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Top Analyst Says: Gold Will Reach $2,300 in 2018… Here’s Why

By Rich Checkan

One of my favorite precious metals analysts is Ronald-Peter Stoferle of Incrementum AG in Liechtenstein. His meticulously researched 10th annual In Gold We Trust report has just been released and is well worth reading. In this, my third interview with Ronald, we highlight the information we find most meaningful for you.
 
Rich: Congratulations on publishing your 10th anniversary issue of In Gold We Trust. Have you changed your approach or conclusions from prior years?

Ronald: The process is the same. We largely isolate ourselves from the outside world for a few weeks to research and write. We cover the current events, history and philosophy that lead to our evaluation. We are more confident than ever in the fact that recent events in financial markets confirm our most important statement regarding the gold price… it will reach $2,300 per ounce in June 2018! We first called this in 2008, when gold was trading at $800 per ounce, which must have appeared outlandish at the time.

Rich: What is the top reason you conclude we have entered a gold bull market?

Ronald: It is very clear central banks worldwide are debasing the monetary system. Ask yourself why Eastern Rome lasted 1,000 years longer than Western Rome? My answer is the government did not debase its currency.

Rich: Can we really extrapolate from ancient Rome to the present time?

Ronald: There is a definite parallel. Fiat currencies are constantly losing against gold. And that is true of virtually every major currency. Every central bank is debasing its currency to create inflation. This is an incredible boon for gold.

Rich: When do you see the central bank policy turning around?

Ronald: Unfortunately, I do not see change for the better. If I have one main point to make, it is that this is not a cyclical crisis, but a systemic one.

Rich: But, we are consistently told we are in a deflationary economy. How do you reconcile this with your ideas?

Ronald: I adhere to the philosophy of the Austrian School of Economics. For us, inflation is not a rise in prices, but a rising monetary supply. Governments are printing money and inflating supply. But, I also disagree that we are not in a price inflation environment. Security values are inflated. Look at stocks, real estate and art.

Rich: If we have inflation, what does it mean for gold?

Ronald: Take a long-term look. For example, since 1987, a Big Mac has tripled in price if paid with dollars. If you used gold to buy your lunch, it has gone up .11%. I can compare the purchasing power of gold to fiat currency for many items, from a loaf of rye bread, to a trip to Disney. Across many currencies, including the dollar, gold will fight inflation more effectively every time.

Rich: We see ourselves as having a very strong dollar, so many of us resist moving cash into gold. What do you say to that resistance?

Ronald: In my view, the dollar is not historically strong. Since 1971, the price of gold advanced against the dollar by a factor of 34. There was also a long-term increase in gold versus the Canadian dollar, euro and British pound. People who think their cash is stronger than gold are ignoring the facts, as well as the low or zero interest rates that cash earns today.

Rich: Do you feel our low interest rate policy is stimulating the economy?

Ronald: Not at all. The strategy to lower rates, increase borrowing, and stimulate the economy has failed. One proven indictor of this is the spread between 10-year and 2-year Treasuries. That spread has tightened to its lowest margin since 2008. This indicates there is resistance to borrowing, and banks cannot encourage it through maturity date manipulation. We are actually seeing a slowing of credit expansion.

By the way, the persisting low interest rate environment is leading to a revival of interest in gold by institutional investors. It is only the individual investors that have not yet harnessed the potential of gold.

Rich: Today’s investors associate stocks with profits. How should bullish investors look at gold?

Ronald: The conventional answer is as a balance to securities. But, I go further. I think we are heading for a recession, and the time will come when the bubble will burst. International investment demand and international trade with the U.S. is decreasing. There are signs of recession all over the world, from China to Brazil. Even Canada and Japan show weakness. The U.S. will not escape this.

Rich: We have been hearing our market will slow, but it has reached new heights. What makes you so cautious?

Ronald: If you need proof, the best comes from current data on increasing loan delinquencies and charge-offs. The Austrian School counsels against borrowing and increasing debt as an economic solution. Today’s U.S. policy is just the opposite. Even with an optimistic bias, this level of national and corporate debt cannot be sustained.

Rich: If this is your feeling on gold, where do you see silver?

Ronald: We are even more bullish on silver. Silver will outperform gold. The gold/silver ratio peaked at 80 to 1, and silver has become stronger ever since.

You can download a copy of In Gold We Trust for yourself here, and if you would like the extended version, you can download it here.

And, you can reach out to us toll free at 800-831-0007, or simply send us an email to put some of Ronnie’s thoughts into practice today.

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