About Black Swans,

Gray Rhinos and

Golden Bulls

Ronald-Peter Stöferle
Managing Partner & Fund Manager
Incrementum AG

World Gold Forum

April 20-23, 2020
1
In Our Partners We Trust 2

@IGWTreport
Agenda

I. Black Swans and Gray Rhinos

II. (When) Will Trust in Central Banks Start Eroding?

III. What Is Gold - The 7th Sense Of Financial Markets -

Telling Us?

IV. Inflation and Stagflation - The Ultimate Pain

Trades?

V. The Golden Future – Why All Roads Lead to Gold

3
1. The Black Swan That Wasn‘t

„[...] what you see is likely to be less Black

Swannish than what you do not see.“

Nassim Taleb
4
Bilder white/gry/swan

5
6
What a Difference A Month Makes…

Source: Investing.com, Incrementum AG

7
US Inverted Yield Curve Was Already Flashing Red!

100%

80%
?

60%

40%

20%

0%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Recession Percentage of US yield curve inversions

Source: Tavi Costa, Crescat Capital LLC, Incrementum AG

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The Everything Bubble: A Bug In Search Of A Wind Shield
600% Everything Bubble

2. The Sceptics Housing Bubble

Dot-Com Bubble

500%

400%

300%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Financial assets of households/Disposable personal income

Source: Jesse Felder, Reuters Eikon, The Economist, Incrementum AG

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2. (When) Will Trust in Central Banks Start
Eroding?

„We’ve counteracted this existential shock with the greatest

fiscal and monetary bazooka. It’s not even a bazooka.
It’s more like a nuclear bomb.”

Paul Tudor Jones

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 Unprecedented Monetary & Fiscal Stimulus

• PEPP (Pandemic Emergency Purchase Program)

• CPFF (Commercial Paper Funding Facility)
• PMCCF (Primary Market Corporate Credit Facility)
• TALF (Term Asset-Backed Securities Loan Facility)
• SMCCF (Secondary Market Corporate Credit Facility)
• MSBLP (Main Street Business Lending)
• MMLF (Money Market Mutual Fund Liquidity)

UNLIMITED UNPRECEDENTED
QE FISCAL STIMULUS
11
US Inflation Expectations (lhs), in %, and Gold (rhs), in USD,
01/2008-04/2020
3 2.000

1.800

1.600
2
?
1.400

1.200

1
1.000

800

0 600
2008 2010 2012 2014 2016 2018 2020

US inflation expectations Gold

Source: Federal Reserve St. Louis, Reuters Eikon, Incrementum AG

12
Deflation Has To Be Avoided – Whatever It Takes!
US CPI yoy%, 1785-2019
Gold/Silver Backing (short interruptions) Classic GS Partly Debt Based Pure FIAT
40%

30%

20%

10%

0%

-10%

-20%
Deflation in 43% of all years Deflation in 12% of all years

-30%
1785 1800 1815 1830 1845 1860 1875 1890 1905 1920 1935 1950 1965 1980 1995 2010

Source: Nick Laird, goldchartsrus.com, Incrementum AG

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14
3. GOLD:
What Is The 7th Sense Of Financial Markets
Telling Us?

„When gold speaks, every tongue is silent“

Italian proverb

15
Gold (lhs) and VIX (rhs), 2008 vs. 2020

130
80

70
120
60

110 50
Gold (indexed)

VIX
40

100
30

20
90
10

80 0
0 50 100 150 200 250 300
Number of trading days

Gold 2008 Gold 2020 VIX 2008 VIX 2020

Source: Reuters Eikon, Incrementum AG

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Annual Gold Performance in Various Currencies
EUR USD GBP AUD CAD CNY JPY CHF INR Average
2001 8.1% 2.5% 5.4% 11.3% 8.8% 2.5% 17.4% 5.0% 5.8% 7.4%
2002 5.9% 24.7% 12.7% 13.5% 23.7% 24.8% 13.0% 3.9% 24.0% 16.2%
2003 -0.5% 19.6% 7.9% -10.5% -2.2% 19.5% 7.9% 7.0% 13.5% 6.9%
2004 -2.7% 5.3% -2.3% 1.8% -1.9% 5.3% 0.7% -3.4% 0.6% 0.5%
2005 36.8% 20.0% 33.0% 28.9% 15.4% 17.0% 37.6% 37.8% 24.2% 26.1%
2006 10.6% 23.0% 8.1% 13.7% 23.0% 19.1% 24.3% 14.1% 20.9% 17.2%
2007 18.4% 30.9% 29.2% 18.3% 12.1% 22.3% 22.9% 21.7% 16.5% 21.7%
2008 10.5% 5.6% 43.2% 31.3% 30.1% -2.4% -14.4% -0.1% 28.8% 15.5%
2009 20.7% 23.4% 12.7% -3.0% 5.9% 23.6% 26.8% 20.1% 19.3% 16.5%
2010 38.8% 29.5% 34.3% 13.5% 22.3% 24.9% 13.0% 16.7% 23.7% 25.2%
2011 14.2% 10.1% 10.5% 10.2% 13.5% 5.9% 4.5% 11.2% 31.1% 11.2%
2012 4.9% 7.0% 2.2% 5.4% 4.3% 6.2% 20.7% 4.2% 10.3% 7.5%
2013 -31.2% -28.3% -29.4% -16.2% -23.0% -30.2% -12.8% -30.1% -18.7% -24.1%
2014 12.1% -1.5% 5.0% 7.7% 7.9% 1.2% 12.3% 9.9% 0.8% 6.2%
2015 -0.3% -10.4% -5.2% 0.4% 7.5% -6.2% -10.1% -9.9% -5.9% -3.8%
2016 12.4% 9.1% 30.2% 10.5% 5.9% 16.8% 5.8% 10.8% 11.9% 12.3%
2017 -1.0% 13.6% 3.2% 4.6% 6.0% 6.4% 8.9% 8.1% 6.4% 6.3%
2018 2.7% -2.1% 3.8% 8.5% 6.3% 3.5% -4.7% -1.2% 6.6% 2.6%
2019 22.7% 18.9% 14.2% 19.3% 13.0% 20.3% 17.7% 17.1% 21.6% 18.3%
2020 ytd 11.7% 7.5% 16.4% 25.8% 17.0% 9.5% 7.4% 8.6% 15.3% 13.2%
Average 9.7% 10.4% 11.8% 9.8% 9.8% 9.5% 9.9% 7.6% 12.8% 10.1%

Source: www.goldprice.org. Incrementum AG, as of April 6

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Gold in Local Currency vs. Domestic Stock Index, ytd 2020

31%
30%
25%

20% 17%

11%
9%
10% 7% 6%

0%

-10%
-9%

-20% -16%

-23% -24% -23%

-30% -26%
-28%

-40%

Gold in local currency Domestic stock index

Source: Reuters Eikon *as of April 3rd, Incrementum AG

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 Gold/S&P-Ratio: Breakout!
1,8

1,6

1,4

1,2

1,0

0,8

0,6

0,4

0,2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Gold/S&P 500-Ratio 90-Tage-Linie 200-Tage-Linie

Source: Reuters Eikon, Incrementum AG

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4. INFLATION and STAGFLATION
The Ultimate Pain Trades?

„The two main risk factors for the average portfolio are less
than expected growth and more than expected
inflation.“

Ray Dalio
20
Rising Inflation, The Ultimate Contrarian Call?
7%

5%

3%

1%

-1%

-3%
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

Inflation
Source: Federal Reserve NY, The Economist, Bloomberg, Incrementum AG

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Rising Inflation: The Biggest Pain Trade in History?

18

16

14

12

10

0
2012 2013 2014 2015 2016 2017 2018 2019 2020

Global negative yielding debt market value

Source: Bloomberg, Incrementum AG

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Which Asset Classes Perform Best In Rising Inflation?
30%
26%
25% 24%

20%

15%
15% 14%
11%
10%
7%
5%
5% 4% 4% 4%
2% 3%

0%

-5%
-4%

-10%
-11% -10%
-15%
Falling inflation rates Stable inflation rates Rising inflation rates

Stocks Bonds Mining stocks Precious metals Commodities

Source: Incrementum AG, Reuters Eikon

23
OFID, July 20 2011 It‘s not a sprint, it‘s a marathon!
24
Performance of the S&P and Gold During Various Phases of a Recession

Source: Incrementum AG

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5. Gold Mining Stocks

„In a bull market, the sidelines

is the worst place to be!”
Michael Kosares
26
Homestake Mining and S&P 500 During The Great Depression,
indexed 100 = 01/1920 (log), 01/1920-01/1940
1.000

Are we here?

+600%

200

40
1920 1922 1924 1926 1928 1930 1932 1934 1936 1938 1940

Homestake Mining S&P 500

Source: Longwave Group, Nick Laird, goldchartsrus.com, Incrementum AG

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BGMI/Gold Ratio (log), 01/1940–02/2020
7

0
1940 1950 1960 1970 1980 1990 2000 2010 2020
BGMI/Gold ratio Median (BGMI/Gold ratio)

Source: Nick Laird, goldchartsrus.com, Reuters Eikon, Incrementum AG

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 Bull Markets in Mining Shares: The Party Has Only Started!
800
10/1942-02/1946 07/1960-03/1968 12/1971-08/1974

700 08/1976-10/1980 11/2000-03/2008 10/2008-04/2011

01/2016-03/2020
600

500

400

300

200

100 current bull

market
0
0 40 80 120 160 200 240 280 320 360 400

Source: Nowandfutures, TheDailyGold.com, Barrons, Nick Laird, goldchartsrus.com, Reuters Eikon, Incrementum AG

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6. The Golden Future

„Bull markets are more fun than bear markets.”

Bob Farrell
30
 Gold Now in Public Participation Phase

2. Public Participation Phase

3. Distribution
Phase

1. Accumulation Phase We are here

Source: Incrementum AG

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Generalists and Institutional Investors Have Not Joined The Party Yet
ETF-Holdings as % of Total US Market Capitalization
1,2%

1,0%

0,8%

0,6%

0,4%

0,2%

0,0%
2008 2010 2012 2014 2016 2018 2020

Source: Atlas Pulse, Reuters Eikon, World Gold Council, Incrementum AG

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Actual Gold Price and Projections, in USD, 1971–2049

25.000

20.000

15.000 2030:
4,100 USD (growth rate since 2000)
3,420 USD (growth rate since 1971)
2,530 USD (growth rate since 1990)
10.000

from 1971: 7.7% p.a.

5.000
from 1990: 4.8% p.a.
from 2000: 9.5% p.a.

0
1970 1980 1990 2000 2010 2020 2030 2040

Actual gold price Compound annual growth rate (from 1971)

Compound annual growth rate (from 1990) Compound annual growth rate (from 2000)
Source: Pierre Lassonde, Reuters Eikon, U.S. Global Investors, Incrementum AG

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Commodities – The Biggest Contrarian Investment?
GSCI TR/S&P 500 Ratio, 01/1971–02/2020
10 Gulf War 1990

9 GFC 2008
Oil Crisis 1973/74
8

5
Median: 4.09
4

3
Everything
2 (except commodities)
Bubble
1 Dot-Com Bubble

0
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

SPGSCITR Commodity Index/S&P 500 ratio

Source: Reuters Eikon, Torsten Dennin, Lynkeus Capital, Incrementum AG

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Bullish on Gold? Then Silver Provides Relative Value!
300 Years of Gold/Silver Ratio, 1718–2020
120
2020: G/S ratio = 113
~2.8x above average
~5.6x above median
100

80

60

40

20

0
1718 1768 1818 1868 1918 1968 2018

Gold/silver ratio Average Median

Source: Nick Laird, goldchartsrus.com, Incrementum AG

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Our Core Views

I. Welcome to “The Mother Of All Stimulus”

II. After the corona crisis comes the debt crisis!
III. Rising price inflation continues to be priced by the market
as tail risk.
IV. Mining stocks and commodities will be major
beneficiaries of monetary and fiscal policies.
V. Gold is back in a bull market. Gold (and BTC) on the way
to new all-time highs, not a question of if, but when!

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Our 14th In Gold We Trust report
will be published on May 27th!

Subscribe for free at:

https://ingoldwetrust.report/?lang
=en

37
„All roads lead to gold.“
Kiril Sokoloff

www.incrementum.li

38
Addendum

Because we care…

About our Clients.

About the Society.
About the Future.

39
Biography: Ronald-Peter Stoeferle

 Managing Partner at Incrementum AG, focusing on Research and

Portfolio Management
 Business Administration and Finance Studies at Vienna University of
Economics and University of Illinois
 Chartered Market Technician (CMT) and Certified Financial Technician (CFT)
 Erste Group Research 2006 - 2012
 Manager of a global macro fund that is based on the thoughts of the Austrian
School of Economics
 Since 2007 author of the annual „In Gold we Trust“-Report, one of the most
widely followed publications on gold
 2014 Publication of the bestseller „Austrian School for Investors“ and 2019
„The Zero Interest Trap“
 Advisor for Tudor Gold (TUD), a Canadian junior gold explorer
 Member of the advisory board of Affinity Metals (AFF)
 Married, proud father of 3 daughters

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 About the In Gold We Trust report 41

• The gold standard of gold research: Extensive annual study

of gold and gold-related capital market developments

• Reference work for everybody interested in gold and mining

stocks

• International recognition – newspaper articles in more than

60 countries; almost 2 million readers

• Published for the 13th time in English and German and for
the first time in Chinese on May 28, 2019

• Further information and all editions can be found

at: https://ingoldwetrust.report/?lang=en

@IGWTreport
#igwt2018
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42
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Email: ingoldwetrust@incrementum.li

43
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