Monetary Tectonics, Gold, And Unintended Consequences

Tyler Durden's picture

Via Acting-Man blog,

Dan Popescu of Goldbroker has interviewed Ronald-Peter Stöferle of Incrementum Liechtenstein AG, co-author of the In Gold we Trust 2014 report, covering gold, Austrian economices, and broad range of other topics...

We are currently on a journey to the outer reaches of the monetary universe. We 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, remains an excellent hedge against rising price inflation and worst-case scenarios.


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.



An excellent indicator for the interaction between inflation and deflation is the gold/silver ratio. One could therefore also refer to the gold-silver ratio as the “deflation/reflation” ratio.”



The following illustration serves to place the current economic situation in an inflation matrix and to explicate possible developments. It shows possible future scenarios based on different growth and inflation rates...


Full Incrementum report below:

In Gold We Trust Report 2014

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junction's picture

What we need is Flash Gordon, as in "Flash Gordon Conquers The Universe."  What we have are academic dimwits like Linda Yellen, thieves like Harry Reid, junketeers like Joe Biden and the Obama.

espirit's picture

When I'd read "monetary tectronics", Deja vu of the movie "2012" came into mind.

Stuck on Zero's picture

Caught between the tectonic plates is the middle class - getting crushed out of existence.


aVileRat's picture

Stopped reading when they said a deflationary scenario amid "natural growth" was true economic growth.

Compare and contrast this statement with what we are seeing in industrials and fixed capital expansion right now. Bad article, used to generate reenforcement bias amid readership. Le sigh.


Spumoni's picture

Best Irish band in aeons!

greatbeard's picture

>> Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation

Bull shit.  Gold has been a terrible hedge.  One of the worst over the last few years.  Fucking god damned pumpers.

Yeah, I know, it's due to unnatural circumstances, but facts are fact, gold, and silver suck as a hedge.  It may have been the right move, for the right reasons, at the right time, but the PTB have, and will continue, to crush gold, until game over.

Tinky's picture

Trader Dan? Is that you?

greatbeard's picture

>> Trader Dan

Come on now, did you see any, any, politics sprinkeled in?  That sould be a dead give-away.



Tinky's picture

No, what I saw was a short-term trader's mentality, coupled with a conflation of those seeking to get rich and those seeking to conserve wealth.

greatbeard's picture

>> short-term trader's mentality,

I made my last purchase four years ago.  And, coincidentially, gold is now right about where it was four years ago.  Hardly a short term traders perspective, nor a valuable hedge against inflation.  Unless, of course, you can say there's been no inflation in four years.

Tinky's picture

Still a trader's mentality, I'm afraid. If you bought four years ago and sold today, you wouldn't have made money, nor compensated for inflation, yet that fact only speaks to that particular, narrow – yes narrow – time frame.

In 2004, gold was trading at 400 to 450/oz, so over that time frame it has done far more than mitigate inflation. So who is correct, you or the person who bought 10 years ago?

That's just one of the problems with your rants.

greatbeard's picture

"Gold, .... remains an excellent hedge against rising price inflation"

Fact of the matter, Tink, gold doesn't "remain" and excellent hedge against inflation, as claimed by the pumper.  Maybe from six or eight or ten years ago, to four years ago, it did, but it is not now, and hasn't been for four years, an excellent hedge against inflation.  Put all the lipstick on it you want, it is not currently an inflation hedge.




Latitude25's picture

I bought at the lows around $1200 last year.  It's been a good inflation hedge even short term.  I also bought at $300 in 2000 so that's been a good long term hedge.  You're a "follow the herd" investor.

Spumoni's picture

Four years? A long-term investment? You oughta smoke something different.

DoChenRollingBearing's picture


I made my first purchase of gold some 30 years ago.

My first purchgase of silver (a US Mint bar, an irregular 7.42 toz) was when I was 15 years old, and that was over 40 years ago.

brushhog's picture

Huh? What data are you looking at? Gold has been an excellent hedge. It's true that TPTB are holding it down to some small extent but they cannot fight the tide of global inflationary panic once it sets in. All the can do is play some cheap, short term tricks.

greatbeard's picture

>> Gold has been an excellent hedge.

It's up 0% in four years.  What's inflation been in the last four years?

angel_of_joy's picture

Yeah, much better to keep your savings in currency, and lose on cumulated inflation... dope head !

Haole's picture

You're right, gold and silver have been shitty hedges for some time.  Thankfully for some, Bitcoin has been a marvelous hedge over the same timeframe, and then some, against owning things that have been shitty hedges.

DoChenRollingBearing's picture

Bitcoin is perhaps best thought of as a separate asset class.  If you don't like (or understand) Bitcoin, then do not buy it.

It takes some time to get your "sealegs" in BTC.  Do your own due diligence.

Haole's picture

You're not directing your comments at me are you?  No idea what your first sentence is supposed to mean other than stating the obvious.

Agreed, it's not for everyone.  Certainly more involved than buying rocks, continually losing purchasing power for the last 3+ years in that investment and parroting "gold bitchez" in the echo chamber all the way down, concurrently proclaiming BTC dead about 40,000 times as it appreciates thousands of percent in the same timeframe...

Comical to have watched really, nice one ZH.

Spumoni's picture

Right, oh great beard. You must have bought your gold at the top of the 'parabolic' curve, say at 1700 or above? I would have imagined that you short-timers would have figured out by now that backing the Fed's bullshit was better money than locking in long term value in precious metals and commodities. If you bought in 2011, you were a fucking idiot (DCA-ers excepted). The herd buys at the tops, and that's why serious students of any market make their $$-because they either bought low or cost-averaged their investments. Precious metals remain the chief hedge against inflation, banksterism and global instability, as they have for thousands of years. You and your little bitcoin-loving diatribe aren't even a fart in a typhoon. So shut the fuck up.

Goldilocks's picture

Bee Gees- How Can You Mend A Broken Heart (3:59)

TeamDepends's picture

Silver in serious backwardation in Shanghai!

DoChenRollingBearing's picture

"Backwardated enough" to pay for my trip there?

Ewtman's picture

The Dow has been declining for over a decade in terms of gold, i.e, "real money". If you chart the Dow in terms of the amount of gold necessary to but a share of each member versus the amount of dollars needed to buy the same shares --- you get a scary looking chart that looks like this:

Ginsengbull's picture

Food is inflated way more than gold.

Tegrat's picture

One day a package of ramen noodles will go for an ounce. Just make sure you have some. Most food perishes. That ounce can be stolen but it wont perish.

Tegrat's picture

An ounce of gold is more than $1300. you need to buy 1000 .22LR + a case of ramen. Now what is the POG?

Spumoni's picture

Gold is wealth. Cash is spending money. You can spend your money on things you piss out, or you can spend it on things people will pay you cash for later, and then piss it out. Trolls crack me up - like most of us, they don't whine about the price of gasoline, which is the same thing as cash tossed in a campfire. They tell you not to buy something with intrinsic value, but to spend your money on ramen noodles. All well and good when tshtf, but you're gonna die from heart disease if that's the best you have for food. And guess what, stupids? The company that makes ramen ain't gonna be shipping to your Food Lion when the dam breaks. Try reading the ad for "survival seeds" and learning how to plant, grow and harvest. Read a book on what you can eat and survive that grows out in 'the wild.'

When tshtf. If there's a single population in the USA that understands what that really means, they WERE here on ZH. And from my reading of the news, not ONE of you recent sonsabitchez has made a single headline yet. You haven't torched a bank. You haven't lynched a crooked cop.You haven't even protested beyond the comfortable confines of your little anonymous lcd screens. Losers, most of you. Fucking retards. Shitferbrains. Buy all the .22lR's you want - I can walk straight up to you while you're firing and punch your stupid asses in the nose, and you still won't have hit me.

The ZH'ers of old have left off posting here because you fucktards are so stupid that it isn't worth debating the size of your fucking petards. What you silly faggot fucking morons really need to do is go learn something real about how democracy works, and get off your fat lazy assholes and go do something that counts. Ranting about an asset class older than your moronic family trees makes you no wiser and less respected by anyone with an IQ greater than 72. 

The day a pack of ramen noodles goes for an ounce of gold, I will shoot myself. Or go catch a fish and eat waaaay better than you. Fucking morons. What's your byline? Moron Labe? Fuck off.

DoChenRollingBearing's picture

It is very true that you do not have to buy gold for a SHTF situation.  But, buying gold covers a number of bases, as NO ONE knows how a SHTF might unfold.

An alternative to precious metals would be spiritual growth, an area where I am woefully deficient.

Emmet Fox wrote excellent (and easy-to-understand) books on this.  Highly recommended.  Especially if you abhor violence, and want a better life.

Spumoni's picture

So right, DoC. I personally prefer looking at gold instead of plastic wrapping, and if nothing else, history shows that there have ALWAYS been 'suckers' willing to buy gold. As for the one genuine cure for all this madness, to which you refer, all I can say is labor on my friend. History is equally clear on that point- we are ALL woefully deficient spiritually, which is why we are kept locked up on this little rock.

Nice to see a post from you.

Puncher75's picture

I'm buying. I must be stupid. Oh well.

Spumoni's picture

Just don't forget to buy some scuba gear too!

Puncher75's picture

I'm buying. I must be stupid. Oh well.

Puncher75's picture

I'm buying. I must be stupid. Oh well.

AdvancingTime's picture

Because of the uncertainty in today's market and the direction events might take the subject of "value and worth" continues to garner a fair amount of interest and remains relevant. History is chucked full of  distorted markets, debts unpaid, promises unfilled, and bubbles.

These "interesting times" play havoc with the value of things and what they are worth. Like some of the cruel games children play you don't want to find yourself without a chair or holding the "hot potato" when the game ends. More on this important subject in the article below.

AdvancingTime's picture

 Both people and governments have lived beyond their means by taking on debt they cannot repay. Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances. Promises were made on the assumption that the advantages we enjoyed would continue.

Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Now reality has begun to come into focus and it is becoming apparent that this is unsustainable. The entitlements and promises that have piled up have become overwhelming. More on why this system will fail in the article below.