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Ronald Stöferle

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2022-06-30
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2022-06-30
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  1. “Well, I think that's definitely a topic I think we should not forget that last year the S&P was hitting, I think, 68 new all-time highs. I think that Bitcoin kind of stole the show from gold last year. I think it's a bit exaggerated that it's stealing too much investment flows from gold. I think it's mostly media kind of appearance, stuff like that. And then we shouldn't forget that the 2019 and 2020 performance was really good. Gold was up 19% in 2019. It was up 25% in 2020. So last year in dollar terms, it was down 3.5%, which is okay. I mean, it's been taking a breeder. And I think people...”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  2. “2022. I mean, we have to say that we almost did hit new all-time highs in US dollar terms in spring. We did hit several new all-time highs in euro terms and have a look at the price of gold in Japanese yen terms. And we always say that our friends in Japan, there are a couple of steps further. And you know what's going on there? And we've got a big trade set up based on this monetary madness going on. I think it's no coincidence that the Japanese yen is so weak and that gold actually in Japanese yen terms is up almost 20%. So I think gold did okay, but still to be honest I would have expected a little bit more.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  3. “1550, we started into the year. And you would tell me what's going to happen. I would be a liar if I would have told you well, I think 1800. That's going to be the price level. But still, I think people kind of it's all about managing expectations. And I think that gold actually kind of did a not a tremendous job, but it did okay, especially in this very, very volatile weeks of 2020 in spring. I think gold stabilized your portfolio. Gold did really well in an environment of negative real rates. I think gold anticipated rising inflation very early on. And it also did a good job in”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  4. “Not really well prepared to such a crisis. And there were too few firefighters and they came to late and there were so many measures being taken by central banks, but it took ages. Now I think we haven't seen a lack of firefighters in 2020. Actually, they did probably way too much. And then they were lazy taking back their measures. And we wrote a special report on inflation in fall 2020. It was called the boy who cried wolf, where we expected price inflation to surge. However, when it comes to the price of gold, I would be a liar if I would tell you, Jack, well at the beginning of 2020 when gold was trading at, I think, 1500.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  5. “Well, you know, I think it's back to the future, the second part. Do you remember it where Biff gets this sports almanac and he basically knows all the sporting results of the future and then bets on it and becomes a rich man. Actually, we don't have such a DeLorean time machine, unfortunately. But I think what we know and understand quite well is financial markets history. And therefore, for us, I think it was not a big surprise that central banks would step in very, very aggressively. And I think it wasn't, you know, in 2008, 2009, I think the system or markets were”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  6. “We didn't have any fear. I mean, yeah, we were excited and everything, but we almost were certain that this will reverse since they were printing trillions and the amount had even doubled and tripled relative to the last financial crisis. And we thought there will be no limits. They will print so much until they turn these markets around. So, I definitely couldn't have told you the price where Bitcoin is going to be, but we were both so certain that as well, Bitcoin and gold would be much higher. Bitcoin turned out to be much higher. In the meantime, it fell a little bit, but it's still much, much higher than back then. Similar story to gold, actually. Ronnie the word regarding gold, but would you have known Ronnie where gold price would have been?”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  7. “Deflation debt deflation is actually a real threat to this system and with this knowledge we basically could anticipate that they will throw everything at it to keep this system from imploding and that gave us the confidence actually to start the fund and build up the exposure. I remember when Bitcoin futures were 4,000 I was buying. I mean obviously if you buy into this falling knife it's a weird feeling but still we incrementally started the exposure because that was just happened to be the time when the fund started in February, March 2020 and we didn't we”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  8. “Obviously, Jack, I would have called it exactly. I mean, very easy, difficult question. I mean, what I can say is basically at that time around, we started our fund strategy, which combines Bitcoin and gold. And so that was, I remember very lively still, and it was in February when we started. What we did, I think, see correctly back then since we had very memories of the financial crisis still, we knew that this is a real threat in terms of deflationary event which is now hitting the global economy. And we also think that deflationary threat is actually, can be crucial and fatal to the state-based monetary system.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  9. “I think one can really measure or experience which kind of environment one is. If one basically listens to small talk, if people are talking, are people talking about inflation or aren't they? And then I think people will be still talking about inflation if the official inflation rate goes back to 5% points or even four, perhaps financial market participants will already be cheering and saying, hooray, this inflation is going away and everything is going to be normal in a few quarters. But I think the psychologically nothing will have changed yet if prices only continue to rise at 4% after they have risen 9 percentage points perhaps last year. I think inflation Topic still will be a topic in the general public and the inflationary period really only will end once people stop talking about price inflation. This is, I think, really a”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  10. “The SP down even more baby boomers, they're now retiring, having a look at their investments being down 30% plus 8% inflation on top. That's a pretty pretty nasty wealth destruction over just a couple of months. I think, Jack, it's for us as asset managers as well as writers, it's a very, very interesting and stimulating environment. However, I think for the mainstream investors, for people that don't follow markets like we do, it's a very, very dangerous environment.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  11. “And going forward, probably the last thing, the last shoot to drop that we would have to see for falling inflation rates would be oil prices and energy prices. So far, you know, we're still trading at 112 for brand, but as I've said, we couldn't take out the 120. I think this is really crucial to follow because elections are being won and being lost at the gas station and probably also in the supermarket. And we all know that there's midterm elections coming up. So inflation definitely is a very, very political issue at the moment. But on the other hand, I don't think that Joe Biden and the Democrats really want to see”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  12. “Fear of central banks. Then obviously we've got a big problem because if we all expect inflation numbers to remain high, this affects our behavior as consumers, as business owners, as investors tremendously. Now, I think what's really interesting is this divergence between what financial markets are seeing. So if you have a look at 10-year break-even inflation rates, they were at above 3% in April. Now they are at 2.5%. So they came down quite a lot. If you have a look at five years, five-year inflation expectations, they also came down significantly. But on the other hand, if you have a look at University of Michigan inflation expectations, so basically What consumers are expecting, they're at 5.4%, which is the highest since 1981, and there is still rising. So I think this”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  13. “now huge differences when it comes to growth, when it comes to demographics, when it comes to the financialization of our system. But I think, you know, if I was a politician, I would be quite happy about seeing inflation numbers between 3% to 6% over the next couple of years. The problem is that in theory, it works probably quite well, but in practice it doesn't and what I experience over here in Europe is that we are now really starting to have a inflation mindset. And I think that inflation still very much is a psychological topic. Now, if inflation expectations should really become unanchored, and this is the biggest...”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  14. “At the moment, that are active as wealth managers, as fund managers, whatever, really know how to navigate in an inflationary environment. So I think this is really a new environment that we're in. And we should not forget, check that actually, this is exactly what central bankers kept telling us and what actually politicians wanted to achieve to reduce their debt burden. And if we study history, if we study, for example, the period after the Second World War, where we saw enormous levels of debt, financial repression deeply negative real rates in combination with high growth rates were basically the solution to the debt problem. Now, obviously compared to the time after the Second World War, there are”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  15. “Well, you know, they have already pivoted, I think Dave Rosenberg wrote about that recently at points where inflation rates were significantly above 2%. So I think for them, it's not the absolute level. It's direction. From my point of view, I think what's important to say is that I think that this great moderation, as Mark said, this is basically over. So our take is basically that inflation and following inflation and structuring your portfolio based on the topic of inflation will become much more important going forward. Because let's face it, we've had basically 40 years of constantly falling inflation rates. No investment profession.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  16. “It comes to trying to save the field money system at the end of the day, and I think the Fed is absolutely right that they are very hawkish, although one can debate on very hawkish or not, but at least relatively hawkish compared to all other currencies, big currencies. The question is if they're going to be able to follow through and if they are not provoking asset price deflation that is too bad. And this is extremely exciting, this kind of setup. And we're leaning towards the opinion that we probably are going to experience further turmoils on the asset markets, which then again will probably give the Fed a very tough time to actually follow through what they have basically communicating.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  17. “When this ends and when this inflationary environment holds on, keeps on for longer, then perhaps we are now currently or mainstream is now anticipating, I think the problem really could become very bad when this inflation expectations get anchored on a higher level. So in this precedence I actually agree with the framework of central bankers. They really have to make sure that this inflation expectations don't go up too high because the higher the inflation expectations are for the longer run, the more difficult the task of actually bringing down the inflation gets. So I think this point in time is crucial.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  18. “Important what the nominal rate is, but I think it's more important what the real rate is, right? So if you say 6 or 8% or 4 or 6, whatever, the question is, what is the inflation rate at that point? And currently we have so many moving parts. Obviously, we have this geopolitical problems in Russia which have severe consequences on energy markets and commodity markets in general, which again have consequences on price inflation, which then again have consequences on the real rate, right? This is one big question mark. How will this resolve or how will this go on if there at some point could be some kind of Relaxation on that front that obviously would help in terms.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  19. “Just adding a few thoughts. I mean, when it comes to what is the correct interest rate, obviously we are leaning to free market economics and it's very much contrary to our philosophy to think that anybody can know what the right price is. I mean, just this has to be said, I think. But if one starts discussing game or if one perhaps looks at history, what happened in previous cycles, obviously the big example was in 1980, the period of Paul Volcker, what happened there. And I think it's probably not so...”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  20. “Aluminium down 40%, nickel 54%, lumber 60%. If you have a look at energy markets, I mean, of course, there's a big political premium, but still, you know, at 120 brands failed to take that level out. If you have a look at equity sectors, automobiles down 40%, home building down 36%. So we are already seeing recession moves in financial markets. And those moves are disinflationary per definition. Therefore, I think that inflation numbers will come down over the next couple of weeks. And this will also give central bankers lots of leeway. And they can say, well, we did a great job. We orchestrated a soft landing and everything's going to be. And we don't have to hike that aggressively. But I think it's already too late because they already broke so much. It will be hard to reinflate this bubble”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  21. “Bullshit on the rate hikes. And as we write in the report, everybody kind of wants to believe that central bankers are now really turning hawkish, but they're only hawks in dove's clothes. What's the right rate? I don't know. I just see that this massive interplay between asset price deflation and consumer price inflation. I think this is really crucial to understand at the moment, but at the moment, based on our incremental inflation signal, we see, we clearly see that probably for this inflation wave, we've seen the highs. I think that if you have a look at, I don't know, copper being down 22% from March highs.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  22. “I think that over the last couple of weeks we already saw quite a move and we're seeing that the expectations for next year actually got lowered significantly. So I think the market and even especially Jay Powell, I think he realizes that the recession clouds are getting darker and darker. Now, I think this U-turn is not one moment. It is a process and I think we're at the moment right at the beginning of the process. Now, I think that gold, if you have a look at a chart showing gold and real yields, I think that actually based on real yields, gold would have to be 200 bucks lower. So my interpretation would be that actually gold is kind of caught.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  23. “Trust in central banks has deteriorated significantly. And I think the credibility that for some reason central banks still have, I think within the course of this upcoming U-turn, it will suffer tremendously.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  24. “To rising interest rates. And as we're seeing an all-time high, obviously in global debt, the sensitivity to rising rates is higher than ever. And I think we are now already probably we are already in a recession in the United States. We are already in a recession in the European Union. And therefore, I think we will have to expect at some point very, very aggressive measures by central banks. And I think it's not a coincidence that our reports are called In Gold We Trust. And we wrote one report about the very, very important topic of trust and how it affects our lives as family fathers, as businessmen, as members of society. Trust is really crucial. And I think that.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  25. “Yet, but I think we are currently in the process, and I think that the gold market and risk assets in general, they are already kind of anticipating this U-turn by central banks, which is, you know, in the United States, at least some rate hikes have happened, while in the Eurozone, so far nothing has happened. So it's kind of ironic that they will have to make a U-turn before they even got started. And this is exactly the scenario that we described in our book, in our second book. The first was called Austrian School for Investors. The second was called the Zero Rate Trap, which was published in 2019, where we basically laid out the case and said, well, you know, the higher the debt levels are, the higher the sensitivity.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  26. “Pavlovian dogs that at some point the Federal Reserve will step in, but they forgot that the Fed put only came into consideration previously when inflation was not a topic. So in 2020, 2008, 2009, actually central bankers were pretty nervous about deflation and disinflation, but not about price inflation. So this is actually the big difference. However, I think at some point, and I mentioned this number, which is really staggering, 35 trillion US dollars. At some point, the market participants will put so much pressure on the Federal Reserve and central banks in general that they will have to reverse. We don't think we are there yet.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  27. “Well, actually, I think we now really experience what it means for financial markets if the Federal Reserve takes away the punch bowl. I tweeted out a chart today that basically shows how much just in bond and in equity markets. We're not talking about prior equity real estate, crypto, the art market, whatever. Since the beginning of the year, we've seen a wealth destruction. Obviously, only paper wealth of 35 trillion. So that's basically the combined GDP of the United States and China. That's a pretty big number. And I think that many market participants, you know, they were so conditioned as we write as”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  28. “Has become even more clear that this is not sustainable, and people, more and more people are asking these questions, which we thought they would be asking in the future. And still, I think this thesis is very correct. I think this... Investors, people in general will more and more question the current monetary system when it comes to investments. We'll think about solutions that take this into consideration. And that is actually what we are trying to offer at incremental.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  29. “When it came to the point that after 2008 it became more clear to us, at least that this current monetary system is not sustainable and you have an edge actually also as an investor. That's at least what we think. If you know about the Austrian school and if you know... What is fiat money and what other options could there be and what are the effects of fiat money? And that was basically also a main driver for us to find incrementum because we were actually anticipating that more investors will actually think about the non-sustainability of the monetary system and will demand and ask for investment strategies which take these thoughts into account. And I think nine years later since we founded”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  30. “May I just add a few parts from my angle? As Ronnie mentioned, I was fund manager and was interviewing all these hedge fund guys at the time where we were discovering the Austrian school. And I always ask the question, like especially to macro funds, what about the Austrian school? Do you know about it and so on? And mostly they said, yeah, of course we know about it. And if you were lucky, they brought up the name Schumpeter, who is Austrian but not actually belongs to the Austrian school in a narrow sense, but you barely ever heard names like Hayek Gomis. So it was really not known back then, even among the investment professionals, which I found very weird.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  31. “And what we do at incrementum, it's three different things. First of all, wealth management for high net worth individuals. Then we manage investment funds. So we've got six investment funds. Most of them, I would say, in a commodities and precious metal space, but we also have two funds that actually combine gold and bitcoin crypto assets in general. And then the third pillar of our business is the in-gold we trust report that is now really the most widely followed publication on gold. We just published a new edition end of May and it's published in German in English in Mandarin and also starting this year also in Spanish. So that's long story short.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  32. “I said, wow, did you ever hear about this Ludwig von Mises guy? And he said, no, not really. Austrian school of economics. That sounds interesting. So, yeah, we kind of discovered the Austrian school by accident due to the great financial crisis 2008. And then at some point, you know, if you're going into this rabbit hole, at some point, you know, you feel like the vegetarian in the big butchery being hard assets guy, you know, being kind of in favor of a gold standard and sound money while still sitting in a bank. So we've been in discussions for a while to set up our own shop. And then in 2012, we both quitted our jobs. And yeah, together with some gentlemen from Switzerland, we founded Incrementum AG.”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT

  33. “Sure. So I started writing about gold actually in 2007 when I was still a young analyst sitting in a bank with lots of hair and I was super naive when it comes, let's say, to the financial markets. I had no clue about the Austrian School of Economics, which is not taught at all over here in Austria. And yeah, I started writing about gold because one gold investment that I had privately did very, very well. And then I fell into this big rabbit hole. And Mark, whom I know from university, he was a fund manager back then and he started as a hedge fund analyst. And we were still in touch. And then at some point,”

    2022-06-30 · Forward Guidance · Stagflation 2.0 Is Here To Stay | Ronald Stöferle and Mark Valek · IDENTIFIED FROM THE TRANSCRIPT