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Ask The Expert

Ask The Expert - Ronald-Peter Stöferle - June 2020

Headshot of Ronald-Peter Stöferle

June 17, 2020

Ronald-Peter Stöferle is Managing Partner and Fund manager at Incrementum AG, where he manages a fund that invests based on the principles of the Austrian School of Economics. A lecturer at the academy of the Vienna Stock Exchange as well as at the Institute for Value Based Economics, he is co-author of a book on investing titled Austrian School for Investors – Austrian Investing between Inflation and Deflation .

Since 2007, Ronni has written the annual In Gold We Trust report, now considered the industry standard publication on gold, money, and inflation. It provides a “holistic“ assessment of the gold sector and the most important factors influencing it, including real interest rates, opportunity costs, debt, central bank policy, etc. Since 2013 it has been co-authored by his partner Mark Valek.

The 2020 report can be found here:

In this value-packed edition of Ask the Expert, Ronni answers seven of your burning questions, including:

  • Are we headed for stagflation? If so, what will it do to the price of gold?
  • Why is he so bullish on silver?
  • Plus: will interest rates stay low indefinitely?

Announcer: You're listening to "Ask The Expert" on Sprott Money News.

Craig: Well, hello again from Sprott Money News at It is June, the year 2020, and it's time for your "Ask The Expert" segment. I'm your host Craig Hemke and joining us this month is Ronnie Stöferle. Ronnie is a managing partner at Incrementum AG, and one of the principal authors of the annual "In Gold We Trust" report, which is always much anticipated every year and really a must-read for all gold investors and even traders. And so, what a pleasure to get a chance to visit with Ronnie, talk about the report a little bit and have him answer your questions. Ronnie, thank you so much for your time.

Ronnie: Thank you very much for having me again. And I have to say your pronunciation, your Stöferle, that was really perfect.

Craig: Hey, thank you, Ronnie. Well, thank you for joining us, Ronnie. It is really a pleasure. And before we get started, just a reminder, these podcasts are courtesy of, where you can find all sorts of bullion products. We now have plenty of supply again, a terrific amount of Royal Canadian Mint gold and silver Maples, plus other bullion products to choose from at competitive prices. So, always remember to visit or just simply call us at 888-861-0775. All right. Ronnie, we've been collecting questions for you. A lot of them deal with this year's report. I've got seven questions. If you're ready, should we get rolling with the first one?

Ronnie: Ready to rumble.

Craig: All right, my friend. I think this one leads us off really well. It has to deal with inflation and the current economic conditions, which I know is something you wrote about in the report this year. Specifically, the question is, do you think the world is headed into a period of stagflation, stagnant economic growth with inflation, and if so, what would be the impact on the gold price?

Ronnie: Yeah. Well, that's a great question. And, you know, if you talk to, let's say, a mainstream economist, he would say that stagflation is impossible. It's just not how their models work, but if we have a look at the 1970s, that was, of course, a highly stagflationary environment. Now, do I believe that such an environment could reappear, an environment where gold on a nominal and on a real basis does tremendously well, where real assets are sought after, where stocks, you know, on a nominal basis do okay, but on a real basis have a hard time, and where bonds actually are probably the worst in an investment? I absolutely believe that a stagflationary decade might be ahead. So, from my point of view, talking about inflation, we once said that inflation will make the biggest comeback since "Rocky IV," like this great movie where Rocky Balboa fights Ivan Drago. And I think that inflation is not around the corner yet, but it is something that is reappearing on the horizon, and let's face it. It's exactly what central bankers want to achieve with their measures.

And that's a very basic rule of thumb, the higher the debt levels, the higher the need, and the desire for inflation and the higher the fear of deflation. So, if we have a look at the developments in the COVID crisis compared to 2008, 2009, we see that inflation expectations rebounded much, much faster. So, I think that, yeah, central bank has, kind of, learned their lesson. So, they acted much more aggressively, much, much faster. So, in March for the TIPS, so the inflation-protected bonds, the volatility was enormous. We started, real yield were falling to -0.61 on March 5th, and then they rose to +0.63 within two weeks. And we've never seen such a big rebound in inflation expectations.

And this is telling me, "Okay, the system fears deflation, and it will do whatever it takes to create higher inflation expectations." And if we mix that up with, yeah, kind of a lackluster economic development because I don't see any big growth numbers over the next couple of years, then we are already in a stagflationary environment. And just one last sentence. The average investment advisor now is 52 years old. So, he was born in 1968 and did not experience stagflation of the 1970s as an active investor. He was basically a kid back then. So, we should expect a stagflationary environment to be an investment environment that basically no professional player knows how to deal with. And I think that in this process, and we try our best to educate people about that. I think within this process, gold will definitely celebrate a big recovery and a big comeback. So, yeah, stagflation is the name of the game.

Craig: And what, in the 1970s, gold went from $35 to what, $800 an ounce?

Ronnie: Yeah. $850, yeah.

Craig: Yeah.

Ronnie: So, quite nice.

Craig: All right. Well, the second question, kinda, follows on with that, I guess, Ronnie, in a different sense about deflation and the concerns that the central banks have about deflation and liquidity. So, the second question is in order to fight possible deflation or if it gets out of hand, is it possible that gold might be officially revalued higher?

Ronnie: You know, I'm from Austria, but my partners are from Switzerland and the Swiss tend to be very, very diplomatic. And one of our partners always says, "You know, I can imagine that there will be a recalibration of our monetary system." And I say, "Yeah." "So, you mean a currency reform?" I said, "Yeah, a reallocation, a recalibration of our monetary system." And I would say that that's a more diplomatic way of telling you that, actually, we are in a systemic crisis of our monetary system. And this is really crucial for us to tell people about, and, you know, everybody was talking about exponential curves and everybody was studying, you know, the new cases of corona infections. And we said, "People should have a closer look at the exponential function in our monetary system, in our creditism system because, actually, we need more and more credit growth to survive in this monetary system."

So, at some point, and I think we're not too far away from this point, at some point, we will see a new monetary order. And do I think that gold will be revalued? I think we can make a strong case for that because, you know, Western central banks hold, I think, 18% of their total reserves in gold. This is much, much more than most private or institutional investors holding gold. We should not forget that the U.S. has more than 8,000 tons, the Eurozone has more than 10,000 tons, the Chinese own much, much more than they officially announced, the Russians bought every ounce they could get, the IMF holds more than 3,000 tons. So, the most important players, they already have, let's say, their golden chips. And I think that if there should be a reallocation of our monetary system, and if you study history, you can see that it happens every couple of decades, then I think gold will play a major role because what is necessary in such a situation, it is necessary to create trust in the new monetary order. And I think that that gold is the trust anchor of such a new currency. If it's gonna be the global or I don't know what name they will come up with, I'm not sure about it, but I think that gold will definitely play a major role in this, kind of, transition phase from one monetary system to the other one.

Craig: Actually, that feeds right into question number three, Ronnie. This was gonna be question five. I'm gonna move it up to number three now, so we can expand this further because the question then was if, when the dollar loses reserve currency status, what replaces it and might gold play a role?

Ronnie: Yeah. I think, you know, we are writing about the de-dollarization already for many, many years. And this year, the name of the chapter was The End Game has Begun. And we've got a fantastic interview with Luke Gromen, a really great colleague. And, you know, it reads like a three-light. It's really exciting to read this interview because there's so much going on. And if you connect the dots, you can see, okay, there is something big happening. But on the other hand, we should not forget, and I can recommend the work of Barry Eichengreen, who writes about, you know, the leading world reserve currencies and the phases from one to the other world currency. And we had, for example, the British pound and the U.S. dollar being the primary reserve currencies in parallel for almost two decades.

So, I think it would be naive to think that, you know, the Chinese Yuan will be the next global reserve currency and the time of the U.S. dollar will be over from one day to another. It is a process, but, you know, if we look into the history books again, it is no coincidence that the U.S. dollar came out in the Bretton Woods Agreement as the reserve currency. One of the major reasons, of course, was that the U.S. held 29,000 tons of gold, and they also had the German and the Italian, the French gold reserves sitting in the vaults in New York basically. So, I think that in this process of a change in the monetary system, as I've said, gold will play a major role, and we're seeing really on a daily basis signs and deals that confirm this thesis. We're seeing lots of deals being made between Russia and China, between China and Saudi Arabia, between China and many, many, let's say, commodity exporters. So, there's quite a lot going on, but, of course, at the end, this is a highly political question and a highly political threat for the U.S., of course. So, actually, do I think this will be something that will, you know, end without any war? Of course, I hope so, but, you know, having a look at the current setup and all the tensions that are building up and those tensions, you know, tend to escalate in times of various crises, economic crisis, financial crisis, political crisis, this makes me quite concerned, I have to say also as a family father, and I hope that we will try to resolve those things in a peaceful way.

Craig: Yeah. Let's hope so. Like you said, history is not replete with examples of it working out peacefully. So, we'll keep our fingers crossed. All right. To the fourth question, Ronnie. U.S. debt and total money supply are about 50% higher versus 2011, but the dollar gold price is still 10% lower. Why?

Ronnie: Yeah. I mean, that's a great question. I think, you know, we should not forget that the dollar still is a safe haven currency. And we saw that basically over the last couple of weeks where in the times of enormous volatility and stress and panic in markets, the dollar surged higher significantly. Now, the last couple of days, it, kind of, leveled off, but still, I think, you know, the U.S. dollar still has the deepest and most liquid bond market and currency market. And it is still holding this role as the world-leading, let's say, fiat currency. But I think it's important to say that, first of all, gold is trading in a bull market in every currency and gold made new all-time highs in every currency but the U.S. dollar. And from my point of view, new U.S. dollar highs are only a question of when, and not a question of if, but it's not only gold versus other fiat currencies. It is also gold versus the stock market showing relative strength. So, gold is outperforming stocks. Gold is outperforming the bond markets, which is another confirmation. Then we see that mining stocks are actually outperforming gold, which is another confirmation. So, the market breadth is fantastic. And Bob Farrell, the strategist, he said, "Markets are strongest when they are broad and they're weakest when they are narrow." So, this is a boom market that you can go on the beach and relax. I think it's a stealth bull market. And, of course, you referred to the debt situation. I mean, let's not forget it. We are reaching, in industrialized nations, we're reaching debt levels that we used to see in banana republics. So, those debt levels are not sustainable, of course. We should not forget it's an election year in the U.S. So, expect more to come, payroll tax cuts, mortgage deals, business credit. We should not forget that it's not only the president who will be elected but also the whole House and one-third of the Senate.

So, it's not the year where we will see, you know, let's say, fiscal conservatism. And I think the numbers, they're just staggering. Between 2007 and 2014, Fed total assets increased by five times from $900 billion to $4.5 trillion. From my point of view, the Fed balance sheet will hit $20 trillion probably within the next 12 to 18 months. So, the Federal Reserve will give power to support all sorts of assets. At some point, they will also buy stocks. We would just have to amend the Federal Reserve Act. And this has been done already four times. So, I think, and this is the concern that I have, the whole crisis leads us, of course, to more debt and more interventionism, and it also leads us to less free markets and less capitalism. So, I tweeted out a while ago, I feel a bit like in the novel "Atlas Shrugged." So, this is one of the long-term concerns that I have, this kind of zombification of our economy.

Craig: Yeah. Let's move on to question five then, Ronnie, kinda, tags onto the discussion of gold, I would imagine, but your report this year is very bullish on silver. Can you explain your optimism?

Ronnie: Yeah. First of all, it is a fundamental case that we are making in the silver market. We should not forget that out of eight sources of supply, six are basically stagnating. So, I think from a supply side, this is kind of a bullish case. From a demand side, I think the market that will really move the needle will be investors' demand. Now, why do I think that investors will, at some point, realize, you know, "Let's invest some money in the small brother of gold"? I think that, you know, with those historic undervaluations of silver, and, you know, we saw the gold-silver ratio at 125 in March which was an all-time high. Never in history we saw a higher gold-silver ratio. Now, this has basically rebounded. So, silver started outperforming gold. And I think that now is the time when, first of all, inflation expectations pick up and silver is much, much more sensitive to inflation than gold actually. Then, I think that at some point, many, many large investors will realize, "Well, silver is actually a bargain. We are bullish gold, but we want a bit more, you know, a bit more better on gold." So, they will realize, well, silver is a great idea. We are much further away from all-time highs than in the gold market.

And then, I think that, you know, going forward, I would, kind of, be surprised if the decade ahead would not have some of the best years in silver's long history. So, we're extremely bullish on silver, both from a fundamental point of view, but also from a timing point of view because of our bullish view on gold. So, that's basically the main reasoning. And this also means that at some point, commodities will really pick up because usually, it's first gold that starts, then the second metal is silver, and then the whole commodity complex is following. Now, if I go to a conference now, I mean, most of them are canceled anyway, but if I say, "I am bullish on commodities," I know that I will be ridiculed. I know that people would say, "Come on, commodities? That's like the worst thing that you can buy at the moment." And this is a great confirmation because the best investments, they really hurt, they concern you when you start investing. And I think when it comes to commodities, we will see massive infrastructure programs. We will see massive fiscal stimulus. So, I have a hard time seeing the commodity complex not going higher over the next couple of years.

Craig: All right. Just two questions to go, Ronnie.

Ronnie: Yeah.

Craig: The first one has to deal with interest rates. What is your outlook there? Do you think they'll ever go higher or will central banks work to keep them low indefinitely?

Ronnie: Well, we published a book called [foreign language 00:21:18] which is "The Zero Interest Rate Trap," and it was translated to English and just published the English version. And obviously, I think we can say goodbye to higher real interest rates. And this is basically the main reason for my bullishness on gold. You know, 1970s, we had primarily negative real rates. '70s were a fantastic environment for gold. 1980s and 1990s, primarily positive real interest rates, horrible investment environment for gold. And now, since the year 2000, we also have, again, primarily negative real interest rates. And, you know, this means low opportunity costs for holding gold. And it means that gold has...the boom market is standing on a very, very solid basis. Now, do I think that going forward, we will see real rates at +3%, +4%, +5%? No, because we just cannot afford it. So, nominal interest rates will stay low. We just had the Federal Reserve coming out and saying, you know, until 2022, at least we know that in the Eurozone, nothing's gonna happen, and so, this is the nominal side of interest rates. And then we know that inflation, going forward, will become a concern. We know that politicians and central bankers will try everything to create higher inflation. And at some point, they will succeed and at some point, it will probably spin out of control. So, we should expect lower real interest rates and that's a fantastic environment for gold.

Craig: And finally, Ronnie, one last question that was sent in, a question, just want to know if you could speak to your position on the advisory board of a company called Affinity Metals?

Ronnie: Yeah. Well, I mean, I cannot say too much about it, but I'm actually an advisor to two mining companies. One of them is Tudor Gold. I started in 2017 advising them. And if you have a look at the price chart, yeah. I think we did a pretty good job. It's a fantastic stock, a fantastic property that they are currently drilling and a gentleman called Eric Sprott is the second-largest shareholder. And over my work at Tudor Gold, I also met gentlemen that are involved at the Treaty Creek property. They own 20% of this property. And I did lots of due diligence on their new project and they invited me to have a close look, and then I decided to join their advisory board. It is Affinity Metals, it is very early stage, of course. It is extremely tightly held. It is a very, very reliable, hardworking team. I like the properties. They just staked a new property in the Timmins area. The other one is next to Revelstoke. As I've said, it's early stage, but it's extremely tightly held and it is definitely a stock that should be put on the watch list.

Craig: Sounds good. We've been speaking with Ronnie Stöferle, managing partner in Incrementum AG and one of the principal authors of the annual "In Gold We Trust" report. Please, be sure to stop by If you are always looking for more information, quality guests, we've got them at Sprott Money. Click the insights tab, and you'll find links to blog posts, articles, previous "Ask The Expert" interviews, and, of course, our "Weekly Wrap-up" with Eric Sprott. You can also sign up for the Sprott Money News newsletter while you're there so that you don't miss a single post. Ronnie, thank you so much for your time. This has just been tremendous, lots of valuable information, and, of course, thank you for all your efforts with your team to crank out the "In Gold We Trust" report. It's just terrific.

Ronnie: Thank you very much, Craig. Always a pleasure and, you know, after the "In Gold We Trust 2020" is before the "In Gold We Trust 2021." So, we're already, kind of, working on our next edition and, yeah, will be published May 2021.

Craig: Oh, my gosh. Can't even imagine what the world might look like by then, Ronnie.

Ronnie: We'll see.

Craig: Well, again, thank you so much for your time, and thank you, everyone, for listening. We'll have another "Ask The Expert" report next month.

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About the Author

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities.

Since 2010, he has been the editor and publisher of the TF Metals Report found at, an online community for precious metal investors.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.


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