Ronald Stoeferle: Gold Is Dirt Cheap Right Now

Fresh from releasing his exhaustive 230-page annual report titled In Gold We Trust, Ronald Stoerferle joins us to summarize his forecast for the yellow metal.

Stoerferle, an author of several books on Austrian economics and head of strategy and portfolio management at Incrementum AG, concludes that gold is extremely cheap right now in dollar terms. And he sees a new bull market beginning for the precious metal -- one likely to quickly build momentum as the next (and long overdue) financial market correction arrives.

We're at the beginning of a new stage of a bull market.

We've seen a massive correction with a big drawdown, but we're now seeing the Commitment of Traders report suggesting that there's been a washout. We're seeing that sentiment is really negative. We're seeing that nobody really cares about gold and mining stocks, and especially about silver. Silver is probably the biggest contrarian investment, though silver mining stocks are probably even more contrarian at the moment.

We all know that the herd behavior in the sector is getting more extreme. I think it has got to do with career risk in the financial industry, so nobody really wants to make a contrarian call. But once we go above this $1,360-$1,380 resistance, which is also the neckline of a large inverse head & shoulder formation, I think gold will hit $1,500, $1,600 pretty quickly.

The most important thing is: in comparison to all the monetary printing that we've seen in the last couple of years, gold got significantly cheaper. Gold, in monetary terms, is dirt cheap at the moment. We're basically at the same levels like in 1971 when it comes to the gold backing of the US dollar. So gold is a bargain at this level.

Of course, we need some sort of catalyst. I think one of the main catalysts will probably be recession fears coming up and the greater volatility in equity markets that's going to go hand in hand. And we’ll see it sooner or later.

We should not forget that stocks have been trading at or close to the all-time highs, that real estate has been doing really well, that bond markets have been doing well, that cryptocurrencies have been kind of stealing the show, that people regained trust in the financial system, in banks, and even in politicians. Inflation is not a big concern at the moment. We're seeing rising rates and so on. Let's face it: those things are not an extremely positive environment for gold. But still, it's been doing pretty well.

If those headwinds become tailwinds, meaning that there will be some volatility kicking in in equity markets, that the bond markets start cracking, that people start losing trust in the system again -- early indications of which it looks like we may be seeing here in 2018 -- that's going to be the point in time when gold will pick up momentum big time.

And the other big thing is that the whole world is increasingly trying to diversify out of the US dollar. We're coming to a multipolar currency system sooner or later. That's a long process. This year we've seen the introduction of the oil futures in Shanghai -- that's a really big development -- volumes are enormous in Shanghai. Nobody would have expected that. And that's just another nail in the coffin of the US dollar. And, of course, all those countries that are trying to avoid the US dollar in their trade, they are big holders of gold. So I think within the course of the next crisis, I think there's might chance of a revaluation of gold.

Click the play button below to listen to Chris' interview with Ronald Stoeferle (49m:22s).

This is a companion discussion topic for the original entry at

Another great interview and overarching analysis from Stoeferle, who is an Austrian with deep Austrian School monetary views! Been following him for years…
He didn’t come out and name it, but he inferred that the people building the link between physical gold and a cryptocurrency are at
They are the first to attach a yield to physically stored gold, and also have devised an ingenious method of rewarding users of the currency in order to stimulate velocity and adoption, thus defeating Gresham’s Law. A paradigm shifting system that has been in the works for years…I started detecting whiffs of the project from Andrew Macguire last year and then they started releasing information just this year. It is in the equity raising phase right now and being launched October 1st.
MAJOR players, financial institutions and dedicated, respected people have realized this is an entire, closed-loop, new monetary system. It is complicated, but they seem to have all bases covered.
I recommend PP folks go have a look, and it would be great if Chris interviewed Tom Coughlin, without endorsing Kinesis, some how. This longtime investor and 10 year PP subscriber has never been as excited about something that will break the cartels and FORCE honesty back into our money…

Its an interesting idea. Here’s a podcast at TF metals on the subject:
My sense:
The core of the system is transaction fees. They appear to be competing with western union. Kinesis assumes that they will charge a more reasonable fee, and then distribute bits and pieces of that fee to “minters” (those who provide gold, which allows them to create kinesis coins, thus enabling transactions) as well as “Kinesis coin owners” (those who buy into the ICO, funding the Kinesis org in a way similar to a private placement).
The whole business is limited by the prospective amount of fees generated from remittances. Early adopters might get some great income, but as more “currency” is minted, then the same number of fees gets split among more and more currency minters. At some point, nobody will want to mint any more coins since the yield will have dropped to “below interesting.”
Do they have other revenue sources other than remittances? I know the gang on the podcast are excited about the opportunity to wipe the eye of the bullion banks (which is always a fun thought), but ultimately, the amount of gold that Kinesis will attract is limited by the total yield the system can generate.
So. The “total yield” number is the key. With that number, we could project just how much gold would be sucked out of the current system to enable Kinesis.
That’s my current thinking.
Were I being asked to fund the thing, my first question would be: “if you could get 100% of all western union remittances to third world countries, how much would that be?”
And from that, we can calculate just how much gold that will end up attracting.
It might end up being a really interesting number.

If isolationist and trade protection thinking becomes popular, ultimately, business will look to invest in things that make other things happen. Art Berman has echoed that concern many times on this site. Oil and PM’s “grease” these activities and their demand will affect price. Definitely something to watch. Position yourself, accordingly.

This year we've seen the introduction of the oil futures in Shanghai -- that's a really big development -- volumes are enormous in Shanghai. Nobody would have expected that. And that's just another nail in the coffin of the US dollar. And, of course, all those countries that are trying to avoid the US dollar in their trade, they are big holders of gold. So I think within the course of the next crisis, I think there's might chance of a revaluation of gold.

Oil futures - is that an oxymoron?

Dave, sorry it has taken so long for me to reply, but thank you for posting the TF Metals interview with Tom and Andrew from a couple months ago. I susbscribe over there too, and listened to it back then. It is a good feeling to know that these leaders (Chris, Adam, Craig) we follow are able to get the inside track sometimes. I honestly feel that Kinesis is the one new gold-backed currency SYSTEM that might break the cartels backs. We’ve put money into it, prepared to lose all or gain tremendously. I think it will be one or the other…
With respect to the transaction fees and thus yield to the token holders, minters and depositors, there are forecasts that have been done independently that are too good to be true! So of course that has gotten everyone’s skepticism raised. But I followed the whitepaper, the website, the presentations, checked out the alliances and then got on the Telegram group. Our investment decision was based on some super-smart analytical calculations and projections provided by folks over there, done independently and with extremely conservative assumptions. Look at a guy named “Uchiki” over there to see some heavy duty calcs, based on outside data that he gathered.
If the yield incentives work, the vast “unbanked and underbanked” masses recognize the enormous fee savings vs. Western Union or other exchanges, and the coin circulation (velocity) come anywhere close to these conservative assumptions, this system will be very profitable and should rapidly gain adoption. While also becoming a price leader for physical, vaulted gold held with direct title, throughout the world.
We’ll see!

Agent700 wrote:
Another great interview and overarching analysis from Stoeferle, who is an Austrian with deep Austrian School monetary views! Been following him for years.. He didn't come out and name it, but he inferred that the people building the link between physical gold and a cryptocurrency are at
Thanks for the pointer. I'm checking them out now. Looks interesting but I haven't got past the first layer of fluff yet...this will take a bit of time to understand...

Interesting podcast but the 2017 In gold we trust report and chartbook is more illuminating.
However, like so many reports, it has an agenda and that agenda is to make a strong case for buying gold.
It is a terrific report with plenty of useful detail but I thought the conclusion did not pay enough attention to the black swan risks cited.
From the chart “In Gold we trust” chartbook p. 31:
“The alternative to revaluing gold….is to force an outright contraction of the US broad or possibly even narrow money supply, which would wreak havoc with the banking system and economy”
Who says it needs to be forced? A stockmarket crash would achieve the same thing not only by the destruction of stock values but also by the the domino effect of liquidation of assets to cover margin debt. Real estate and gold would be caught up in the carnage.

We are way beyond any hope of restoring stability. Unintended consequences piling upon unintended consequences for 2 decades now. As the interview points out, recessions are a healthy system cleansing just like a good gardener prunes her shrubs and roses.

From IGWT chartbook p.34:

“It ain’t what you don’t know that gets you in trouble. It’s what you know for certain that just ain’t true.” Mark Twain

The report should pay more attention to this quote. It is a little too convinced of its own argument.

From IGWT compact report p.5:

“There are two ways to be fooled. One is to believe what isn’t true; the other is to refuse to believe what is true.” Soren Kierkegaard

What is true is that stock values are way over-priced. The financial engineers have been stoking prices with buybacks and share cancellations to raise price/earnings ratios. The refusal to believe this truth (described as “fear of missing out” in the report) is obvious as the US markets remain at sky high levels.

The IGWT report does point out that despite worries about the elevated levels of the sharemarket, many are there for fear of missing out. It then goes on to ask (p.22):

“This raises the question whether the exit will be big enough to accommodate all of them.”

That is a rhetorical question - of course it won’t. It never is and many get left behind because they cannot contemplate taking a loss so take a much bigger loss later on.

From IGWT compact report p.6:

“Upcoming recession fears resulting in a U-turn by the Fed, and the consequential depreciation of the US dollar would probably finalise the entry into a new age of inflation. This will be the moment in which gold will begin to shine again.”

It is pure assumption that the Fed will will make a U-turn. They won’t see a crash coming and they would have no effect anyway standing in the path of a financial tsunami.

From IGWT compact report p.16

"It would be a big surprise, so to speak a back swan, if the response of the authorities to the next economic downturn were to deviate from the usual one.

Since the normalization of monetary policy hasn’t progressed sufficiently yet, renewed stimulus measures would probably shake market confidence in the efficacy and sustainability of the monetary therapies applied to date. Historical experience indicates that the crumbling of such deeply ingrained faith is often a wonder to behold…"

It may be a black swan to highly paid economists and Wall Street. They are, after all, “all in”. No one is stepping out of line. Consensus is complete. Until it isn’t. The next economic downturn will come after the market crashes - by which time it will be too late to stop the damage spreading far and wide.

Normalization of monetary policy has hardly begun. It will be forced by events and the liquidation will not be orderly. The idea that there can be normalization of monetary policy is ludicrous. The system has gone critical but the wits and wags think it is all a joke.

From IGWT compact report p.16:

“In a theater, it happened that a fire started offstage. The clown came out to tell the audience. They thought it was a joke and applauded. He told them again, and they became still more hilarious. This is the way, I suppose, that the world will be destroyed - amid the universal hilarity of wits and wags who think it is all a joke.” Soren Kierkegaard

From IGWT chartbook p.43:

The valuation disparity between the price of the HUI and Apple is cited as a reason for the price of the HUI to rise. The idea that Apple or any other high priced share might fall instead or at a faster rate than gold shares, thus reducing the disparity, is not considered - presumably because it does not add to the argument for gold bulls.

From IGWT compct report p.23

"Where will the gold price go next?

Two years ago, we made a quite audacious forecast, calling for gold to reach a price target of USD2300 by June 2018. At the current juncture that appears unlikely to happen. Nevertheless, the long term chart suggests that gold has pulled out of its rut. We continue to believe that the second phase of its secular bull market still lies ahead."

Anyone who follows Elliott Wave Theory would question this assumption. Five waves down (A wave) are usually followed by a B wave correction then another 5 waves down (C wave). The B wave correction may have more to go but but it is not the second phase of a secular bull market.

From IGWT compact report p.24:

“Even if the Fed were to reduce its holdings of securities at the same pace at which it acquired them during its last QE prgram, i.e., if it were to reduce them by USD$85 billion per month, it would take until sometime in 2021 to shrink the monetary base to its pre-crisis level. From our perspective one can essentially rule out that this can be done without triggering a recession

I think the more likely scenario is a sharemarket crash and a forced liquidation i.e. a firesale of Fed assets. No way would they voluntarily reduce assets by US$85 billion per month for the reason cited above. That would amount to a firesale.

The warning was given by the sharemarket at the end of January. In 8 trading days a little over 10% was knocked off the Dow 30. That has either been forgotten or is being ignored. People believe what they want to believe and so bury their heads in the slippery sand of hope.

From IGWT compact report p.24

“Excessive global over-indebtedness is by now glaringly obvious.”

“The consequence would be high price inflation rates or a stagflationary environment.”

Astonishingly, this report does not list deflation as one of its scenarios. No doubt because deflation is not considered good for gold. Actually, deflation is more than likely good for gold holders if gold does not deflate at the same rate as everything else. In other words its relative purchasing power would be higher than currencies or other assets if they deflate at a greater rate than gold. That does not mean that it will not drop in price. It could still be a safer bet.