Gold Thesis: Strong multi-year bull case supported by mainstream acceptance, with upside potential driven by macro instability and inflation dynamics.
Emerging Markets Demand: Physical gold buying in China, India, and other EMs, plus sustained central bank purchases, are core secular drivers of the rally.
Portfolio Construction: Traditional 60/40 is challenged; a new mix adds meaningful gold, miners, and commodities, while keeping bond exposure lighter.
Bonds vs. Gold: Structural underweight to fixed income is favored; any tactical bond rallies are seen as short-lived amid deteriorating macro and debt overhang.
Gold Miners: Miners remain underowned and misunderstood; despite outflows from GDX/GDXJ, improving margins and sentiment offer better risk-reward than bullion.
Commodities Outlook: After gold, silver, miners, and broader commodities are set to follow, with copper and select critical metals showing momentum.
Stagflation Risk: Softening labor data and geopolitical stress raise stagflation odds, a backdrop where gold historically excels as a hedge.
Market Flows: Anticipated rotation from large fixed-income pools into hard assets (gold, miners, commodities) could be a significant multi-quarter tailwind.
Transcript
This time is different. These are usually famous last words of any investor. We need to take a closer look at the gold space because it is March. We need to talk about seasonality and how everything is affecting the gold price right now. What are the factors contributing to current gold price strength or weakness depending on how you look at it because we're not trading near all-time highs right now, but we're still above $5,200 as we speak. So, lot lots going on of course in the world. And uh I've invited a phenomenal guest. He's maybe the godfather or maybe the author of the gold bible, the engul we trust report. His name is Ron Peter. Um we're going to do this interview in English of course, but uh he's Austrian and I tremendously enjoy having him on the program. He knows gold like nobody else and we're going to test some of his theories, the 60 2020 portfolio, seasonality of course, but also bonds versus gold. We had Mike McClone on the other day and he said, "Well, bonds are going to outperform gold in 2026." I'm really curious what Ronnie thinks about that. But before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously and we really really appreciate it. Now Ronnie, it is a great pleasure to have you back on the program. It's good to see you again. >> Hi Kos. >> Yeah, Sos as we would say in Yeah. Uh in Austria or Bavaria as well, but >> Bavaria. Yeah, I was born in Northern Bavaria, so it's okay to say that. So, um, yeah. No, we got to be careful not to drift into German because we're just speaking German off camera, of course. And, uh, I introduced you as the author of the Engold We Trust report, Ronnie. Um, you're you're about to publish this 20th issue of the Ingold We Trust report. And, uh, how how dis difficult is it these [laughter] days to sort of come up or not come up with topics, but keep them under control and not have a a thousandpage masterpiece? I mean, uh, it's not easy, but it's, uh, you know, I I accept the challenge and I and I and I truly love it. Um, although it's, you know, it's it's just hard work. You know, we're we're usually in the in the crunch time of the report. I usually get up like 4:30 a.m. and we work till till 10:00 and there's like 21 people all over the globe working on the report. We're uh, now we have finished already a couple of chapters. Uh, I've got a great interview with Dr. Judy Shelton coming up regarding Goldback bonds. We've got great um guest writers and yeah, you know, we're just really doing this very very deep dive into the topic and as you know, Kai, it's it's not about gold, it's about everything. Um gold, you know, hasn't changed for the last uh you know, thousands of years. Um but everything around is moving at a um higher pace. It's geopolitics, it's macro, um it's inflation, it's you know the reserve uh the um the the the the developments in central banks. It's east versus west uh dd dollararization. So many topics to think and to research. So it's uh it's it's always fascinating. It's a challenge, but it's it's lots of hard work. >> Yeah. How do you keep focus though? Like as as you just pointed out, there's a gazillion topics you could focus on. And uh how do you keep it how do you keep the report somewhat focused? It's still I think 400 pages somewhere around there. >> Well, every year we try to write less and we we just fail. >> So [laughter] last year we hit a new all-time high which was 450 pages. Um this year we we try to write only 300 pages. But again you know if our our mission is it should be the best um the the most entertaining the most rewarding um uh research piece that you read every year. Um everything you need to know about gold should be included in the in gold with trust report. So um yeah uh uh it's it's it's not easy. I don't know if we're going to end up with three or 400 pages, but I can tell you it's it's going to be a great read hopefully. >> Absolutely. No, it's an absolute masterpiece and it's like the gold bible. I think a lot of people love it and uh I think the numbers >> I also heard it's like the playboy for gold bucks. Uh some most people only look at the pictures, but some uh actually read the the articles. So, >> well, you need a fold out like of the chart this year. Maybe in the middle you need a fold out like a center fold, right? [laughter] Just of the gold price chart. Just the gold price chart. All right. Yeah. Or or or CEOs of mining companies. >> It's something like that. Exactly. Absolutely. [laughter] No, Ronnie. Um let's get back to business here. Um let's talk gold. As I said in the intro, we're trading over $5,000 uh per ounce as we speak. Right around 52, actually to be precise. Um a few years ago, this would have sounded absolutely extreme. Even 12 months ago, that would have been absolutely bananas to talk about that price level. Um where are we in the cycle right now? Let's start very high level and we'll get a bit more granular granular uh later in the conversation. >> Well, Kai, I think it's um I know that many pundits around saying, well, you know, this is only the beginning, but let's face it, gold is not a contrarian asset anymore. Um I think the the easy money has been made. Um that doesn't necessarily mean that, you know, this bull market is over. I I don't think so. Um, but I think it's it's it's it's going to be harder to to make money over the next couple of years in the gold space. Um, so, you know, we put out um a piece in in 2020 um where we said at the end of this golden decade, our base case scenario is $4,800. Um, and if inflation should become a concern in this decade, uh, we're expecting $8,900 at the end of this decade. So, obviously, we we've already reached our base case scenario. Um, we haven't reached the $8,900, which I think is still um I think a reasonable price target. However, um compared to 2020 where people said, "Well, those guys um putting out the Gold Trust report, coming up with those numbers, they're they're crazy. We don't know what they're actually doing, what the input to their models is, what they're uh smoking or drinking, whatever." Now, you know, if I say like 8,900, it seems to be already quite quite a conservative call. And if you have a look at, you know, the the analyst forecasts by the big banks, they usually just, you know, follow the price development and they've been way behind the curve for for many years. Um, but now we're seeing larger institutions. We're seeing Goldman, JP Morgan, Bank of America, uh, you name it, with, you know, price targets that are significantly above current price trends. So this is telling me well well actually gold is not a contrarian asset anymore. It has become a little bit more of a mainstream um recommendation now. But I would also say Kai that we're not in the crazy phase yet. We're not like um you know if I'm always coming up with that that an analogy. If you go to a to a cocktail party and uh uh you start talking about asset allocation in 2020 if I would have said well we're recommending our clients to own gold people would have ridiculed me. Now if I say you know you should own some gold and and our research says that 15 to 20% uh is kind of the optimal gold allocation. People would accept it and say yes um we we we we told you so. We always said that you need some gold, but we're not at this stage yet where people would say, "Yeah, but um I I just heard from my broker that you have to get into this uh junior mining stock in uh in in in South America." So, we're not there yet. Um I would say we're like somewhere in the second half of this bull market, but we can go to overtime. We can go to penalty shooting. So I think we've got at least two three good good years ahead but again um it's it's not going to be as easy as as previously. >> You you you touched on the portfolio allocation. Maybe let's start there in in general. Um is is the market still underallocated gold? You said it's not a contrarian uh investment asset anymore. Um has it gone mainstream and is the market still underallocated? I think it has become a little bit more mainstream. However, if you have a look at, for example, there's uh the UBS uh family office um um uh study which came out last year, but back then it says that family offices hold just 2% of their portfolios in gold and precious metals, which is the same as in art or infrastructure. Uh and which is far below allocations to private equity and real estate. So 2% in gold that's that's not a hedge that's pocket change. There are other studies uh by JP Morgan I think they had like 2.8%. Then there was Goldman coming out with a survey um um from their um institutional clients which said I think 6% uh allocated in gold ETFs. So this is telling me well actually um institutional players aren't allocated at all and we know that they're they're kind of complacent and the larger the institution is the the more um bureaucracy obviously happens so the longer decisions take but Kai I think it's important to say that um you know my my framework for this bull market is um it is primarily being driven by um eastern demand. So we in the western world I think we we tend to forget that the majority um of the gold demand of the physical gold demand is coming from emerging markets. That's really important to say. So just travel to China to India to Dubai although that's u a little bit more complicated now um >> and talk with people with investors about you know their their view on gold and this is a completely different attitude. So for them it's it's you know it's just normal to own gold at significant higher um percentages as in compared to the western world. So I think the the secular trend is being driven by uh emerging market gold demand. Then obviously in 2022 um with the invasion uh uh uh of Ukraine and uh the sanctions afterwards I think uh central bank gold demand kicked in three years in a row more than thousand tons. last year I think it was 864 tons of gold um which is an all-time high in value terms um so I think this is the second part of this bull market um diversification from central banks also primarily in emerging markets and now only quite recently um basically in 2024 beginning of 2025 western financial investors started allocating some capital into gold so they've in the the Johnny come lately. >> Um they only recently came in and I think this is going to be the driver for uh the next couple of quarters. >> Yeah. >> So I think that this the secular trend is intact. Um but again um it's going to be a little bit more volatile compared to um um you know the the first part of this of this bull market. >> Yeah. Just to hit on that note, like the death of the 6040 portfolio, of course, I think is a is a trending topic here in general. Um, something you've been focused on and looking at quite closely as well. It was Morgan Stanley. I think one of I'm not sure who it was and Morgan Stanley analyst or so said, "Okay, maybe we should reallocate at 60 2020 and we we've discussed this here before, but I'm curious like where are we in that process? Has that already kicked in? Was that just an idea or has it gone from idea to implementation? Are we seeing a bit of a a sentiment change perhaps towards gold and is that portfolio reallocation already happening? >> Great point. I mean that was um I think um what's his name? Brian Wilson or is Brian Wilson Beach Boys? I I I don't I don't know. Um but I I it was it was obviously the um the CIO of Morgan Stanley um said he favors a 60 2020 20 portfolio. So um 60% equities, 20% bonds and 20% um gold actually. And and this is actually pretty close to what we introduced in our in gold with trust report 2024 um where we introduced a new 6040 portfolio. We said 45% stocks, 15% bonds and those bonds perhaps even more so um from the corporate space and emerging market sovereign debt 15% what we call safe haven gold 10% performance gold which is gold and silver mining equities 10% commodities and 5% Bitcoin. So gold plays basically a double role in that new 60/40 um safe haven gold that's really physical gold which should be stored in safe jurisdictions with minimal counterparty risk where you shouldn't do any active timing. This is really like it it just sits in your portfolio as a strategic monetary insurance. But then you've got performance gold and this is silver plus gold and silver mining stocks. And as you know, as you're also an portfolio manager, this has to be actively managed because the volatility is is is pretty high. So, um I think we're now kind of seeing that more and more people are starting to realize that uh the old 6040 playbook doesn't work anymore. So, why did 6040 um work? I mean that's that's an important question because the there was just one basic assumption and and the assumption was that bonds always hedge stocks. So as we entered an inflationary world in 2022 that that hedge actually fails. So um we we're now seeing that um we're basically coming back to uh what what what we've seen during most of of most of history because over the last 100 year actually stocks and bonds moved together about 70% of the time only during the great moderation in that time when actually you know uh yields were coming down and inflation was was was trending down um the 60/40 portfolio really worked. perfectly well. But I think that the big question is what if the portfolio anchor is the bubble itself? And and this is really I think for for for us from >> Honey, just to jump in real quick, I just threw this slide up on the screen here of your the new 6040 works well uh from your chart book. >> Um so that's slide seven in your in your chart book. So just to show that chart, so I just put that up on screen here. Yeah, you you can see that, you know, the new 6040 clearly outperforms um the traditional 6040. That's that's 25 percentage points of of pure alpha since we we we we introduced it. Now, Kai, I think the big question is, you know, where is the future demand for gold coming from? And from my point of view, that's fixed income. Fixed income is you know if this is like a big pie that's I think 170 trillion allocated in fixed income. Now, if only like small, how do you say like breadcrumbs or or or or small percentages of this big big pie move over into hard assets, beat gold, beat mining equities, beat commodities, beat Bitcoin for example, then I think it's it's going to have a major impact. And and I think this this has only started very very recently because as I've said before um the larger the institution the more complacent they are and that the longer actually big shifts um take. So, so I think that's that's there was also a great chart by uh by Bank of America recently where the um uh showing um um uh the 6040 portfolio and actually lost decades for um the 6040 portfolio. So if we say that 2022 is actually the starting point for let's say um a downtrend of the 6040 portfolio then again we shouldn't have a couple of we should have a couple of very good years ahead. >> AB absolutely and I think we're starting to see that trend being implemented and accelerate perhaps as well. So, which leads me back maybe to another question here and since we're on that topic of bonds, uh Mike Mccloan and uh I keep using him because I know him well enough as as a maybe a reason or discussion point or something we can hang our head on for a discussion is really he said bonds are going to outperform gold in 2026 and uh I'm curious what your take on that is Ronnie. Um that was really when bonds started to rally rallied towards 4% the 10 year that is in the US and they've been rallying elsewhere as well. that trend reversed a little bit, but would you agree with with his thesis that gold will underperform bonds this year? TLT in particular? >> Well, you know, from a from a let's say tactical point of view, um perhaps um so so you can have a tactical rally for a few months, but but structurally, Kai, if you're an asset allocator for the long term, you want to be underweight uh bonds as much as you can. So, I've got this this little um post-it note on my on my screen which says scare your investors out of bonds. And this is a an advice of a a mentor of mine, a a gentleman that that really is in the market for many many years. And he told me that actually a couple of years ago. So, he was too early. But I think now if you have a look at um you know at bond prices but also at flows especially giving now the whole Iran crisis um if if I look at at at markets now and if you would have told me Kai that actually um you know that the straits of Hormos uh is is is being blocked and um you know there's this es escalation in the region that everybody kind of expected for for a couple of years ago And um if one would have to guess where the S&P 500 uh would trade, where the where the dollar index would trade, where treasuries would trade, I would have probably said that the treasuries um would be trading much higher. So lots of lots of uh demand kicking in for classical safe havens. The same for for the dollar index. We've seen some some some tiny moves, but I think um this is a pretty good confirmation of my thesis that actually, you know, the US has been um harbor or a haven for for capital for the last 15 years and for the next couple of years, it's probably going to be a source of capital. So, so I think the flows are completely reversing at the moment and the price action is is totally confirming that. So yeah, Mike Mcloone might be might be right. Um it it really depends on your on your time frame, but I think from a structural point of view, um you don't want to be uh super overweight uh fixed income. >> Um no, as you're absolutely right, especially with the looming debt crisis, not just in the US, but globally, what is it? $375 trillion in global debt that is hanging over our heads. So that's uh that's a big number we need to digest in general. Um ju just looking at it maybe just to summarize Ronnie and I'm I'm guessing the answer here but true is the uh gold is the only true uh portfolio hedge in in your opinion right now is it >> well Kai I mean uh the only portfolio hedge um we we we'll again have um a big picture on on gold and and uh portfolio characteristics. So, so I think it's uh what really bugs me in our industry is that um gold is often being labeled as the solution for everything as you know the uh you know the answer to all our problems. It's it's not it's just a an excellent portfolio diversifier, but it's not a religion. And and and I think if we really want to be successful and I said at a panel discussion recently at a at a gold conference and I said, you know, um we can all be happy that finally, you know, gold is trading well and the miners are making decent money, but actually you want to attract the generalists. Yeah. And I think that um this this whole negative narrative um is something that you know doesn't doesn't um doesn't attract outside investors. But we can make a very very positive case for gold as a portfolio diversifier that that really worked tremendously well you know in times of rising inflation in in in a stlflationary environment and actually this is something that nobody talks about recession risks. Yeah. Just have a look at the uh most recent um labor market report. It was a disaster. It was really a disaster. So um this in combination with uh current turmoil um um uh in Middle East, I think that's that's a perfect recipe for stlflation. Gold works extremely well during stlflation. Gold works well as a dollar hedge. Gold works well as a recession hedge. But again, it's it's not the solution for everything. I think from a from a cycle point of view, we always said and this was the thesis of last year's in gold we trust report called uh the big long. We said gold always goes first and then silver follows. Um mining stocks follow, commodities are following and and we are seeing it now in the commodity space. Um obviously copper uh having having a run um some critical metals uh green metals however you want to you want to call it now now energy finally agricultured commodities not so much. I think coal is super attractive at the moment. Um so so I am to some degree even more confident regarding um the price outlook for commodities going forward. I think the riskreward is even more skewed than uh what we're seeing in the gold space now. >> Yeah. No abs. Absolutely. And lot lots of factors contributing to that of course as well. Many of them we've already discussed. But one topic I still want to touch on Ronnie is really just seasonality. Um it's early March March 11th as we're recording this here. Um, seasonality is a big factor and maybe let me bring up a chart here. I had it prepared. Um, just from your presentation as well. I think it's from your current chart book, I believe. Um, where are we at here? We're on page 17. Gold seasonality and March is always a weaker one, negative.2%. Uh, over a longer period of time. >> The question though is Ronnie, is this time different? Well, well, I think you know um I would never trade on on on seasonality to be honest and I and I think that actually Kai with um emerging markets becoming more and more important I would say that seasonality works less. Um so this is uh seasonality since 1970 for example. Um I I would say that seasonality tends to change. I would say that um obviously there's also other seasonal factors driving gold for example you know um we've got elections coming up. Yeah. So we've got a couple of charts on seasonality during different stages of the presidential cycle. I I think it's it's interesting but again this would ne this is just an an additional tool um in in my very very big toolbox. Yeah. But but but if we have a look at at price action at the moment, I I would say that you know what many people you know there I I I think that first of all at the end of January when we saw this this this massive draw down I think that was an excuse to take profits uh for many investors. Now we we've seen some selling pressure on precious metals but for me that wasn't like a big surprise. Of course, there's lots of conspiracies around that. However, in stressful situations, the first assets to be sold um to raise liquidity are those that are particularly liquid, especially if there is still uh in in in profit. But I think what's interesting if as soon as this phase basically is over and the geopolitical uncertainty comes back and people start thinking about the reaction function of central banks. I think um this is when when the safe haven demand kicks in again. So um I think now once we're seeing that the selling pressure has eased more or less I think investors will will start discounting the long-term consequences. um of the recent actions uh in the Middle East again and and and then that makes me uh makes me pretty confident. But again, you know, in in in our funds, for example, we we've uh raised some money. Um we've got lots of cash to allocate at the moment. We're looking for opportunities. Um, I think we're now if if if you're not 100% allocated, you probably won't miss too much over the next couple of days or probably weeks. >> No, fair fair enough. And I fully agree with that, Ronnie, as well. I don't think there's any urgency. Um, the last few minutes I want to use Ronnie just to talk about performance gold. I want to talk about the mining stocks. Um, we we need to cover that as well. Well, and I brought up a chart here at the gold miners, um, the GDX, GDXJS, uh, and we've seen outflows despite a massive rally in gold, especially in 2025. Um, let's start with the negative before we come to the positive. What what what does that mean to you when when you look at the GDX and GDXJ and you see outflows? >> Well, as we know, Kai, uh, finally the gold miners have ripped. Um, but it seems that money is still leaving. So, so, so we have to ask ourselves who's who's actually selling into the strength uh and who's left to to buy when the float turns. So, if if prices rose while while capital exited, what what what happens when the capital finally comes back? So, so my take is that the miners they're they're un uh they're underowned. Uh I mean, that's pretty obvious. they're they're misunderstood and they're they're disbelieved and and and that's clearly not how bull markets die. They die in in in in euphoria and not in redemption. So, makes me pretty confident. And we also saw that uh in the last major major secular bull market when gold made its highs um in January 198 1980 actually the mining mining stocks only peaked I think um 16 months later. So I I think for the for the mining stocks, we're still seeing a much better riskreward than we're seeing for for for gold at the moment. >> Absolutely. Um just looking at some PE ratios and things like that as well. Um I think we still have a way to go or PNAF calculations, we're still way under owned because a lot of the analysts also just don't use spot prices, right? And uh >> Exactly. >> So that that's something um I'm trying to find the the slide. I hope I can find it here in a second. But you also have your own proprietary um sort of indicator of where we're at in the cycle and whether investors should maybe get more aggressive purchasing stocks here. It's the active aum signal. I want to explain it to us real quick. Um what what is it and what is it telling you right now? >> So in in in the gold fund that we're managing um our benchmark isn't uh a mining index like the GDX, GDXJ, uh HU. So we actually tried to outperform gold uh which is a really really tough benchmark. Yeah. Um so far we did pretty well. So we we have outperformed gold by by 50 percentage points since we launched the fund. Um but but my take has always been and and and Kai, we're in this industry for for quite a while. Um most of the mining stocks aren't uh you know buy and hold. Um it reminds me of uh uh you remember uh Andre Costlani who was like a a big big guru back in the days and and and really a fascinating speculator and he always said that um he his secret uh is you know buy quality stocks then buy sleeping pills take them and you will wake up 10 years later and you will wake up looking at your uh your account and you will be rich. Now if you do that in the mining space um takes you you buy uh mining stocks you take sleeping pills and then you wake up 10 years after I'm not so sure about that. Yeah because as we know in mining there's so many things that can go wrong. Um so my take has always been um it's not a it's not a buy and hold sector. You got to be active and and as we know Kai there are like big big draw downs in in this space. And I'm sure like um you know if there can be outside drivers like uh for example 2008 2009 we've seen massive draw downs in the in the mining space down 75% I think from the top. So how do we manage our portfolios? uh well well we we said that you know um let's let's study history and and then uh prepare a model and and this model I don't I I know that we we've all seen many back tests and um uh they are all [laughter] always perfect back tests but we really try we we won't be selling at the top and we won't buy won't be buying at uh at the lows but I think we we really want to have like this fat part of the trend we want want to be in we want to be invested in that part. Um so the design of our active aum signal is is is pretty much uh straightforward. First there's a fundamental signal which is basically our long-term um um uh anchor. Um and this is this is kind of a market environment indicator that's that's a gold mining stock margin trend channel which is obviously very much uh driven by by energy prices as well. So we we we saw the the trend weakened recently. And then there's a cycle signal which which is basically our our our tactical dashboard. So it measures everything from from momentum to sentiment to macro environment. And and as we can see on the chart, it's it's actually it switched to neutral quite recently. Now what does it mean for us? Uh we raised some money. We took some profits. Um um we we put in some hedges. Um we uh reduced our positions in in let's say more of the momentum stocks. Uh we increased our positions in high quality names. So we're a little bit more defensive. It doesn't mean that we we hit, you know, the um uh we hit the brakes, but we took some gas off the off the gas pedal. And I'm feeling pretty pretty confident or or pretty pretty happy and and relaxed with that uh stance in in in in uh in our risk allocation at the moment. >> No, fantastic. Honey, uh really really enjoy our conversations. Um can't wait to do this again soon. Hopefully we can do it around the time of the publication of the next report which I believe is May 20th. You told me >> May 20th uh 20th anniversary. >> Fantastic. No, that's a great date. Do you have a title yet for it? Yes, we actually >> one you can share. >> We had a big meeting yesterday. Um uh and uh yeah, the title is back to the future of money. Um, and uh, you know, it's I think it's now we're really we're kind of in the tunnel and it's it's fascinating because there's just so much going on and um, it's next couple of weeks will be tough not only for me but also for my family. But but I'm I'm I I really look forward to hitting the send button on on May 20th and I think it's going to be a great read again. >> Absolutely. I better see a Delorean in the pictures on your social media account when you announce it. >> Of course. Yeah. >> So, absolutely fantastic. Ronnie, um, where can our audience follow more of your work and where can they find the report when it comes out? >> Yeah. Well, uh, Incrementum, we're an uh, asset manager based in Lenstein. Uh, we're a boutique asset manager. Um, you can find all information on our web page incrementum. I and for the in gold we trust report um we publish all our work totally free of charge. You don't have to register. It's possible with um the support of our premium partners from the industry. Um and you can find everything on inold.report. um we're publishing once a year the big in gold we trust report but also the monthly chartbook um that we talked about some special publications um and yeah just have a look at our web page in gold we trust and I'm also pretty active on Twitter my handle is rontofell per fantastic Ronnie we'll we'll link to all of that down below as well of course really appreciate your time it's always great to catch up with you um really enjoy our conversations thanks so much for coming on And uh everybody else, thank you so much for tuning in to Soore Financially. Really appreciate you watching. If you agree or if you enjoyed this conversation, hit that like and subscribe button. Helps us out tremendously. We really appreciate it. And uh put your thoughts down below as well. Have you started shifting from bonds into gold or other hard or real assets? Let us know below as well. We do want to hear from you. It really flows into our conversations with our guests and it just helps us ask better questions. So, thanks so much for doing that and take care out there. Don't be too emotional.
GOLD Isn’t Contrarian Anymore | Stöferle on $5,200 Gold, Bonds & Miners
Summary
Transcript
This time is different. These are usually famous last words of any investor. We need to take a closer look at the gold space because it is March. We need to talk about seasonality and how everything is affecting the gold price right now. What are the factors contributing to current gold price strength or weakness depending on how you look at it because we're not trading near all-time highs right now, but we're still above $5,200 as we speak. So, lot lots going on of course in the world. And uh I've invited a phenomenal guest. He's maybe the godfather or maybe the author of the gold bible, the engul we trust report. His name is Ron Peter. Um we're going to do this interview in English of course, but uh he's Austrian and I tremendously enjoy having him on the program. He knows gold like nobody else and we're going to test some of his theories, the 60 2020 portfolio, seasonality of course, but also bonds versus gold. We had Mike McClone on the other day and he said, "Well, bonds are going to outperform gold in 2026." I'm really curious what Ronnie thinks about that. But before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously and we really really appreciate it. Now Ronnie, it is a great pleasure to have you back on the program. It's good to see you again. >> Hi Kos. >> Yeah, Sos as we would say in Yeah. Uh in Austria or Bavaria as well, but >> Bavaria. Yeah, I was born in Northern Bavaria, so it's okay to say that. So, um, yeah. No, we got to be careful not to drift into German because we're just speaking German off camera, of course. And, uh, I introduced you as the author of the Engold We Trust report, Ronnie. Um, you're you're about to publish this 20th issue of the Ingold We Trust report. And, uh, how how dis difficult is it these [laughter] days to sort of come up or not come up with topics, but keep them under control and not have a a thousandpage masterpiece? I mean, uh, it's not easy, but it's, uh, you know, I I accept the challenge and I and I and I truly love it. Um, although it's, you know, it's it's just hard work. You know, we're we're usually in the in the crunch time of the report. I usually get up like 4:30 a.m. and we work till till 10:00 and there's like 21 people all over the globe working on the report. We're uh, now we have finished already a couple of chapters. Uh, I've got a great interview with Dr. Judy Shelton coming up regarding Goldback bonds. We've got great um guest writers and yeah, you know, we're just really doing this very very deep dive into the topic and as you know, Kai, it's it's not about gold, it's about everything. Um gold, you know, hasn't changed for the last uh you know, thousands of years. Um but everything around is moving at a um higher pace. It's geopolitics, it's macro, um it's inflation, it's you know the reserve uh the um the the the the developments in central banks. It's east versus west uh dd dollararization. So many topics to think and to research. So it's uh it's it's always fascinating. It's a challenge, but it's it's lots of hard work. >> Yeah. How do you keep focus though? Like as as you just pointed out, there's a gazillion topics you could focus on. And uh how do you keep it how do you keep the report somewhat focused? It's still I think 400 pages somewhere around there. >> Well, every year we try to write less and we we just fail. >> So [laughter] last year we hit a new all-time high which was 450 pages. Um this year we we try to write only 300 pages. But again you know if our our mission is it should be the best um the the most entertaining the most rewarding um uh research piece that you read every year. Um everything you need to know about gold should be included in the in gold with trust report. So um yeah uh uh it's it's it's not easy. I don't know if we're going to end up with three or 400 pages, but I can tell you it's it's going to be a great read hopefully. >> Absolutely. No, it's an absolute masterpiece and it's like the gold bible. I think a lot of people love it and uh I think the numbers >> I also heard it's like the playboy for gold bucks. Uh some most people only look at the pictures, but some uh actually read the the articles. So, >> well, you need a fold out like of the chart this year. Maybe in the middle you need a fold out like a center fold, right? [laughter] Just of the gold price chart. Just the gold price chart. All right. Yeah. Or or or CEOs of mining companies. >> It's something like that. Exactly. Absolutely. [laughter] No, Ronnie. Um let's get back to business here. Um let's talk gold. As I said in the intro, we're trading over $5,000 uh per ounce as we speak. Right around 52, actually to be precise. Um a few years ago, this would have sounded absolutely extreme. Even 12 months ago, that would have been absolutely bananas to talk about that price level. Um where are we in the cycle right now? Let's start very high level and we'll get a bit more granular granular uh later in the conversation. >> Well, Kai, I think it's um I know that many pundits around saying, well, you know, this is only the beginning, but let's face it, gold is not a contrarian asset anymore. Um I think the the easy money has been made. Um that doesn't necessarily mean that, you know, this bull market is over. I I don't think so. Um, but I think it's it's it's it's going to be harder to to make money over the next couple of years in the gold space. Um, so, you know, we put out um a piece in in 2020 um where we said at the end of this golden decade, our base case scenario is $4,800. Um, and if inflation should become a concern in this decade, uh, we're expecting $8,900 at the end of this decade. So, obviously, we we've already reached our base case scenario. Um, we haven't reached the $8,900, which I think is still um I think a reasonable price target. However, um compared to 2020 where people said, "Well, those guys um putting out the Gold Trust report, coming up with those numbers, they're they're crazy. We don't know what they're actually doing, what the input to their models is, what they're uh smoking or drinking, whatever." Now, you know, if I say like 8,900, it seems to be already quite quite a conservative call. And if you have a look at, you know, the the analyst forecasts by the big banks, they usually just, you know, follow the price development and they've been way behind the curve for for many years. Um, but now we're seeing larger institutions. We're seeing Goldman, JP Morgan, Bank of America, uh, you name it, with, you know, price targets that are significantly above current price trends. So this is telling me well well actually gold is not a contrarian asset anymore. It has become a little bit more of a mainstream um recommendation now. But I would also say Kai that we're not in the crazy phase yet. We're not like um you know if I'm always coming up with that that an analogy. If you go to a to a cocktail party and uh uh you start talking about asset allocation in 2020 if I would have said well we're recommending our clients to own gold people would have ridiculed me. Now if I say you know you should own some gold and and our research says that 15 to 20% uh is kind of the optimal gold allocation. People would accept it and say yes um we we we we told you so. We always said that you need some gold, but we're not at this stage yet where people would say, "Yeah, but um I I just heard from my broker that you have to get into this uh junior mining stock in uh in in in South America." So, we're not there yet. Um I would say we're like somewhere in the second half of this bull market, but we can go to overtime. We can go to penalty shooting. So I think we've got at least two three good good years ahead but again um it's it's not going to be as easy as as previously. >> You you you touched on the portfolio allocation. Maybe let's start there in in general. Um is is the market still underallocated gold? You said it's not a contrarian uh investment asset anymore. Um has it gone mainstream and is the market still underallocated? I think it has become a little bit more mainstream. However, if you have a look at, for example, there's uh the UBS uh family office um um uh study which came out last year, but back then it says that family offices hold just 2% of their portfolios in gold and precious metals, which is the same as in art or infrastructure. Uh and which is far below allocations to private equity and real estate. So 2% in gold that's that's not a hedge that's pocket change. There are other studies uh by JP Morgan I think they had like 2.8%. Then there was Goldman coming out with a survey um um from their um institutional clients which said I think 6% uh allocated in gold ETFs. So this is telling me well actually um institutional players aren't allocated at all and we know that they're they're kind of complacent and the larger the institution is the the more um bureaucracy obviously happens so the longer decisions take but Kai I think it's important to say that um you know my my framework for this bull market is um it is primarily being driven by um eastern demand. So we in the western world I think we we tend to forget that the majority um of the gold demand of the physical gold demand is coming from emerging markets. That's really important to say. So just travel to China to India to Dubai although that's u a little bit more complicated now um >> and talk with people with investors about you know their their view on gold and this is a completely different attitude. So for them it's it's you know it's just normal to own gold at significant higher um percentages as in compared to the western world. So I think the the secular trend is being driven by uh emerging market gold demand. Then obviously in 2022 um with the invasion uh uh uh of Ukraine and uh the sanctions afterwards I think uh central bank gold demand kicked in three years in a row more than thousand tons. last year I think it was 864 tons of gold um which is an all-time high in value terms um so I think this is the second part of this bull market um diversification from central banks also primarily in emerging markets and now only quite recently um basically in 2024 beginning of 2025 western financial investors started allocating some capital into gold so they've in the the Johnny come lately. >> Um they only recently came in and I think this is going to be the driver for uh the next couple of quarters. >> Yeah. >> So I think that this the secular trend is intact. Um but again um it's going to be a little bit more volatile compared to um um you know the the first part of this of this bull market. >> Yeah. Just to hit on that note, like the death of the 6040 portfolio, of course, I think is a is a trending topic here in general. Um, something you've been focused on and looking at quite closely as well. It was Morgan Stanley. I think one of I'm not sure who it was and Morgan Stanley analyst or so said, "Okay, maybe we should reallocate at 60 2020 and we we've discussed this here before, but I'm curious like where are we in that process? Has that already kicked in? Was that just an idea or has it gone from idea to implementation? Are we seeing a bit of a a sentiment change perhaps towards gold and is that portfolio reallocation already happening? >> Great point. I mean that was um I think um what's his name? Brian Wilson or is Brian Wilson Beach Boys? I I I don't I don't know. Um but I I it was it was obviously the um the CIO of Morgan Stanley um said he favors a 60 2020 20 portfolio. So um 60% equities, 20% bonds and 20% um gold actually. And and this is actually pretty close to what we introduced in our in gold with trust report 2024 um where we introduced a new 6040 portfolio. We said 45% stocks, 15% bonds and those bonds perhaps even more so um from the corporate space and emerging market sovereign debt 15% what we call safe haven gold 10% performance gold which is gold and silver mining equities 10% commodities and 5% Bitcoin. So gold plays basically a double role in that new 60/40 um safe haven gold that's really physical gold which should be stored in safe jurisdictions with minimal counterparty risk where you shouldn't do any active timing. This is really like it it just sits in your portfolio as a strategic monetary insurance. But then you've got performance gold and this is silver plus gold and silver mining stocks. And as you know, as you're also an portfolio manager, this has to be actively managed because the volatility is is is pretty high. So, um I think we're now kind of seeing that more and more people are starting to realize that uh the old 6040 playbook doesn't work anymore. So, why did 6040 um work? I mean that's that's an important question because the there was just one basic assumption and and the assumption was that bonds always hedge stocks. So as we entered an inflationary world in 2022 that that hedge actually fails. So um we we're now seeing that um we're basically coming back to uh what what what we've seen during most of of most of history because over the last 100 year actually stocks and bonds moved together about 70% of the time only during the great moderation in that time when actually you know uh yields were coming down and inflation was was was trending down um the 60/40 portfolio really worked. perfectly well. But I think that the big question is what if the portfolio anchor is the bubble itself? And and this is really I think for for for us from >> Honey, just to jump in real quick, I just threw this slide up on the screen here of your the new 6040 works well uh from your chart book. >> Um so that's slide seven in your in your chart book. So just to show that chart, so I just put that up on screen here. Yeah, you you can see that, you know, the new 6040 clearly outperforms um the traditional 6040. That's that's 25 percentage points of of pure alpha since we we we we introduced it. Now, Kai, I think the big question is, you know, where is the future demand for gold coming from? And from my point of view, that's fixed income. Fixed income is you know if this is like a big pie that's I think 170 trillion allocated in fixed income. Now, if only like small, how do you say like breadcrumbs or or or or small percentages of this big big pie move over into hard assets, beat gold, beat mining equities, beat commodities, beat Bitcoin for example, then I think it's it's going to have a major impact. And and I think this this has only started very very recently because as I've said before um the larger the institution the more complacent they are and that the longer actually big shifts um take. So, so I think that's that's there was also a great chart by uh by Bank of America recently where the um uh showing um um uh the 6040 portfolio and actually lost decades for um the 6040 portfolio. So if we say that 2022 is actually the starting point for let's say um a downtrend of the 6040 portfolio then again we shouldn't have a couple of we should have a couple of very good years ahead. >> AB absolutely and I think we're starting to see that trend being implemented and accelerate perhaps as well. So, which leads me back maybe to another question here and since we're on that topic of bonds, uh Mike Mccloan and uh I keep using him because I know him well enough as as a maybe a reason or discussion point or something we can hang our head on for a discussion is really he said bonds are going to outperform gold in 2026 and uh I'm curious what your take on that is Ronnie. Um that was really when bonds started to rally rallied towards 4% the 10 year that is in the US and they've been rallying elsewhere as well. that trend reversed a little bit, but would you agree with with his thesis that gold will underperform bonds this year? TLT in particular? >> Well, you know, from a from a let's say tactical point of view, um perhaps um so so you can have a tactical rally for a few months, but but structurally, Kai, if you're an asset allocator for the long term, you want to be underweight uh bonds as much as you can. So, I've got this this little um post-it note on my on my screen which says scare your investors out of bonds. And this is a an advice of a a mentor of mine, a a gentleman that that really is in the market for many many years. And he told me that actually a couple of years ago. So, he was too early. But I think now if you have a look at um you know at bond prices but also at flows especially giving now the whole Iran crisis um if if I look at at at markets now and if you would have told me Kai that actually um you know that the straits of Hormos uh is is is being blocked and um you know there's this es escalation in the region that everybody kind of expected for for a couple of years ago And um if one would have to guess where the S&P 500 uh would trade, where the where the dollar index would trade, where treasuries would trade, I would have probably said that the treasuries um would be trading much higher. So lots of lots of uh demand kicking in for classical safe havens. The same for for the dollar index. We've seen some some some tiny moves, but I think um this is a pretty good confirmation of my thesis that actually, you know, the US has been um harbor or a haven for for capital for the last 15 years and for the next couple of years, it's probably going to be a source of capital. So, so I think the flows are completely reversing at the moment and the price action is is totally confirming that. So yeah, Mike Mcloone might be might be right. Um it it really depends on your on your time frame, but I think from a structural point of view, um you don't want to be uh super overweight uh fixed income. >> Um no, as you're absolutely right, especially with the looming debt crisis, not just in the US, but globally, what is it? $375 trillion in global debt that is hanging over our heads. So that's uh that's a big number we need to digest in general. Um ju just looking at it maybe just to summarize Ronnie and I'm I'm guessing the answer here but true is the uh gold is the only true uh portfolio hedge in in your opinion right now is it >> well Kai I mean uh the only portfolio hedge um we we we'll again have um a big picture on on gold and and uh portfolio characteristics. So, so I think it's uh what really bugs me in our industry is that um gold is often being labeled as the solution for everything as you know the uh you know the answer to all our problems. It's it's not it's just a an excellent portfolio diversifier, but it's not a religion. And and and I think if we really want to be successful and I said at a panel discussion recently at a at a gold conference and I said, you know, um we can all be happy that finally, you know, gold is trading well and the miners are making decent money, but actually you want to attract the generalists. Yeah. And I think that um this this whole negative narrative um is something that you know doesn't doesn't um doesn't attract outside investors. But we can make a very very positive case for gold as a portfolio diversifier that that really worked tremendously well you know in times of rising inflation in in in a stlflationary environment and actually this is something that nobody talks about recession risks. Yeah. Just have a look at the uh most recent um labor market report. It was a disaster. It was really a disaster. So um this in combination with uh current turmoil um um uh in Middle East, I think that's that's a perfect recipe for stlflation. Gold works extremely well during stlflation. Gold works well as a dollar hedge. Gold works well as a recession hedge. But again, it's it's not the solution for everything. I think from a from a cycle point of view, we always said and this was the thesis of last year's in gold we trust report called uh the big long. We said gold always goes first and then silver follows. Um mining stocks follow, commodities are following and and we are seeing it now in the commodity space. Um obviously copper uh having having a run um some critical metals uh green metals however you want to you want to call it now now energy finally agricultured commodities not so much. I think coal is super attractive at the moment. Um so so I am to some degree even more confident regarding um the price outlook for commodities going forward. I think the riskreward is even more skewed than uh what we're seeing in the gold space now. >> Yeah. No abs. Absolutely. And lot lots of factors contributing to that of course as well. Many of them we've already discussed. But one topic I still want to touch on Ronnie is really just seasonality. Um it's early March March 11th as we're recording this here. Um, seasonality is a big factor and maybe let me bring up a chart here. I had it prepared. Um, just from your presentation as well. I think it's from your current chart book, I believe. Um, where are we at here? We're on page 17. Gold seasonality and March is always a weaker one, negative.2%. Uh, over a longer period of time. >> The question though is Ronnie, is this time different? Well, well, I think you know um I would never trade on on on seasonality to be honest and I and I think that actually Kai with um emerging markets becoming more and more important I would say that seasonality works less. Um so this is uh seasonality since 1970 for example. Um I I would say that seasonality tends to change. I would say that um obviously there's also other seasonal factors driving gold for example you know um we've got elections coming up. Yeah. So we've got a couple of charts on seasonality during different stages of the presidential cycle. I I think it's it's interesting but again this would ne this is just an an additional tool um in in my very very big toolbox. Yeah. But but but if we have a look at at price action at the moment, I I would say that you know what many people you know there I I I think that first of all at the end of January when we saw this this this massive draw down I think that was an excuse to take profits uh for many investors. Now we we've seen some selling pressure on precious metals but for me that wasn't like a big surprise. Of course, there's lots of conspiracies around that. However, in stressful situations, the first assets to be sold um to raise liquidity are those that are particularly liquid, especially if there is still uh in in in profit. But I think what's interesting if as soon as this phase basically is over and the geopolitical uncertainty comes back and people start thinking about the reaction function of central banks. I think um this is when when the safe haven demand kicks in again. So um I think now once we're seeing that the selling pressure has eased more or less I think investors will will start discounting the long-term consequences. um of the recent actions uh in the Middle East again and and and then that makes me uh makes me pretty confident. But again, you know, in in in our funds, for example, we we've uh raised some money. Um we've got lots of cash to allocate at the moment. We're looking for opportunities. Um, I think we're now if if if you're not 100% allocated, you probably won't miss too much over the next couple of days or probably weeks. >> No, fair fair enough. And I fully agree with that, Ronnie, as well. I don't think there's any urgency. Um, the last few minutes I want to use Ronnie just to talk about performance gold. I want to talk about the mining stocks. Um, we we need to cover that as well. Well, and I brought up a chart here at the gold miners, um, the GDX, GDXJS, uh, and we've seen outflows despite a massive rally in gold, especially in 2025. Um, let's start with the negative before we come to the positive. What what what does that mean to you when when you look at the GDX and GDXJ and you see outflows? >> Well, as we know, Kai, uh, finally the gold miners have ripped. Um, but it seems that money is still leaving. So, so, so we have to ask ourselves who's who's actually selling into the strength uh and who's left to to buy when the float turns. So, if if prices rose while while capital exited, what what what happens when the capital finally comes back? So, so my take is that the miners they're they're un uh they're underowned. Uh I mean, that's pretty obvious. they're they're misunderstood and they're they're disbelieved and and and that's clearly not how bull markets die. They die in in in in euphoria and not in redemption. So, makes me pretty confident. And we also saw that uh in the last major major secular bull market when gold made its highs um in January 198 1980 actually the mining mining stocks only peaked I think um 16 months later. So I I think for the for the mining stocks, we're still seeing a much better riskreward than we're seeing for for for gold at the moment. >> Absolutely. Um just looking at some PE ratios and things like that as well. Um I think we still have a way to go or PNAF calculations, we're still way under owned because a lot of the analysts also just don't use spot prices, right? And uh >> Exactly. >> So that that's something um I'm trying to find the the slide. I hope I can find it here in a second. But you also have your own proprietary um sort of indicator of where we're at in the cycle and whether investors should maybe get more aggressive purchasing stocks here. It's the active aum signal. I want to explain it to us real quick. Um what what is it and what is it telling you right now? >> So in in in the gold fund that we're managing um our benchmark isn't uh a mining index like the GDX, GDXJ, uh HU. So we actually tried to outperform gold uh which is a really really tough benchmark. Yeah. Um so far we did pretty well. So we we have outperformed gold by by 50 percentage points since we launched the fund. Um but but my take has always been and and and Kai, we're in this industry for for quite a while. Um most of the mining stocks aren't uh you know buy and hold. Um it reminds me of uh uh you remember uh Andre Costlani who was like a a big big guru back in the days and and and really a fascinating speculator and he always said that um he his secret uh is you know buy quality stocks then buy sleeping pills take them and you will wake up 10 years later and you will wake up looking at your uh your account and you will be rich. Now if you do that in the mining space um takes you you buy uh mining stocks you take sleeping pills and then you wake up 10 years after I'm not so sure about that. Yeah because as we know in mining there's so many things that can go wrong. Um so my take has always been um it's not a it's not a buy and hold sector. You got to be active and and as we know Kai there are like big big draw downs in in this space. And I'm sure like um you know if there can be outside drivers like uh for example 2008 2009 we've seen massive draw downs in the in the mining space down 75% I think from the top. So how do we manage our portfolios? uh well well we we said that you know um let's let's study history and and then uh prepare a model and and this model I don't I I know that we we've all seen many back tests and um uh they are all [laughter] always perfect back tests but we really try we we won't be selling at the top and we won't buy won't be buying at uh at the lows but I think we we really want to have like this fat part of the trend we want want to be in we want to be invested in that part. Um so the design of our active aum signal is is is pretty much uh straightforward. First there's a fundamental signal which is basically our long-term um um uh anchor. Um and this is this is kind of a market environment indicator that's that's a gold mining stock margin trend channel which is obviously very much uh driven by by energy prices as well. So we we we saw the the trend weakened recently. And then there's a cycle signal which which is basically our our our tactical dashboard. So it measures everything from from momentum to sentiment to macro environment. And and as we can see on the chart, it's it's actually it switched to neutral quite recently. Now what does it mean for us? Uh we raised some money. We took some profits. Um um we we put in some hedges. Um we uh reduced our positions in in let's say more of the momentum stocks. Uh we increased our positions in high quality names. So we're a little bit more defensive. It doesn't mean that we we hit, you know, the um uh we hit the brakes, but we took some gas off the off the gas pedal. And I'm feeling pretty pretty confident or or pretty pretty happy and and relaxed with that uh stance in in in in uh in our risk allocation at the moment. >> No, fantastic. Honey, uh really really enjoy our conversations. Um can't wait to do this again soon. Hopefully we can do it around the time of the publication of the next report which I believe is May 20th. You told me >> May 20th uh 20th anniversary. >> Fantastic. No, that's a great date. Do you have a title yet for it? Yes, we actually >> one you can share. >> We had a big meeting yesterday. Um uh and uh yeah, the title is back to the future of money. Um, and uh, you know, it's I think it's now we're really we're kind of in the tunnel and it's it's fascinating because there's just so much going on and um, it's next couple of weeks will be tough not only for me but also for my family. But but I'm I'm I I really look forward to hitting the send button on on May 20th and I think it's going to be a great read again. >> Absolutely. I better see a Delorean in the pictures on your social media account when you announce it. >> Of course. Yeah. >> So, absolutely fantastic. Ronnie, um, where can our audience follow more of your work and where can they find the report when it comes out? >> Yeah. Well, uh, Incrementum, we're an uh, asset manager based in Lenstein. Uh, we're a boutique asset manager. Um, you can find all information on our web page incrementum. I and for the in gold we trust report um we publish all our work totally free of charge. You don't have to register. It's possible with um the support of our premium partners from the industry. Um and you can find everything on inold.report. um we're publishing once a year the big in gold we trust report but also the monthly chartbook um that we talked about some special publications um and yeah just have a look at our web page in gold we trust and I'm also pretty active on Twitter my handle is rontofell per fantastic Ronnie we'll we'll link to all of that down below as well of course really appreciate your time it's always great to catch up with you um really enjoy our conversations thanks so much for coming on And uh everybody else, thank you so much for tuning in to Soore Financially. Really appreciate you watching. If you agree or if you enjoyed this conversation, hit that like and subscribe button. Helps us out tremendously. We really appreciate it. And uh put your thoughts down below as well. Have you started shifting from bonds into gold or other hard or real assets? Let us know below as well. We do want to hear from you. It really flows into our conversations with our guests and it just helps us ask better questions. So, thanks so much for doing that and take care out there. Don't be too emotional.