Gold can be bought and sold all over the world
Ronald-Peter Stöferle is a Partner of Incrementum AG and responsible for Research and Portfolio Management. He published his first “In Gold We Trust” report in 2007. Over the years, the Gold Report has become one of the benchmark publications on gold, money and inflation. Ronni will be presenting ‘In Gold we Trust – Gold in between the tides of inflation and deflation’ in the Gold & Precious Metals session at Mines and Money Asia 2019. We caught up with Ronni this week to chat about where his interest in gold comes from and his outlook on the market moving forward.
You’ve written the “In Gold We Trust” report for 13 years already. What makes you so interested in the gold markets?
I love studying the various characteristics and angles of gold, and understanding fields like history, monetary policy, (geo)politics, technical analysis, opportunity costs etc. These are all crucial to understanding gold and to making forecasts.
Supporting the wealth management of our clients by analysing the strength of an investment in gold and mining stocks is an enduring yet rewarding task. Investing in gold is not a short-term ride on a speculative wave, instead it’s focused on a medium to long-term investment perspective. It’s not striving for a “The sky is the limit”-buzz, but for sustainable capital preservation in times of huge monetary experiments.
What are your thoughts on where the gold market will move next?
We are in the middle of a big monetary U-turn. Qualitative tightening and rising rates have already caused great havoc, and events in Q4 2018 clearly showed that the market does not appreciate the end of the 10-year long liquidity party.
Our central point is this: the global boom, fuelled by ultra-low interest rates and the never-ending expansion of the money supply and credit, is on shaky ground. The likelihood of the boom turning into a bust is high – much higher than the mainstream expects.
How does the global political and economic state play into how gold is valued?
Again and again gold has proven to be the real safe haven, both when it comes to political and to economic turbulences. Thus, the more fragile the economic or the political situation is, the better gold performs. Gold is one of the few assets that can be bought and sold all over the world and in contrast to most assets, gold has no counterparty risk. Gold is nobody’s asset or liability. Thus, in a deflationary contraction or as a result of a haircut it cannot simply disappear, as do all other assets.
From our point of view, in 2019 many economies will be slipping into a recession. How does the gold price perform in recessions? Short answer: Very well! On the one hand investors are looking for safe havens in times of crisis, and gold is the classical safe haven asset; on the other hand many investors will anticipate monetary and fiscal stimulus and buy gold for inflation protection.
Where do you see cryptocurrencies’ role within the commodities and investment space?
Cryptocurrencies are here to stay, even though as with every new technology there is a lot of trial-and-error going on. Time will tell which business models are viable. In general, I believe that gold and cryptocurrencies are friends, not foes. In fact, a collaborative approach would play to the strengths of both. The first gold-based cryptocurrencies are underway as we speak. This could tremendously facilitate not only the purchase of gold, but also the use of gold as medium of exchange, aka money.
Can you share a few notes about what you’ll touch on with your presentation at Mines and Money Asia next month?
I will discuss “Gold in between the tides of inflation and deflation”. As always it will be a thought-provoking but also very entertaining keynote.
Ronald-Peter Stoferle will be presenting at the upcoming Mines and Money Asia, taking place in Hong Kong, 2-4 April 2019.