In Gold We Trust 2014 - Incrementum's Ultimate Guide To "Selling Economic Ignorance"

Tyler Durden's picture

"Sell economic ignorance; buy gold" as Tim Price once said, is the premise behind Incrementum's 94-page extravaganza as they explain how we are currently on a journey to the outer reaches of the monetary universe. Stoeferle and Valek believe that the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies they note, remains an excellent hedge against rising price inflation and worst case scenarios.



As Incrementum AG begins,

Ronald-Peter Stoeferle, CMT
Mark J. Valek, CAIA

Monetary policy does not work like a scalpel, but like a sledgehammer. The tug-of-war between a deflationary debt liquidation and politically-induced price inflation is well and alive. Last year we coined the term ”monetary tectonics” which describes the battle between these powerful forces.
In our opinion, it is by no means certain that inflationary forces will win the race. However, socio-economic incentives and high indebtedness clearly suggest that in case of doubt, higher inflation rates will be tolerated. Should the inflation trend reverse, there would be excellent opportunities in inflation sensitive assets like gold, silver and mining equities.
In the course of last year’s price collapse, a lot of technical damage was inflicted. The past months have seen a significant decline in speculative activity in the sector. The majority of bulls appear to have thrown in the towel. We like the fact that the consensus considers the gold bull market over. Gold is now a contrarian investment.
The migration of gold demand from West to East is continuing. The growing importance of Asia's middle class for gold demand is widely underestimated. Assuming that incomes in China and India will continue to rise, gold will inevitably be one of the beneficiaries of this “love trade”.
Gold stocks clearly exhibit a highly asymmetric risk-reward profile at present. In the wake of the correction, mining companies have reset their priorities - profitability, capital spending discipline and shareholder value have replaced the maximization of production. Moreover, there is no other sector that investors view with similarly pronounced scepticism.
From a technical perspective, our assumption is that the gold price is near the end of its long consolidation period. The clearly positive CoT data and the recent revival of gold mining shares all suggest as much. We are therefore convinced that the technical picture has been repaired and that a stable bottom has formed.
Our 12-month price target is the USD 1,500 level. Longer-term, we expect that a parabolic trend acceleration phase still lies ahead. In the course of this event, our long-term target of USD 2,300 should be reached at the end of the cycle.

Further highlights of the report:

-       1971: Monetary Paradigm Change

-       Systemic inflation addiction

-       The gold price and the rate of price inflation

-       The consequences of the global zero interest rate policy

-       Gold and the international financial order

-       The International Monetary Fund and Special Drawing Rights

-       Stock-to-flow: the special anomaly of gold stocks

-       Quantitative valuation model: scenario analysis

-       The great fallacy of "high gold demand"?


Full Incrementum Research note below (or download PDF here)

In Gold We Trust Report 2014 by zerohedge

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zorba THE GREEK's picture

Gold is money...everything else..not so much.

markmotive's picture

Jim Grant on Gold and other stuff...

Gold, the Fed, & the Fiscal Situation of the USA | James Grant

knukles's picture

I'm gettin' tired of all the cheerleading.
Hows about some price aciton?

NoDebt's picture

How about the S&P 500 measured in gold?

El Oregonian's picture

Food is gold. Water is gold. Gold is nice, but guns w/ammo is better. Just say'in...

Crazy Or Not's picture

@El Oregonian... Oh Thank you! Almost better than a blowjob!

Yesterday we saw the "Yeah what's it gonnat take to get the people to wake up..." agrument go into freefall as if it's never gonna happen.....

Well "bitchez" .....this is it. Gold is not food or health or anything other than jewelry and trinkets (and maybe some insulation/conductor values for high tech) ......EXCEPT in our society and current when you buy into gold as a intrinsic money /currency item then you buy into current value paradigm......and seeing as so many here are knocking the FED, DC, WB, IMF and all the bent crocked markets inbetween......Then it amazes me that in whatever improvements any players here want to make to structure of the social fabric....

Well that starts with our values, and Gold just says that stuff is mine. and contributes nothing back..Whereas investing in a hard asset like farmland and providing food and work for others we integrate our wealth back into the community which protects us (without guns) as our farming knowledge is more value than our immediate wealth.

Further if we buy in so called third world (or emerging economies) we buy at a fraction of US, EU equivilant property prices and have enough left over to build a school, a hospital and local product manufacturing and increase our value to that community many fold....and what's more the situation here implodes that much faster by the wealth migration....and you become pillar of the change you so desperatly claim to want.

Any questions?


gmak's picture

All of what you say is well siad, however one still needs a medium of exchange.  Land, buildings, services, food crops - all are fixed in place and, unfortunately, the cultaral and economic environment shifts around them. Things change and what was a smart idea becomes a d-oh! moment.


On the other hand, If one has too many pieces of paper, one exchanges them for something else. Exra food and water are good. Pieces of shiny yellow metal are also good - especially when at lest 2.5 billion of the population of this planet consider it as a storage battery for future value. One can't carry land about nor exchange it for anything else easily  - it is fixed in place and not liquid. 

True, the metal does not add any value to civilization. It's role is a battery for value - by mutual agreement among most societies. By definition, a battery is a store for FUTURE use. It suggests that there is no reason to apply the underlying in present circumstances.

No questions. 



Crazy Or Not's picture

Thanks and agreed. 
People like Chris Martenson (AKA The crash course) have "got out" and each do it in their own way for sure.
Money is however the means of exchange in a society which has no trust. The indiginious societies of old functioned perfectly well without money as when we respect one another and in communities like current Armish for example when one is as good as one's word and do what you say the exchange is made good in wahtever way that is agreed. 

This is important as while we stay where we are, and do what we do.... we continue to cause prosperity to the those whose objective is to continue the current system....which readers here KNOW does not work.

I have a small farm and its going OK and I would happily show people around if they have real interest in "moving on".


Crazy Or Not's picture

I would also add that there is a transition period, and there are day to day expenses and non local outside materials which may need to be bought from time to time. So battery for future use is very much valid. Though revenues do come in from your hard investments - sold produce manufactured goods or trained people who go on to give back in their own ways.

Keeping it liquid is just procrastination and hedging against your options. If you believe in SHTF then prompt immediate action is needed or your just part of the route on the day. For whatever it means the people here are early adopters to one extent or another, and have educated themselves in the movements. If that's not acted upon its just education and does not mature into wisdom. The wise move is to act on your instincts.....and as they say "hedge accordingly"!

Good luck and live well - life's so much more enjoyable away from the city!

"It is no measure of health to be well adjusted to a profoundly sick society." -Jiddu Krishnamurti 


skillyhog's picture

@ gmak

Well said, AU does not "do anything" or add value, but it is a 5k year consensus-wide battery, I like the  term, of a store of value. And x billion view it that way unconditionally. All my "You're a damn gold bug!" friends cannot cross that mental threshold.....  I'm  new to this, so apologies if I come across as stupid, but shouldn't any "our price target is...." analysis that does not acknowledge laughable current price manipulation and the fact that measuring the price in a currency that is soon to be wiped out be considered incomplete?

Freegold's picture

Currency moves trough gold, not into. Buying gold doesn´t deprive the economy of currency for investments.


Any questions?

philipat's picture


Agreed but I do think things will shake out in the next few months. If The Fed really does end QE3, something has to give in the equity and bond markets. If they surrender to market tantrums and introduce QE4, that HAS to ignite inflationary expectations. EIther way, should be good for PM's.

The problem remains the paper markets and so long as the paper tail continues to wag the physical dog, the Cb/BB complex will remain in control. But The East is gradually taking over the Gold markets, and those are physical markets and even Comex plans to open a PHYSICAL market in Asia. Right now, Comex has become a circle jerk between the BB's, taking it in turns to debit/credit warehouse receipts, with little if any physical actually being traded, which helps them short-term but as trading volumes decline and as Asia takes over, there is a good chance that Comex becomes irrelevant.

Anyway, I just have a portion of my assets in physical PM's stored outside the banking system. And that's where it stays.

fockewulf190's picture

I never needed any 90+ page report to know that stacking phyzz is the only way to go. But, if it serves as an informational hammer and chisel to break up the rocks some people have in their skulls and finally convinces maybe another 1% of the population to see the light and stack phyzz, then Its all good. Prices are still dirt cheap.

teslaberry's picture

i've watched a lot of grant, even emailed and called his office, he's sort of legendary in my opnion....but that video link you sent was the worst performance of his i've ever seen. in my humble opinion.

Da Yooper's picture



Gold & silver are not money


why do the central banks hold & trade it


why do governments hold & trade it


why do the wealthy hold it


why do the Rothschilds hold it




because it IS money & the ultimate store of value

shouldvekilledthem's picture

It's an excellent store of value but the worst medium of exchange.

PMs and bitcoin FTW. 

zorba THE GREEK's picture

Silver is not so bad either.

zorba THE GREEK's picture

Platinum is okay too.

zorba THE GREEK's picture

Ammo is is good also.

fonzannoon's picture

I agree with ammo. i would use ammo to shoot silver in the the fucking face...

Droid Fuel's picture

I tried to "vote up" twice but it only allowed one vote.  Consider this my second "vote up".

logicalman's picture

Skills & fitness are rarely mentioned.

Good to have and easy to carry.


knukles's picture

Sugar Frosted Flakes are pretty good for breakfast.
With strawberries on top.

At the rate societies and empires decline, I don't plan on being here at the end.

potato's picture

He must mean $2,300 per gram.

The Duke of New York A No.1's picture

How about a long-term prediction of $1,000,000 per ounce in Zimbabwe Dollars ... or did Gold already breach that number?.

you enjoy myself's picture

first a little bit of deflation, and as much of a mini-crash as the Fed will tolerate.  when they announce QE4 in Nov/Dec is when gold goes parabolic.

greatbeard's picture

Take that stupid skirt off, put the pom poms down, gold isn't going anywhere for a long time.

GetZeeGold's picture



Glad to see your normalcy bias is clicking on all cylinders.


Take a piece of paper and write a number on it followed with a lot of zeros behind're rich

zaphod42's picture

Knock off all but one zero - you're poor, but your real worth has not changed! 


zaphod42's picture

Not quite true, though that is one way of looking at it.  Gold is going to follow currency value - like everything else.  If currency values go up, gold goes down.  If currency values drop, gold rises.  When all the tallies are counted, it is one ounce for a week of skilled labor, whatever that might be in the currency that has the face of your local tyrant. 


Seer's picture

"our long-term target of USD 2,300 should be reached at the end of the cycle."

What, and then USD is going to be stronger?  Huh?

Sorry, but when lift-off starts there's no turning back.

People need to completely toss overboard all this "cycles this cycles that" shit.  What's coming is NOT like anything that we've experienced before.

813kml's picture

"Your feelings betray you, my son.  Trust in the dark side of the FED Farce." - Darth Cheney

Sorry_about_Dresden's picture

The Fed. is just an errand boy for the Bank of International Settlement.


The BIS runs the show and buys and sells their horde for price suppression. 


If you are looking at the Fed. you are missing the bigger picture.


The BIS trades in secret and with impunity.

zaphod42's picture

How about this cycle:  Hyper inflation followed by total deflation.  It is called a bubble!  And, the world is so connected that it is one house of cards.  Watch out when this baby begins to fall!


Dr. Engali's picture

How can anybody say that gold is now a contrarian investment when the moment gold has two consecutive up day everybody gets a gold hard on? TPTB can keep gold well contained for a lot longer than people think. The truth is gold is not an investment, it is a hedge against a financial catastrophe.

logicalman's picture

Always good to hedge agains a certainty.

Carpenter1's picture

Who exactly would this "everybody" be? ZH'ers, the gold community? Certainly not the status quo.

Dr. Engali's picture

The status quo is always going to be anti -gold (while secretly stacking) the everybody I'm talking about are the industry writers and anybody with a passing interest in the metal.


People will be willing to do anything just for a fucking potato. 

How many economic currency crashes have there been throughout the last 100 years.

Short memories,  humans are having. 

zaphod42's picture

You have the right idea.  If a skilled worker gets one potato for one week's work, then that will be the value of an oz. of gold - one potato.  If you have a gazillion dollars, and the dollar is worth zip, you have no net worth.  Unless you have a skill, it is in demand, and you are willing to work.  

Nothing magic - no easy way - no free lunch.  And, even the 0.01% are not entitled to anything.


navy62802's picture

Get it while it's still cheap. At some point, the system will break, and when it does, gold will become unaffordable for all except the exceptionally wealthy.

Seer's picture

Buy low and sell high!  Man, I'm patiently waiting for the firesale on the USD, going to, um...

zaphod42's picture

What are those wealthy people going to trade the gold for?  The value of gold is set, like EVERYTHING else, based on human labor.  When human labor is no longer compensated in dollars/rupies/yen/etc., it will be set at one week of labor for a skilled worker.  And affordable based on your skill and the demand for your labor.  Just like everything else.  

It is NOT magic stuff.  


Bemused Observer's picture

I think it is time for the 'gold bugs' to sit back quietly and top off their 'stacks' now. All alarms have been sounded, all advices given, all historical facts presented...It feels like things are beginning to shift, and anyone unconvinced by now is too far gone anyway.

Once things tip over into trouble, the price of long proven assets like gold and silver will go up too fast for anyone to buy in time. Buy now while it is still quiet, because they will soon be talking about PM's...a lot...and those who stack will wish for the quiet times to come back.
You may quickly become unable to afford to much better to be able to sell into that if you need?

Seer's picture

"Once things tip over into trouble, the price of long proven assets like gold and silver will go up too fast for anyone to buy in time."

Yup, just like this:

zaphod42's picture

You are blowing smoke.  Gold will always settle at about one week of labor for a skilled worker.  It always has, so why should today be any different?  To expect otherwise is insane. 

The reason it might look like it is going up is from inflation of local fiat currency.  If that local currency fails, would gold become infinite in value?  No!  It would still be worth a week of work from a skilled laborer, which is where it trades today, and why the value always hovers near there.  Any spikes are from manipulation, and short lived.

If we have deflation, the "value" of gold, based on your local tyranny, would still be a week of labor, and with that labor's value being depressed, the value of gold is pressured to drop accordingly.  

It is good to hold, not because it will cause you to become wealthy (except through your hard work and thrift), but because it will prevent you from becoming a pauper!  Not a bad reason to buy gold... 


Bemused Observer's picture

"Gold will always settle at about one week of labor for a skilled worker."

Well, yes, that's the point. It is insurance against the currency, not something to MAKE money off of. Of course it doesn't march in lock-step, and there are times when the currency is so unstable that gold seems to become decoupled. But that is because the currency is unstable, and it is human nature to value things in terms of their 'dollar value' in the currency they are using. So it SEEMS like gold is fluctuating when in fact it barely's the currency that is bouncing all over the place.

But with all the manipulation and 'managing' going on, it has become impossible to get a true 'read' of what's going on. Truth has been buried beneath a mountain of fake statistics, re-worked data, 'future guidance' which is little more than fortune-telling...This huge Potemkin Village of an economy scares me, I can SEE there's nothing behind those facades!

I want gold and silver in my possession. When those claptrap plywood boards start falling over, I do NOT want to be standing there with a handful of FRN's.

Quinvarius's picture

The gold price will move all at once.  The paper price is the price of hedge.  Right now it is all groupthink sell gold hedges by people who have never made a single correct prediction about the gold market or the economy.  The weight of their bets keeps gold under mining cost.  But buyers of physical can easily wait them out.  What was the latest revelation...29 trillion printed to buy stocks in an economic collapse?  The other side of that was probably 29 trillion in paper gold sales.  Only the government or its agents can create a bubble price dislocation.  Gold selling is a bubble.  Gold is worth over 14k an ounce, if the US has what it claims.  It will happen again.  I have no reservations about stating that number at all.  That is just the correct price.