The New In Gold We Trust Report is Here!

As announced in our latest gold market update last week, this year’s In Gold We Trust report by our good friends Ronald Stoeferle and Mark Valek has just been released. This is the biggest and most comprehensive gold research report in the world, and as always contains a wealth of interesting new material, as well as the traditional large collection of charts and data that makes it such a valuable reference work for gold investors.

 

Nothing provides a feeling of material security comparable to the reassuring heft of a gold coin.

 

To provide a brief overview of the contents, here is the press release that accompanied the publication – the report is available for download via a link further below.

 

Gold and the Turning of the Monetary Tides

  • The 12th edition of the annual In Gold we Trust report discusses three fundamental turning points affecting the global monetary system. The authors of the report Ronald- Peter Stoeferle and Mark Valek refer to these as “Monetary Turns of the Tide”:
  1. The Federal Reserve has sounded the bell on a beginning turn of the tide in monetary policy: the start of a global rate hike cycle and particularly the reversal from “QE” to “QT” puts an end to a decade of flooding the markets with liquidity. The fact that the liquidity tide is going out marks the first time in ten years that financial markets are facing a real test.
  2. A turn of the tide in the global monetary system, away from the US dollar-centric monetary order toward a multi-polar order increases the relevance of gold. Gold is beginning to play a more prominent role in the currency policy deliberations of central banks, above all as a result of growing geopolitical polarization, increasing over-indebtedness and the continuing process of “de-dollarization”.
  3. A technological turn of the tide has occurred due to the proliferation of blockchain technology and the cryptocurrencies associated with it. These new technologies are offering a multitude of innovations as virtual means of payment and stores of value. In the meantime even gold-backed crypto-tokens have been successfully launched.

 

  • Another topic examined in this year’s In Gold we Trust report are inflationary tendencies. In the ongoing tug-of-war between inflationary and deflationary forces, inflationary forces appear to have gained the upper hand in the course of the past year. Since September 2017 our proprietary Incrementum Inflation Signal also indicates that price inflation is gathering pace.
  • After a period of intense creative destruction, precious metals mining stocks are once again attractive. In light of the currently extremely high level of the gold-silver ratio, excellent investment opportunities should become available in the stocks of primary silver producers, in particular once the trend in the ratio changes again.
  • Technical analysis by and large indicates that a positive set-up for gold is in in place. Sentiment on gold is pessimistic and there was a healthy adjustment in speculative positioning in the futures markets. The seasonally strongest period for the gold price begins in June.

 

This year’s edition of the In Gold we Trust report was presented at an international press conference in Vienna, Austria on May 29, 2018. Ronald-Peter Stoeferle and Mark Valek, investment managers of the asset management company Incrementum AG in Liechtenstein, are the authors of the report. Last year’s edition of the In Gold we Trust report was downloaded more than 1.7 million times and the report is widely considered the “gold standard” in gold-related research. Further information on the report and its authors can be accessed at www.ingoldwetrust.report.

On more than 200 pages, the authors analyze a wide variety of drivers affecting the gold price. This year’s edition of the report also contains two exclusive interviews: one with US-based analyst Luke Gromen (FFTT), in which he discusses the future of the US dollar. The other interview was conducted with Dr. Richard Zundritsch, the nephew of renowned Nobel Prize laureate Friedrich A. Hayek. He comments on Hayek’s proposal calling for competition between (privately issued) currencies. Due to the introduction of gold-backed cryptocurrencies, the idea has gained renewed topicality.

In the course of 2017 the price of gold rallied primarily in US dollar terms (+13.7%). It gained ground in almost every other currency as well (AUD, CAD, JPY, etc.). Only in euro terms did the gold price suffer a small decline of -1%. Since the beginning of 2018, the performance of gold in USD terms was to date slightly negative (-1.2%), while euro-based investors enjoyed a small gain of +0.6%. The recent low volatility of the gold price is quite remarkable. It has decreased to the lowest level in more than 10 years.

Three turns of the tide are the focus of this year’s edition of the In Gold we Trust report:

 

1) A turn of the tide in monetary policy

The changeover from quantitative easing (QE) to quantitative tightening (QT) has received surprisingly little attention in public debate. By creating a gargantuan flood of liquidity over the past decade, global central banks have pushed asset prices to dizzying heights. The world’s five largest central banks have created the almost unfathomable equivalent of USD 14.357 trillion in this time period and invested it in securities.

However, this year central banks will turn from net buyers of into net sellers of securities. The consequences of this turn of the tide in monetary policy – the implementation of which has already begun in the US, with the euro area set to follow suit soon – could be quite dramatic, as the monetary stimulant applied in an attempt to prevent a relapse into crisis conditions in the post-Lehman era had numerous side effects.

For one thing, the medicine enticed the patient to indulge in a da capo of the global debt accumulation orgy. Mario Draghi’s “whatever it takes” policy was supposed to buy time for Southern European countries to implement structural reforms and reduce their indebtedness – that was the theory, anyway. In practice extremely low interest rates were an irresistible incentive to pile up even greater mountains of debt.

For another thing, investors have come to know and love what is a supposedly low-risk financial market environment. Now the first dark clouds are appearing on the interest rate horizon. Apart from the Fed, the ECB is slowly but surely implementing a turn of tide in monetary policy as well, albeit with a considerable lag. The tide of global liquidity is beginning to go out.

 

From quantitative easing to quantitative tightening

 

2) A turn of the tide in the global monetary order

This fundamental change is nothing less than the process of “de-dollarization”, i.e., the slow renunciation of the US dollar as the dominant global reserve and trading currency and the associated changeover from a uni-polar to a multi-polar world and monetary order continues.

The process is accompanied by geopolitical polarization and a rhetoric that puts greater emphasis on divisiveness rather than on common ground. This trend has reached a new pinnacle with the election of Donald Trump. European politicians in particular are trying to take advantage of this geopolitical opportunity to escape – at least to some extent – from the clutches of the US.

The creeping loss of the hegemonic status of the US dollar as the senior global reserve currency could have far-reaching consequences for the US. Declining global demand for the US dollar and treasury bonds could boost domestic US price inflation and drive interest rates up further.

The increasing need for substitutes for the ever less popular US dollar leads – not least due to a lack of real alternatives – to a revival of gold’s role as a currency reserve. Particularly the central banks of Russia, China, India and Turkey have been regular buyers of gold for quite some time.

 

Central bank gold reserves

 

3) Technological turn of the tide

Epochal technological change is taking place at a breathtaking pace. More and more financial transactions are conducted with smart phones or over the internet. With the invention of cryptocurrencies the digitalization of money has received a further boost.

With respect to cryptocurrencies, the authors are convinced of three major points: 1) not everything designated “crypto” has value; 2) nevertheless, cryptocurrencies are here to stay. They will fundamentally change business and quite possibly the working of the current monetary system, perhaps decisively; 3) 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.

 

Market capitalization: cryptocurrencies vs. gold vs. M2

 

Other key messages of this year’s edition of the In Gold we Trust report are:

 

  • The risk-reward profile of the precious metals mining sector strikes us as excellent. We expect the gold-silver ratio to decline in the medium term. In this scenario stocks of primary silver miners should offer particularly enticing investment opportunities. In our own investment process we remain focused on developers and emerging producers.
  • In the great tug-of-war between inflationary and deflationary forces, inflationary forces have gained the upper hand in the course of the past year. Since September of 2017 our proprietary Incrementum Inflation Signal also indicates that price inflation is gathering pace.
  • Technical analysis by and large indicates a positive set-up for gold is in in place. Sentiment on gold is pessimistic and there was a healthy adjustment in speculative positioning in the futures markets. The seasonally strongest period for the gold price begins in June; this seasonal pattern in the gold price tends to be particularly pronounced in mid-term election years.

 

The authors expect significant upheaval in coming years that will have noticeable effects on the gold price. “In view of the three major turns of the tide discussed in this year’s edition of our In Gold we Trust report, we are quite confident regarding the prospects for gold. Once the consequences of the recent turn of tide in monetary policy become obvious and the threat of recession looms on the horizon, demand for gold as a traditional safe haven is bound to return”, notes Ronald Stoeferle in summarizing the insights of this year’s In Gold we Trust report.

 

Download link:

In Gold We Trust, 2018 (PDF)

 

Charts and data by Incrementum, Bloomberg, World Gold Council, coinmarketcap.com

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

8 Responses to “In Gold We Trust, 2018”

  • RagnarD:

    I agree that cryptos don’t need gold backing. But if that’s the case then they also can’t really be “wealth”.
    They can have “value” in facilitating transactions. But they can’t be a store of wealth in so far as there is no limit to their quanity.

  • 23571113:

    I really pity the authors of the report who have got it wrong for so many years and are completely oblivious to why they are wrong.

  • jks:

    “…The first gold-based cryptocurrencies are underway as we speak…”

    This is not a good development and misses the entire point of crytocurrencies. In the first place, cryptocurrencies need no backing. They are “backed” by a protocol agreed to by the users that defines how much currency will be circulated. Cryptos are designed to be as trustless as possible. A gold-backed crypto introduces the necessity of third party trust which defeats its entire reason for being. Liberty Reserve was in the business of gold-backed digital currency and a consortium of governments waved the “money laundering” flag at them in a secret tribunal and shut them down. Their customers lost everything. E-Gold was in a similar business and suffered a similar fate. Not only does a gold-backed crypto have a physical location that can be easily raided, it’s an easy mark to be looted by it’s directors. Wasn’t the dollar once gold-backed? This is why no good crypto has gold backing.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The Great Debasement - Precious Metals Supply and Demand
      Fiat Money Woes Monday was Labor Day holiday in the US. The facts are that the euro lost another 1.4%, the pound another 1.1%, and the yuan another 0.9% last week.   Assorted foreign fiat confetti against the US dollar – we have added the Argentine peso as well, as it demonstrates what can happen when things really get out of hand. [PT]   So, naturally, what is getting play is a story that Bank of England governor Mark Carney said the dollar’s influence...
  • Hong Kong - Never the Same Again
      Freedom Rock Hong Kong ranks among the freest societies in the world. Not only economically, but socially it is a very liberal place. It was marinated in British ways until 1997, much longer than Singapore and other colonies. Then China took it over as a special administered region, which according to the agreement with the UK meant that it was only nominally to be under Chinese control for the next 50 years. It was possibly the only colony in which a vast majority of citizens did not...
  • Suffering the Profanity of Plentiful Cheap Money
      A Case of Highway Robbery What if the savings in your bank account lost 55 percent of its value over the last 12 months?  Would you be somewhat peeved?  Would you transfer some of your savings to another currency?   USD-ARS, weekly. For several years the Argentine Peso has followed a certain pattern: it declines mildly, but steadily, with little volatility for long time periods, and then spikes in crash waves whenever a crisis situation comes to a head. In early 2011, it...
  • Don’t Be Another Wall Street Chump
      The Future and the Past Securities and Exchange Commission Rule 156 requires financial institutions to advise investors to not be idiots. Hence, the disclosure pages of nearly every financial instrument in the U.S. are embedded with the following admission or variant thereof:   “Past Performance Is Not Indicative of Future Results”   “Buy and hold”... “The market goes always up”... “No-one can time the market”... “Buy the dip” “With what? You...
  • A Wild Week - Precious Metals Supply and Demand
      Paying a Premium for a Lack of Default Risk The price action got pretty intense last week! The prices of the metals were up Monday, Tuesday, and Wednesday. But Thursday and Friday, there was a sharp reversal and the silver price ended the week below its close of the previous week.   The net speculative position in gold futures has become very large recently – the market was more than ripe for a shake-out. [PT]   Silver made a round trip down from $18.35 to...
  • Will the Nikkei Win the Next Olympic Games?
      Listless Nikkei On 24 July 2020 the Olympic Summer Games will begin in Tokyo, the capital of Japan. Olympic Games and Soccer World Cups are among the largest sporting events in the world.  Do you perhaps also think that these events may affect the performance of local stock markets?   Olympic Summer Games 2020 – official logo (left), and a fan-made logo (right) by designer Daren Newman [PT]   Let us examine whether and in what way such major sporting events impact...
  • The Weird Obsessions of Central Bankers, Part 3
      Inflation and “Price Stability” We still remember when sometime in the mid 1980s, the German Bundesbank proudly pointed to the fact that Germany's y/y consumer price inflation rate had declined to zero. It was considered a “mission accomplished” moment. No-one mentioned that economic nirvana would remain out of sight unless price inflation was pushed to 2% per year.   CPI, annual rate of change. During the “stagflation” period of the 1970s, Congress enacted the...
  • The Weird Obsessions of Central Bankers, Part 1
      How to Hang on to Greenland Jim Bianco, head of the eponymous research firm, handily won the internet last Thursday with the following tweet:     Jim Bianco has an excellent idea as to how Denmark might after all be able to hang on to Greenland, a territory coveted by His Eminence, POTUS GEESG Donald Trump (GEESG= God Emperor & Exceedingly Stable Genius). Evidently the mad Danes running the central bank of this Northern European socialist paradise were...
  • The Weird Obsessions of Central Bankers, Part 2
      The Negative Interest Rates Abomination Our readers are probably aware that assorted central bankers and the economic advisors orbiting them occasionally mention the “natural interest rate” (a.k.a. “originary interest rate”) in speeches and papers. It is generally assumed that it has declined, which is to say, time preferences are assumed to have decreased.   This is actually an understatement...   Although interest is generally associated with money, the...
  • Why Are People Now Selling Their Silver? Precious Metals Supply and Demand
      Big Moves in Silver Last week, the prices of the metals fell further, with gold -$18 and silver -$0.73. On May 28, the price of silver hit its nadir, of $14.30. From the last three days of May through Sep 4, the price rose to $19.65. This was a gain of $5.35, or +37%. Congratulations to everyone who bought silver on May 28 and who sold it on September 4.   The recent move in silver [PT]   To those who believe gold and silver are money (as we do) the rising price...
  • Fiat Money Cannibalization in America
      An Odd Combination of Serenity and Panic The United States, with untroubled ease, continued its approach toward catastrophe this week.  The Federal Reserve cut the federal funds rate 25 basis points, thus furthering its program of mass money debasement.  Yet, on the surface, all still remained in the superlative.   S&P 500 Index, weekly: serenely perched near all time highs, in permanently high plateau nirvana. [PT]   Stocks smiled down on investors from their...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!