume that a country as over-indebted as Japan would have to pay much higher interest rates to sell their government bonds to investors than for example Germany a country running on a much, much lower debt to GDP ratio than Japan, only that this is not the case. The reason for this is central bank intervention.
Personally I believe Japan is indicating a direction in this respect as Japan is somewhat running ahead of us sitting here in Europe. Japan is running on low or ultra-low interest rates for decades already and Japan is in a situation of constantly increasing government debt levels that have reached roughly 250% of GDP. What we can learn from Japan and what we can expect to experience in Europe including Switzerland (at least partially and maybe to some lesser extent) is the following:
- Debt to GDP ratios will rise.
- Interest rates will stay low due to central bank interaction.
- Government spending discipline is not going to increase.
- Government bond markets stay manipulated by central bank interaction.
- Government bond markets’ liquidity problem is going to stay due to central bank interaction.
- Inflation will stay low.
- Central bank status quo for decades.
This list is by all means not complete. But it shows why I believe there will not be either a quick fix or hyper-inflation anywhere soon.
Therefore, ask yourself if you really want to invest your money following an unlikely scenario? Because maybe it makes sense to invest in cashflow returning strategies and keep some precious metals for the ultimate worst-case scenario, no?
What is your opinion?
As always, I encourage you to send me your feedback and/or questions but please don’t forget (instead of hitting the reply button) to send your messages to:
Many thanks, indeed!
And now, Ladies and Gentlemen I wish you a great day and weekend.
Kind regards,
Yours truly,
Stefan M. Kremeth
Wealth Management
Incrementum AG
A simple calculation
Dear Ladies and Gentlemen
If you belong to the people who pay their bills primarily in Swiss Francs and/or Euros you belong to a rather large cohort of a few hundred million people living most probably somewhere on the European continent.
Today, I would like to show you with a simple calculation why I prefer equities over bonds.
If you keep your money as liquid and as safe as possible in a bank savings-account (hopefully with a bank offering some sort of government guarantee or at least a bank not getting involved in investment banking and/or corporate debt) or you have it invested in Swiss and/or German government bonds, you, Ladies and Gentlemen, will most probably receive 0% interest. Maybe you will even have to pay a small interest for depositing your money at the bank or for investing it in government bonds of short maturity and in any case, you will have to pay some small banking fees here and there on a regular basis.
This means, in the case of you wanting to invest your money in a Swiss and/or German government bond for 10 years because of its relatively low volatility, you will have to accept 0% interest or in other words no income whatsoever from such an investment and even worse, you will actually lose small bits and pieces of your money (fees) over the entire 10-year period. This truly means that at the end of a 10-year period you have less money than when you started and in real money terms, which means adjusted to purchasing power, you may have lost 10% – 20% due to inflation over that period.
To me this seems not a very attractive investment.
On the other hand, if you invest your money over 10 years in some solid listed company that pays regular annual dividends of 4.5%, thanks to the effect of compounding you will receive some 50% return over the same period. True, you will most probably have to accept higher volatility, but doesn’t the proposed return deliver an incentive high enough to accept such volatility?
Ladies and Gentlemen, to me it does!
Now, I know this is a very simplified calculation but both examples are real and possible in today’s market environment. Solid company delivering 4.5% dividend yield on one side and 0% 10-year government bond on the other side.
Think about it!
As always, I encourage you to send me your feedback and/or questions but please don’t forget (instead of hitting the reply button) to send your messages to:
Many thanks, indeed!
And now, Ladies and Gentlemen I wish you a great day and weekend.
Kind regards,
Yours truly,
Stefan M. Kremeth
Wealth Management
Incrementum AG
Ronald Stöferle – Author of In Gold we Trust Report talks predictions and China’S role in gold markets
In an episode of The Expat Money Show, Ronald Stöferle, author of In Gold We Trust Report talks about the relationship between The Austrian School of Economics and The Gold Standard. Also, China’s Role In Gold Markets, and his Gold Prediction 2019.
Click here to listen the audio file:
Incrementum Inflation Signal: Reversal To “Rising Inflation” – Interpretation and Investment Impact
Dear investors, advisory board members and friends,
We hereby want to inform you that as of the beginning of January, our proprietary inflation indicator has switched from “FALLING INFLATION” to a full blown “RISING INFLATION” signal.
In the following please find a detailed analysis and interpretation of the Inflation Signal and our current macro thoughts, as well as the impact on the investment process.
Ladies and gentlemen, we believe that current valuations in inflation sensitive assets are a tremendous buying opportunity which we want to utilize.
Best regards,
Mark J. Valek & Ronald-Peter Stoeferle
Incrementum AG
Zuri Invest Gala Dinner November 2018: “In Gold We Trust” With Ronald Stöferle
Ronald Stöferle gives a speech ” In Gold we Trust” at Zuri Invest Gala Dinner.
He is discussing the following:
1) Status Quo
2) A turn of Tide in Monetary Policy
3) A turn of Tode in the Global Monetary Architecture
4 ) Gold Stocks
5) Conclusion: Quo Vadis, Aurum?