For anyone who wasn’t included on the 1.5 million person distribution list for Incrementum AG’s latest 160-page annual tome on the gold sector, “In Gold We Trust”, the authors/portfolio managers, Ronni Stoeferle and Mark Valek, helpfully condensed the report into a chartbook containing "only" mere 60 charts. This can be viewed below, and as a courtesy for those short on time, here is our pick of the 14 best charts.
Incrementum believes that the bull market in gold has resumed. The gold price will benefit from the Fed’s inability to normalize monetary policy. With so much debt, how can it.
The gold price has dramatically lagged creation of base money, resulting from unconventional policies of central banks. Incrementum terms this “advanced monetary surrealism” which has eliminated risk aversion.
Pressure on the long end of the Treasury yield curve threatens Fed policy and is bullish for gold.
Central banks have outdone asset bubbles that have gone before with the “Everything Bubble” this time (except gold).
Gold has been much stronger in other currencies than the dollar. While Fed tightening has restrained the dollar price, it will be unable to “normalize” policy.
The current gold bull market since 2001 has been following a similar timeline and pattern to the great 1970s bull market.
From a risk on/risk off perspective, the bull market in equities has been one of the key negatives for gold. Now the gold/S&P ratio is bottoming out.
The Commodity sector in aggregate is trading at a 50-year low compared with the S&P 500.
Unsurprising statistic - 89 economists were surveyed by Bloomberg and none expects a GDP contraction in 2017, 2018 or 2019 (plus ca change)…
…despite 16 out of the last 19 rate hiking cycles being followed by recessions. That’s 84% in case you’re wondering.
Periods of negative real interest rates (using Fed Funds) are positive for gold.
The market cap of Apple is more than 7 times that of the HUI Index, which includes the 16 largest unhedged gold producers.
In 2016, the free cash flow of the HUI stocks was superior to 2011 as managements have structurally improved operating and capital outlays.
Finally, some solace for long-suffering gold bulls: the purhasing power of gold in terms of beer at the annual Oktoberfest is comfortably above the long-term average.
Of course, metric system and all, it’s lit(re)s not pints although £5.00 per pint in the City of London is still exhorbitant.
The full slideshow is below (link)