Ronald-Peter Stöferle talks to James Turk about Gold
They explain why gold’s high stock-to-flow ratio makes it very different to commodities. Gold is not consumed, it is accumulated, which is why it is great for monetary purposes. Mine production and supply of gold in general is not very important in setting the gold price, whereas demand for gold is. All economic goods are subject to supply and demand, including money, something that many economists overlook. The decreasing trust in fiat currencies, which are gold’s real competitors, is what really drives bullion prices. It is Gresham’s law that we should use to model gold’s demand.
They talk about the gold price correction in September. Ronald explains that it was a normal, healthy correction within the bull market. He explains that negative sentiment is a good indicator that we are far from a mania or bubble. The parabolic move to over 1900$ in August was too fast too soon. October’s negative seasonality will mean a consolidation and then another leg up in the present and continuing uptrend. Considering fundamentals, Ronald asks whether real interest rates have turned positive or structural debt problems have been solved… in the absence of such a development the positive fundamentals are well in place for gold. They talk about Chinese and Indian demand. Gold is increasingly seen as money and less as a commodity, which is how it was seen in the first stage of the bull market. The lack of counterparty risk is an important quality of gold, which gives it an advantage over the euro and the dollar. Fiat currencies, backed by nothing, will eventually lose all trust.
Ronald explains that he is very confident on gold mining companies because they provide leverage on the price of gold, especially the juniors. However he is not bullish on mining stocks in the very short term, since he is bearish on the stock market and has not yet seen gold miners decoupling from the crowd. He also talks about his forthcoming report on silver.
This interview was recorded on October 1st 2011 in Vienna
Ronald-Peter Stöferle Interview with James Turk
Ronald-Peter Stöferle, of Erste Bank, and James Turk, Director of The GoldMoney Foundation, talk about gold, mining stocks and the financial situation.
Ronald talks about how he first got interested in gold, through mining stocks as an equity analyst and became very bullish when he examined the supply-demand situation. Later, as he learned about gold’s monetary role he became even more optimistic about the gold price and its role as a safe haven. James and Ronald talk about the Austrian school of economics and how, despite being Austrian and an economist, Ronald had never heard of Mises, Menger and Hayek until a few years ago.
They discuss the greek debt crisis, QE, the Euro and the Dollar. They draw parallels between Austrian hyperinflation in the 1920s and the current US fiscal imbalances. Ronald is unsure about whether the outcome will be hyperinflationary, as James expects, or hyperdeflationary as Antal Fekete predicts, but argues that gold will be good portfolio insurance in either scenario. They talk about gold’s fundamentals and how its low production/stock ratio makes it an ideal currency. They explain why gold protects wealth and holds purchasing power, as well as enabling economic calculation.
They talk about silver and its high volatility, they agree that it will outperform gold over the course of the bull market, but Ronald states that he does not expect it to return to the classical 15 to 1 gold/silver ratio, as he expects gold to be remonetized. He recommends investors in precious metals holding 2/3 gold and 1/3 silver. They talk about the dangers of eastern European exposure for the EU and Austrian banks in particular and Ronald rejects Paul Krugman’s notion that they will be a focus of instability as their absolute debt levels and consumer indebtedness are actually much lower than many western countries. Eastern Europeans also have a lot of interest in physical gold.
Ronald talks about his preference for physical gold over ETFs or any "paper gold" alternative. They talk about gold mining shares and how they are tremendously undervalued and will likely end up outperforming gold in the final stages of the bull market. They also talk about the uncertainties posed for equities by the end of QE2 and how it is unlikely that the Fed will completely end stimulus given US government financial needs, however Ronald expects that they might come up with a new name instead of calling it QE3. They also talk about seasonality and election year impacts on stocks and commodities.
The interview was recorded on 14 May, 2011 in Hamburg, Germany.
Bruno Bandulet interview with James Turk (GoldMoney)
Dr. Bruno Bandulet (www.bandulet.de) and James Turk of the GoldMoney Foundation talk about about the gold market, the Euro and the European debt crisis. Bruno explains how far the Euro has evolved from being a German-like currency to following French monetary policies and now is being managed like an Italian currency. He talks about how, despite it being a big issue in Germany, no major party has spoken out against it and so germans are devoid of alternatives.
They talk about how a major party in Switzerland has proposed a referendum over the reintroduction of a gold franc, which would circulate parallel to the paper swiss franc and allow the swiss to save in gold.
They discuss competing currencies and how the drive to centralize money had nothing to do with monetary stability or international trade, but rather was about political control. The return to the world’s traditional international money, gold and how this is disliked by politicians because of the discipline it imposes. Bruno explains how central banks still keep their gold as a base on which to build if the fiat money experiment crumbles.
They explain the impending dollar crisis, the dire US fiscal situation and possible solutions that could be made if the political will existed. How 40% of US government spending comes from debt, levels only seen in countries near the tipping point on the road to hyperinflation. They also talk about confiscatory measures taken in many governments in similar straits, rather than curb their spending.
They contemplate the possibility of Greece or Germany leaving the Euro. They talk about the possibility of reestablishing the Deutsche mark and how this was already proposed during the pre-Euro European currency system. The different economies of the Euro-zone and the growing distance between France, Italy, Spain, Portugal… and Germany.
They move on to the current Greek situation coming to a critical point this summer and the impact that this could have on the price of gold as well as the European banking system. They see an impending bank run looming in Greece, but according to Bruno it is still manageable as the Greek economy is not as large as, for example, Spain. They talk about how strong Asian demand has been on pullbacks in gold’s uptrend.
They comment on the very strong fundamentals that are driving the long term uptrend in commodities and specially precious metals, the possible corrections that we may encounter as a normal part of bull markets and the growing divergence between physical and paper markets. They draw parallels with the ’70s commodity boom and also point out how it could end differently this time.
This interview was recorded on 14 May 2011 in Hamburg, Germany.
Barbara Lips at GATA Gold Rush 2011
Roland Baader: Money Socialism
Only a small number of economists worldwide foresaw the current global financial crisis. These few, without exception, are all members of the Austrian School of Economics, whose best known representative is the Nobel Prize winner Friedrich A. von Hayek. Back in 1976, he had pressed for a renunciation of state monopolistic paper money, a denationalization of money. The survival of civilization, no less, could depend on it, Hayek claimed.
Roland Baader has an MSc in Economics, was a student of Hayek, and is a prominent representative of the Austrian School in Germany. Like many "Austrians" in the United States, Baader accurately predicted the fi nancial crisis that started in 2007. His book Geld, Gold und Gottspieler (Money, Gold and Playing God), published in 2005, had the subtitle On the eve of the next world economic crisis.
Unlike the erroneous theories shaped by the inflationist (Keynesian) zeitgeist that dominates the Economics university faculties and the media around the globe, up to now only the economists of the Austrian School have worked out the true causes of the current world depression. And because their diagnoses are correct and logically stringent, their suggested therapies also point to the only effective way the Western industrialized nations have of escaping the unimaginable scale of impending impoverishment and disintegration.
We are just at the start of an unprecedented world depression, and only a swift transition to a sound private currency can save us from the worst. Baader offers us both an analysis of the causes of the depression and shows us ways out of it with scientific precision, but, as always, in terms that are easy to understand.
This book, his sixteenth, is possibly the last and most profoundly rousing wake-up call of the great German libertarian thinker.
Author:
Roland Baader
144 pages, hardcover, December 2010
ISBN: 978-3-9523315-6-9
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Special Report Gold: In GOLD we trust |
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Article by Professor Antal Fekete |
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Position Papers No 1, Professor Fekete May 2010 |
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Gold Wars is now available NEW on the Chinese market |
