Buying Monetary Insurance Before The Flood!
Special Guest: Ronald-Peter Stoeferle, Incrementum Liechtenstein
Prior he worked for Raiffeisen Zentralbank (RZB) in the field of Fixed Income/Credit Investments and then later on joined Erste Group Bank, covering International Equities, especially Asia. In 2006 he began writing reports on gold and gained media attention when he expected the price of gold to rise to USD 2,300/ounce when the current price was only at USD 500. His six benchmark reports called "In GOLD we TRUST" drew international coverage on CNBC, Bloomberg, the Wall Street Journal, Economist and the Financial Times. He was awarded "2nd most accurate gold analyst" by Bloomberg in 2011. He also writes reports on crude oil. Mr. Stoeferle is managing two gold mining-baskets and one basket for silver mining-equities. He studied business administration and finance at the Vienna University of Economics and the University of Illinois at Urbana-Champaign. Mr. Stoeferle is also a Chartered Market Technician (CMT) and a Certified Financial Technician (CFTe).
(Editor's Note: Ronald-Peter Stoeferle's essays can be found at SafeHaven.com at http://www.safehaven.com/author/520/ronald-peter-stoferle and http://www.safehaven.com/author/701/ronald-peter-stoferle)
39 Minutes with Slides
Ronald-Peter Stoeferle is a noted Austrian economist and money manager who believes strongly that "we should expect that financial repression as well as wealth taxes in various facets which will increasingly gain in importance in coming years". He believes "this to be a disastrous strategy, as the redistribution will merely buy time, while the structural problems remain unsolved."
A New Monetary Regime
Since 1971 we have had a new monetary era or regime that has directed massive debt induced growth which has been doubling every 10 years. The system presently wants and needs to deleverage but the political pressures don't allow for central bankers and politicians to let this happen. What we have instead is policy induced inflation pressures creating monetary tectonic pressures.
Ronald-Peter Stoeferle and the team at Incrementum LI are developing a new approach which they refer to as Austrian Investing which combines the Macro views of the Austrian School of Economics with Asset Management. Their latest book "Austrian Investing between Inflation & Deflation (presently available in German only) shows how grasping the consequences of the interplay between inflation and deflation will be crucial for prudent investors. Investors should prepare for both scenarios - inflation and deflation.
Followers of the Austrian School have been extremely successful at anticipating major economic events like the Great Depression and the Housing Bubble.
- Monetary Policy - The Starting Point
- Macro Orientation - Most Important today
- Understanding that central bankers & politicians cannot control the dynamics of inflation.
It is important to realize that radical monetary interventions will not lead to self-sustained recovery but to further turmoil in the financial markets.
Austrian Investing Requires Proprietary Inflation Indicators
Understanding the Monetary Tectonic forces of Inflation and Deflation is critical to investment success. As such Incrementum LI uses their "Incrementum Inflation Signal Indicator". Since August it has been signalling massive Disinflation / Deflation which has shifted their portfolio allocations.
Private Investors should watch the Gold-Silver Ratio closely.
Incrementum believes we presently have a "Bull market in Greed and a Bear Market in Fear" which will resolve itself with Gold being one of the big winner and moving to $2300 US/Oz. The recent weakness in Gold is due to:
- Disinflation and rising real interest rates,
- Partly declining money supply (especially in the ECB),
- Very weak commodity prices,
- Record high short positions,
- Rising opportunity cost of owning gold due to the rally in equities,
- Tightening credit standards,
- Increasingly negative analyst opinions,
- Firmer US$ based on confidence in the US Economic outlook,
- A high level of conviction in the ability of central bankers to "get it right".
Most, if not all, of these false premises or signals will soon begin cyclically reversing.