gold bull & debt bear in 50 charts by incrementum liechtenstein

7/30/2019 Gold Bull & Debt Bear in 50 Charts by Incrementum Liechtenstein

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CHARTBOOK

o u e ear n ar s


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THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY VERIFIED AND NO

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OPINIONS CONTAINED HEREIN.

CERTAIN STATEMENTS CONTAINED IN THIS DOCUMENT MAY BE STATEMENTS OF FUTURE EXPECTATIONS AND

OTHER FORWARD-LOOKING STATEMENTS THAT ARE BASED ON MANAGEMENTS CURRENT VIEWS AND

ASSUMPTIONS AND INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL

RESULTS, PERFORMANCE OR EVENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN SUCHSTATEMENTS.

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WITH ANY CONTRACT OR COMMITMENT WHATSOEVER.

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Sources: Federal Reserve St. Louis, Incrementum AG

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Com arisonCom arison WWithith MidMid--CC clecle CCorrectionorrection in 70sin 70sCom arisonCom arison WWithith MidMid--CC clecle CCorrectionorrection in 70sin 70s

Quelle: Fed St. Louis, Erste Group, Incrementum AG

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CorrectionsCorrections SSinceince TThehe BBeginningeginning ofof TThishis BBull Marketull MarketCorrectionsCorrections SSinceince TThehe BBeginningeginning ofof TThishis BBull Marketull Market((LogarithmicLogarithmic ScaleScale))((LogarithmicLogarithmic ScaleScale))


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Two Bull Markets:Two Bull Markets:Two Bull Markets:Two Bull Markets:

o ara o co ara o c renren cce era on ecce era on eo ara o co ara o c renren cce era on ecce era on e


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GoldGold DDurinurin VariousVarious CurrencCurrenc CrisesCrisesGoldGold DDurinurin VariousVarious CurrencCurrenc CrisesCrises

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Two Bull Markets:Two Bull Markets:Two Bull Markets:Two Bull Markets:

o ara o co ara o c renren cce era on ecce era on eo ara o co ara o c renren cce era on ecce era on e


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StockStock--ToTo--Flow Ratio:Flow Ratio:StockStock--ToTo--Flow Ratio:Flow Ratio:

e ose os mpor anmpor an easoneason or or o so s one aryone ary a usa use ose os mpor anmpor an easoneason or or o so s one aryone ary a usa us

Sources: Incrementum AG

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StockStock--ToTo--Flow Ratio:Flow Ratio:StockStock--ToTo--Flow Ratio:Flow Ratio:

nnuannua ro uc onro uc on vs. o a oc nvs. o a oc n onnesonnesnnuannua ro uc onro uc on vs. o a oc nvs. o a oc n onnesonnes

Source: Incrementum AG

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RelativeRelative ScarcityScarcity:: GoldsGolds SupplySupply CurveCurve vs. M2 Growthvs. M2 GrowthRelativeRelative ScarcityScarcity:: GoldsGolds SupplySupply CurveCurve vs. M2 Growthvs. M2 Growth

Maximum, MinimumMaximum, Minimum andand Average RateAverage Rate ofof ChangeChange FFromrom 18681868 TToo 20112011Maximum, MinimumMaximum, Minimum andand Average RateAverage Rate ofof ChangeChange FFromrom 18681868 TToo 20112011

Sources: GoldMoney Foundation, "the aboveground Gold Stock: Ist Importance and IstSize", James Turk, Incrementum AG

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RelativeRelative ScarcityScarcity:: GoldsGolds SupplySupply CurveCurve vs. M2vs. M2RelativeRelative ScarcityScarcity:: GoldsGolds SupplySupply CurveCurve vs. M2vs. M2

Average RateAverage Rate ofof Change: Gold & M2 in Different TimeChange: Gold & M2 in Different Time PeriodsPeriodsAverage RateAverage Rate ofof Change: Gold & M2 in Different TimeChange: Gold & M2 in Different Time PeriodsPeriods

Sources: GoldMoney Foundation, "the aboveground Gold Stock: Ist Importance and IstSize", James Turk, Incrementum AG

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Gold vs. 200 Day Moving Average and DeviationGold vs. 200 Day Moving Average and DeviationGold vs. 200 Day Moving Average and DeviationGold vs. 200 Day Moving Average and Deviation

rom ay ov ng veragerom ay ov ng veragerom ay ov ng veragerom ay ov ng verage


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-- --


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NoNo OvervaluationOvervaluation ComparedCompared toto Stock Market Indices!Stock Market Indices!NoNo OvervaluationOvervaluation ComparedCompared toto Stock Market Indices!Stock Market Indices!

o vs. or o a e urno vs. or o a e urno vs. or o a e urno vs. or o a e urn


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Dow/Gold Ratio since 1900Dow/Gold Ratio since 1900Dow/Gold Ratio since 1900Dow/Gold Ratio since 1900

Source: Federal Reserve Bank of St. Louis, Incrementum AG

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Gold Silver & Commodities Durin DeflationGold Silver & Commodities Durin DeflationGold Silver & Commodities Durin DeflationGold Silver & Commodities Durin Deflation

Sources: Roy Jastram, The Golden Constant, Silver, the Restless Metal, Incrementum AG

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Real Interest Rates vs. Gold Price since 1971Real Interest Rates vs. Gold Price since 1971Real Interest Rates vs. Gold Price since 1971Real Interest Rates vs. Gold Price since 1971


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Change in Inflation Rate vs. Change in Gold Price:Change in Inflation Rate vs. Change in Gold Price:

GoldGold DoesDoes NotNot CorrelateCorrelate WWithith Inflation Rates, ButInflation Rates, But WithWith thethe Change inChange in

Change in Inflation Rate vs. Change in Gold Price:Change in Inflation Rate vs. Change in Gold Price:

GoldGold DoesDoes NotNot CorrelateCorrelate WWithith Inflation Rates, ButInflation Rates, But WithWith thethe Change inChange in

Inflation RatesInflation RatesInflation RatesInflation Rates


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Sources: Bloomberg, Ferdinand Regner, Incrementum AG

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CrowdedCrowded Trade?Trade?CrowdedCrowded Trade?Trade?

GoldsGolds ShareShare ofof Total FinancialTotal Financial AssetsAssets CurrentlyCurrently atat aa MereMere 0.5%0.5%GoldsGolds ShareShare ofof Total FinancialTotal Financial AssetsAssets CurrentlyCurrently atat aa MereMere 0.5%0.5%

Sources: World Gold Council, Credit Suisse, World Federation of Exchanges, Incrementum AG

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DailyDaily TTradingrading VVolume in Billion USD:olume in Billion USD:DailyDaily TTradingrading VVolume in Billion USD:olume in Billion USD:

GoldGold IIss OOnene of of TThehe MMostost LLiquidiquid CCurrenciesurrenciesGoldGold IIss OOnene of of TThehe MMostost LLiquidiquid CCurrenciesurrencies

Sources: World Gold Council, Bloomberg, Incrementum AG

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Average Daily Turnover as % of TotalAverage Daily Turnover as % of Total

**

Average Daily Turnover as % of TotalAverage Daily Turnover as % of Total

**

Sources: German finance agency, Japanese MOF, SIFMA, Thomson Reuters GFMS, UK DMO, WGC

*Daily turnover is calculated as daily average volume divided by total outstanding value. In the case of gold, total

outstanding is calculated using private and public bullion holdings.

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GoodGood OutlookOutlook forfor BeerBeer--DrinkingDrinking GGoldold BBugs:ugs:GoodGood OutlookOutlook forfor BeerBeer--DrinkingDrinking GGoldold BBugs:ugs:

o o er eso o er es eer eer a oa oo o er eso o er es eer eer a oa o

Sources: www.HaaseEwert.de, Historical archive Spaten-Lwenbru, Incrementum AG

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Total Credit Market Debt Owed, GDP & MonetaryTotal Credit Market Debt Owed, GDP & MonetaryTotal Credit Market Debt Owed, GDP & MonetaryTotal Credit Market Debt Owed, GDP & Monetary

aseaseasease

Sources: Federal Reserve Bank of St. Louis, Incrementum AG

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ChangeChange in Central Bank Balance Sheets + Goldin Central Bank Balance Sheets + GoldChangeChange in Central Bank Balance Sheets + Goldin Central Bank Balance Sheets + Gold

r cer ce ncreasencrease:: anuaryanuary vs. ugusvs. ugusr cer ce ncreasencrease:: anuaryanuary vs. ugusvs. ugus

Sources: Central Bank Information, Bloomber , Incrementum AG

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Stocks are Cheap? Not reallyStocks are Cheap? Not reallyStocks are Cheap? Not reallyStocks are Cheap? Not really

:: erer s nces nce:: erer s nces nce

Sources: http://www.econ.yale.edu/~shiller/data.htm, Prof. Robert Shiller, Incrementum AG

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Consumer Prices in the USConsumer Prices in the US OverOver the Past Centurythe Past CenturyConsumer Prices in the USConsumer Prices in the US OverOver the Past Centurythe Past Century

n exen exen exen exe


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BarelyBarely AnyAny Price DeflationPrice Deflation SSinceince 19131913 andandBarelyBarely AnyAny Price DeflationPrice Deflation SSinceince 19131913 andand

spec a yspec a y ncencespec a yspec a y ncence

Quelle: Fed Prof. Robert Sahr - Measuringworth

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Purchasing Power of the US Dollar Measured in Gold and OilPurchasing Power of the US Dollar Measured in Gold and OilPurchasing Power of the US Dollar Measured in Gold and OilPurchasing Power of the US Dollar Measured in Gold and Oil

erms vs. urc as ng ower o o n erms og. sca eerms vs. urc as ng ower o o n erms og. sca eerms vs. urc as ng ower o o n erms og. sca eerms vs. urc as ng ower o o n erms og. sca e


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Sources: Grant Williams, Federal Reserve St. Louis, Incrementum AG

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Sources: Grant Williams, Federal Reserve St. Louis, Incrementum AG

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Real Interest RatesReal Interest Rates ostost BrettonBretton WoodsWoodsReal Interest RatesReal Interest Rates ostost BrettonBretton WoodsWoods


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US Bud et: Sur luses and DeficitsUS Bud et: Sur luses and DeficitsUS Bud et: Sur luses and DeficitsUS Bud et: Sur luses and Deficits


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Interest Expense on the Debt OutstandingInterest Expense on the Debt OutstandingInterest Expense on the Debt OutstandingInterest Expense on the Debt Outstanding

onononon

Sources: Treasurydirect.gov, Incrementum AG

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Debt held by Public (% of GDP):Debt held by Public (% of GDP):Debt held by Public (% of GDP):Debt held by Public (% of GDP):


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Debt held by Public (% of GDP):Debt held by Public (% of GDP):

Two Scenarios b the Government Accountabilit OfficeTwo Scenarios b the Government Accountabilit Office

Debt held by Public (% of GDP):Debt held by Public (% of GDP):

Two Scenarios b the Government Accountabilit OfficeTwo Scenarios b the Government Accountabilit Office

(GAO)(GAO)(GAO)(GAO)

Source: GAO, Incrementum AG

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Grand total Credit and debt er ca ita USD *Grand total Credit and debt er ca ita USD *Grand total Credit and debt er ca ita USD *Grand total Credit and debt er ca ita USD *

As of April 2012

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ource: www.nowan u ures.com

G H h ld Fi i l &G H h ld Fi i l & NNG H h ld Fi i l &G H h ld Fi i l & NN


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Government, Household, Financial &Government, Household, Financial & NonNon--Government, Household, Financial &Government, Household, Financial & NonNon--

nanc a e onanc a e onanc a e onanc a e o

Source: The Economist, Incrementum AG

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Domestic vs. Forei n Debt % of GDPDomestic vs. Forei n Debt % of GDPDomestic vs. Forei n Debt % of GDPDomestic vs. Forei n Debt % of GDP

Source: The Economist, Incrementum AG

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N b f th b kN b f th b kN b f th b kN b f th b k


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No bang for the buck:No bang for the buck:No bang for the buck:No bang for the buck:

ncreasencrease n rea per o ar o ncremen a en rea per o ar o ncremen a encreasencrease n rea per o ar o ncremen a en rea per o ar o ncremen a e

Sources: Ned Davis Research, Federal Reserve, Gary Shilling

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CC B k tB k t** M dM d i Ti T ff G ldG ldCC B k tB k t** M dM d i Ti T ff G ldG ld


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CurrencyCurrency BasketBasket** MeasuredMeasured in Termsin Terms ofof Gold:Gold:CurrencyCurrency BasketBasket** MeasuredMeasured in Termsin Terms ofof Gold:Gold:

Long TermLong Term DowntrendDowntrend IntactIntactLong TermLong Term DowntrendDowntrend IntactIntact

* The basket consists of US-Dollar, Euro, Swiss Franc, Japanese Yen, Renminbi, Indiean Rupee, British Pound, Canadian Dollar and Australian Dollar

Sources: Fed St. Louis, Erste Group, Incrementum AG

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++++


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DevelopmentDevelopment ofof thethe MonetaryMonetary BaseBase sincesince 19991999DevelopmentDevelopment ofof thethe MonetaryMonetary BaseBase sincesince 19991999


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n exen exe oon exen exe oo

Sources: Central Bank Websites, Bloomber , Incrementum AG

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n.n.n.n.

Sources: Central Bank Websites, Bloomber , Incrementum AG

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PurchasingPurchasing PowerPower inin VariousVarious CCurrenciesurrencies HowHow MMuchuch GGoldoldPurchasingPurchasing PowerPower inin VariousVarious CCurrenciesurrencies HowHow MMuchuch GGoldold


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PurchasingPurchasing PowerPower inin VariousVarious CCurrenciesurrencies HowHow MMuchuch GGoldoldPurchasingPurchasing PowerPower inin VariousVarious CCurrenciesurrencies HowHow MMuchuch GGoldold

. ,. ,. ,. ,

Sources: Datastream, Incrementum AG

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Ad usted Monetar BaseAd usted Monetar Base oo Chan eChan eAd usted Monetar BaseAd usted Monetar Base oo Chan eChan e


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HousingHousing Bubble in China?Bubble in China?HousingHousing Bubble in China?Bubble in China?


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HousingHousing Bubble in China?Bubble in China?HousingHousing Bubble in China?Bubble in China?

a oa o oo ouse r cesouse r ces oo nnua ncomennua ncomea oa o oo ouse r cesouse r ces oo nnua ncomennua ncome

Sources: Global Financial Stability Report: The Quest for Lasting Stability, IMF, April 2012

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CantillonCantillon EffectEffect* Applied:* Applied:CantillonCantillon EffectEffect* Applied:* Applied:


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CantillonCantillon EffectEffect Applied: Applied:CantillonCantillon EffectEffect Applied: Applied:

e se s eaea ecec on yon y or or ee c esc ese se s eaea ecec on yon y or or ee c esc es

* The Cantillon effect describes the fact that newly created money is neither distributed evenly nor simultaneously in the population. That means that users of moneypartly profit from rising prices, and partly suffer from them. This results in a transfer of wealth, resp. a hidden tax, from later receivers to earlier receivers of new money.

Source: Incrementum AG

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A Bull Market inA Bull Market in BureaucracyBureaucracy::A Bull Market inA Bull Market in BureaucracyBureaucracy::


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yyyy

agesages oo axax aw agesaw ages oo eg s a oneg s a onagesages oo axax aw agesaw ages oo eg s a oneg s a on

Sources: Incrementum AG

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APPENDIX

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Incrementum is the Latin word for:

a vancemen

expansion

development

offspring


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Incrementum AG is an owner-managed asset manager & wealth manager based in the Principality of

ec tenste n. ur us ness ocus s t e management o nvestment un s t at we e eve to e un que.

We evaluate all our investments not only in perspective of the global economy but in context of the current

state of the global monetary regime. This enables us to gather what we considera truly holistic view of

the state of financial markets. A dee understandin of monetar histor out of the box thinkin andprudent research enables our clients to prosper in this difficult market environment.

We believe our investment team offers a distinct skillset which has proven to be extremely valuable for us

as investors in these uncertain markets. Among our partners are experts within the fields of:

Asset Allocation

Fundamental Bottom Up Research

Precious Metals

Our boutique approach allows us to combine unconventional thinking with state of the art asset

management wisdom. Our independence empowers us to communicate unbiased and our flexibility

enables us to respond to evolving markets rapidly.

ur n en on s o e ver a se ec e range o nves men un s, w c we e eve are a e o growincrementally also during times of increasing economic challenges.


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Incrementum AG Liechtenstein is an asset management company founded in 2013 in Vaduz, Liechtenstein. As

independence is a cornerstone of our philosophy, the company is one hundred percent owned by its partners.There are no affiliations to any banking institut ions, which enables us to implement our investment strategies

autonomously. As a boutique with lean hierarchies, we are able to execute our strategies swiftly and respond to

regime changes flexibly. Our partners practice what they preach. Therefore we are invested in each of the funds

we manage.

The partners of Incrementum AG are highly qualified and have over 140 years of combined banking

exper ence. r or o o n ng e company e par ners e pos ons w n , res ner an , om ar er,Darier Hentsch & Cie., Cantrade Private Bank, PBS Private Bank, Bank Leu, Pictet & Cie., Bank Sal. Oppenheim,

Merrill Lynch, Raiffeisen Capital Management, Erste Group and Socit Gnrale.


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An economic school of thought that originated in Vienna during the late 19th century with the works of Carl Menger. The

us r an sc oo s se apar y s e e a e wor ngs o e roa economy are e sum o sma er n v ua ec s on

and actions, which are based on laws that can be deduced by rational logical methods, unlike the Chicago school and other

theories that look to surmise the future from historical abstracts, often using broad statistical aggregates.

Investopedia on the Austrian School of Economics

Central view points of the Austrian School of Economics:

Money is not neutral

Inflation is the increase in the supply of money and credit

Inflation is a harmful policy and causes a transfer of wealth (Cantillon Effect)

Private ownership and property rights are essential

Economics is all about individuals (subjectivism, methodological individualism)

Bailout policies lead to moral hazards

Prices signal scarcity and abundance and are essential for allocating resources efficiently

Erroneous price signals set by central banks are the cause of boom and bust cycles

Lowerin interest rates leads to distortions in the econom b alterin relative rices which results in an ,artificial boom. Eventually, misallocations and malinvestment can no longer be supported and a bust

ensues in which these misallocations are worked out

A return to sound money is necessary and advocated


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gold bull & debt bear in 50 charts by incrementum liechtenstein

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