The tenth edition of the In Gold We Trust report is out, and it is a MUST READ, without any doubt. Our close friends Ronald Stoeferle and Mark J. Valek did an excellent job, as they describe how a new bull market in gold is emerging. In a 144-page report full of excellent insights they re-confirm their long-term price target of USD 2,300 for June 2018.
There are many topics in the report that are worth your time: monetary policies, economic fundamentals, the gold market, and much more.
One of the highlights of the reports worth mentioning:
“After years of pursuing low interest rate policies, central banks have maneuvered themselves into a lose-lose situation: Both continuing and ending the low interest rate regime harbors considerable risks. In an attempt to finally achieve the desired boost to growth, a monetary Rubicon has been crossed in several currency areas with the imposition of negative interest rates. Gold is increasingly attractive in this environment. It used to be said that gold doesn’t pay interest, now it can be said that it doesn’t cost interest.”
Moreover, the report describes how overall market sentiment is changing, and, with that, the narrative surrounding central bankers. Case in point this observation about the growing scepticism vis-à-vis the U.S. Fed’s monetary policy: “Something quite telling happened at Ms. Yellen’s press conference after the March FOMC meeting. The first question that CBNC journalist Steve Liesman asked her was: “Does the Fed have a credibility problem […]?” (check video).
Executive summary of In Gold We Trust 2016
- Increasing uncertainty about economic and political developments boosts the gold price
- Monetary stimulus ongoing: the BoJ and the ECB are creating the equivalent amount of the world’s entire annual gold production via their QE programs each month
- Dollar strength upon US-recovery and normalization was major contributor to gold/commodity weakness of the last years
- The narrative of economic recovery is crumbling; US recession cannot be ruled out; faith in monetary policy measures declines
- Continued depreciation of the US dollar and strength in commodities may lead to higher inflation, or maybe stagflation
- BREXIT: Uncertainty will negatively affect growth. Further monetary and fiscal stimulus to be expected to counter further disintegration of the Union
- The persisting low interest rate environment is leading to a revival in interest in gold investments on the part of institutional investors
- In addition to gold, this generally means a positive environment for inflation sensitive assets like silver and mining stocks