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The New Queen: Why You Better Learn The “New Rules” to Survive Financially

The Daniela Cambone Show Jun 10, 2024

“The game of chess completely changed. In the world of gold, we’re seeing something similar because the Western financial investor isn’t the marginal investor anymore,” says Ronald-Peter Stöferle, Managing Partner at Incrementum AG. He tells Daniela Cambone that with 70% of physical gold demand coming from China, India, and the Middle East, emerging markets are now the key drivers of gold prices. Stöferle also highlights the importance of central banks diversifying their U.S. dollar holdings, especially in light of recent Russian sanctions. Additionally, he shares his bullish outlook on the commodities market, predicting that gold prices could double within four years if a second wave of inflation hits the U.S.


00:00 Gold market
4:43 China stopped gold purchasing
6:30 Central banks gold purchasing
9:20 Western investors’ missing in gold
12:27 ECB rates cut
13:33 De-dollarization/BRICS
17:38 Government bond
20:56 Gold price
24:29 New era of investing


Hi folks, today’s interview is with Ronnie Stoferle, who is the man behind one of the most respected gold reports in the business and gold we trust report, which brings to mind questions I often get as to how I started my gold journey close to 20 years ago. It really just started with education, educating myself on the asset, on gold, on silver. And

I urge all of you to do the same if you have not to start your journey.

And reach out to one of my colleagues at ITM Trading by booking a free strategy session, maybe you already own some gold or silver, maybe you’ve never thought of it before and just have some questions, or maybe you’re ready to start your journey and, and, and get educated. It’s a really fantastic session. And I urge all of you to book a calendar appointment. You can do so in the link below in the description. Now let’s get to the interview. Hi, this is Daniela Cambone and welcome back to the Daniela Cambone show.

My guest today says that there have been several serious transformations happening in the financial landscape that require a new playbook, a goal playbook, a revised one. We’re going to learn more about what his thesis is surrounding this. So please welcome back to the show, Ronald.

Stoferle, I call him Ronnie though. How do I do on the pronunciation this time, Ronnie? It’s getting better and better. Thanks, Daniela. It’s getting better and better. Just like your reports, the 18th edition, right? Over 400 pages, 20,000 hours of research. Ronnie, I can comfortably say it is one of the best research reports.

in the gold space today. Congratulations on another great report. You know, obviously, anyone who reads it, and it’s free to read, you could see the amount of work that you put into this. So you’ve called it Mastering the New Gold Playbook. And I love the headline, the title, you gave it this year. Because you, Ronnie, really say we are playing a chess match.

but with new rules. Talk us through it. Yeah, well, first of all, many thanks for having me and for your kind words. I have to say, it’s a team of 20 people working on this report. And every year we try to write a little bit less, but there’s just so much going on in the world, in the gold world, that we always end up with like 400 pages. But when the team and I sat together like a couple of months ago, we said,

Well, something doesn’t really add up. We’re seeing real interest rates, which are from my point of view, a very significant driver for the price of gold. Real interest rates have been exploding. So we saw nominal rates going up and inflation rates going down. Normally, this would be a tremendous net win for the price of gold.

Then we’re seeing that the Western financial investors, which mainly buy the ETFs, they’ve been selling more than 700 tons of gold over the last two years. So we said, why is the gold price still trading at new all-time highs, even though those important drivers actually would imply a lower gold price? And then we said, okay, something has changed.

You know, I like watching sports. I run quite a lot. I play football, so soccer as you call it in the US. And then we said something has changed in the playbook. And we came up with this analogy from the world of chess where actually at the end of the 15th century, there was a big change, a far-reaching change made to the rules of chess. So the Queen…

which until then was only allowed to move one square diagonally, was given freedom of movement and could now, you know, basically as much, you know, any time of fields diagonally, but also horizontally and vertically. So this enormous upgrade of the Queen compared to the other six chess pieces.

It meant for players back then that they really had to adopt their playbook. You know, the game of chess completely changed. And I think that in the world of gold, we’re seeing something similar because the Western financial investor isn’t the marginal investor anymore. Price of gold is being made in emerging markets. It’s basically 70% of physical demand now coming from China, India.

and the Middle East. And I think in the Western world, most people haven’t realized that yet.

Well, so then is China the new queen? Kind of. I mean, you know, if we have a look at the purchases of the People’s Bank of China, 18 months in a row, now it seems that they stopped their purchases. Recently, I wouldn’t, you know, overinterpret it. I think it’s, yeah, it’s.

I haven’t looked into the facts, but I think it’s not such big news as the market is implying. But it’s not only the People’s Bank of China that is buying very aggressively. It is primarily the Chinese individuals. Obviously, the real estate market in China is crumbling. And I think what’s really, really staggering is the fact that cash holdings of Chinese households

That’s 108% of Chinese GDP. So it’s really significant. And many people kind of ridicule those gold beans that have become something viral for the younger Chinese population, but it’s really significant. So it’s not only the People’s Bank of China buying huge amounts of gold, it’s also private individuals in China.

And it seems that this year of the dragon that we’re having this year, showing strength and the importance of China, I think that really plays a role for the price of gold and for the gold purchases in China. And I think it will continue to be one of the most important drivers for gold. Yeah. Let’s focus more on this because we’re speaking this morning when the news broke that

or people notice that China has halted their gold buying spree. You know, but look at how much gold Turkey has bought, for example. So, I mean, even if it’s not China, like you say, Ronnie, essential banks are gobbling up hoarding gold. And as your report put places, you know, front and center, they have put a floor under the gold price. So yes, today as we’re speaking, gold getting a smack down here. But

I think from what you’re saying, it shouldn’t have a long term effect. Yes, I mean, first quarter of this year, more than I think two hundred and ninety tons, basically an all time high for quarterly purchases coming from central banks. And it’s primarily emerging markets, obviously. It’s not only China, it’s also India. It’s the Middle East. It’s Turkey. Singapore has been buying recently.

within Europe, Hungary, Czech Republic and also Poland. So it’s really, really broad-based. And I think, Daniela, the most important drive and the reason why central bank purchases have tripled over the last years is obviously the sanctions against Russia. I mean, we’ve seen those sanctions against pariah states already, against Afghanistan, against Venezuela.

But the size of the sanctions against Russia and obviously the geopolitical significance and importance of Russia, that’s a completely different ballgame. So it was kind of a wake-up call for many other central banks that are somewhat critical to the US and the Western world that they have to diversify their US dollar holdings, their treasury holdings and so on. And I thought it was…

It was super interesting that the World Bank came out with some sort of a guidebook for asset managers where they actually recommended, especially emerging market central banks, to hold up to 22% of their foreign exchange holdings in physical gold. I thought that was quite staggering. So from my point of view,

Yes, that in the central banks have put in a floor under the gold price. And if we follow, you know, the the central bank buying programs, they tend to be really long term programs. Yeah, so that they don’t time the market. It’s not a short term thing. It’s really long term strategy that they’re they’re not price sensitive. Yes. Let me ask you Ronnie. So you bring up about valid point here. World Bank, you know, they’re making their recommendation and yet.

Western financial investors, I believe you said 71% have less than 1% allocated to gold in their clients’ portfolios. So what are they missing? What are they not getting about gold that China has understood? That’s a great question, Daniella. I mean,

It might be anecdotal evidence, but I held a presentation, a big keynote with lots of bankers yesterday. And I explained that from my point of view, this fear trade that we follow in the Western world, you know, gold is only for conspiracy guys and people that kind of hope that the world is coming to an end hyperinflation, civil wars, currency reforms, financial repression, whatever.

And I tried to explain them that actually there’s another trade going on, which is much more important. And this is the love trade. So emerging markets or let’s say gold being a low beta emerging markets play as Louis Vizent Gaffe once called it. And for them that was it. I think it kind of clicked and they understood that there’s.

not only this fear trade, but also really physical demand coming from countries that are growing, that have huge savings rates, that tend to have lower debt rates, and that have a very, very high affinity for gold, a cultural affinity for gold. So, I think the Western world, we still, first of all, we still believe that we will go back to this great moderation kind of environment. So, 40 years of

falling inflation rates of rising bond prices, so falling bond yields. 40 years where the majority of asset managers basically grew up, where inflation for your portfolio construction wasn’t an issue at all. So, I mean, it’s even central banks here. The ECB yesterday saying, well, even though inflation rates are still too high, we start lowering now because they believe

we’ll go back to the old playbook. From my point of view, we might see a second inflation wave and I think that emerging markets obviously are much more used to inflation. I think that’s the primary reason for that. If you talk to people in Turkey, in Vietnam, in India. Yeah.

Sorry, go ahead. I think, no, no, no, I wanted to say, you know, bring up a valid point about the ECB cutting the spike, you know, not curbing inflation. Do you think they got it right? No, I think it’s the reverse Trichet move. When he started, when he once hiked again.

when we are also already basically at the beginning of the great financial crisis. So I think it’s a gamble. It’s a big gamble by the ECB. And I think they might really lose their last credibility, actually. You know, the euro is around for 25 years now. Gold is up 770 percent, I think.

since the euro was launched. Gold was down only five years out of those 25 years. So I’m not sure if it’s a huge success. And the most important thing that a central bank has is obviously the trust in the central bank, the credibility. And I think they’re clearly risking it.

Rania a big part of your report is dedicated to De-dollarization you really go in depth here and you know, there’s many feces floating around of Why China is buying all this gold, you know Are they planning a new currency backed by gold as it has to do with the bricks has it to do with Enbridge? You know, we don’t we don’t know the answers yet. But one thing you do question is

Will China be successful in moving away, de-dollarizing and living in a world or creating a world not dependent on the US dollar?

Well, I think before we talk about de-dollarization, we should probably talk about de-euro-ization. I think that obviously there’s quite a lot of developments going on. I mean, we can talk about the BRICS and the addition to the BRICS, which are quite significant, obviously, especially if Saudi Arabia should…

accept the invitation. So far they haven’t accepted yet. But there’s also, for example, Turkey and India, Turkey and Mexico that are invited now. So those are really countries of huge political significance. Iran just joined, the United Arab Emirates. So it’s, you know, my analogy, Daniela, would be it’s like the

the small brother that is growing up and becoming stronger and stronger, but the big brother doesn’t really accept that yet. He doesn’t really recognize that yet. And from a purchasing power parity comparison, developing countries already produce more GDP than developed countries. And we’re seeing that the growth obviously is primarily in emerging markets.

Therefore, I think it’s just fair that those countries, they demand a little bit more respect. They demand more, let’s say, importance on the table of the big guys, the big guys playing poker. For example, I was in Dubai last November. I did a keynote there and held a seminar for

for really big, big gold traders. And for them, you know, United Arab Emirates, but also Saudi Arabia, they’ve got their currencies packed to the US dollar. So for them, talking about de-dollarization is something quite common. And I think it’s for them, it’s something that is gonna come at some point, because why should they follow the central bank policy of the Federal Reserve? So…

Does gold play the central role in this whole de-dollarization game? I’m not sure. I asked Louis-Vincent Gaff in our conversation between Brent Johnson and Louis, if Xi Jinping, for example, if he has a Bloomberg and stares at the price of gold every day, and he says, gold is a means to achieve something, but it’s not central to the Chinese.

strategy obviously. But as I’ve said again, I think it’s just, we’re just seeing that those countries are just really gaining strength and they want to be treated well, I think, from an international point of view.

You also say that one of the points you’ve been making for years is finally coming true, that government bonds are no longer the portfolio foundation they have been, it has been for years. Do you see gold filling that role? Well, so far not, I have to say. Just referring to the keynote that I held yesterday,

We said, you know, we’ve been covering a lot of academic studies, and we also did our own calculations for, let’s say, a standard 60-40 portfolio. And we calculated and said the optimal gold allocation for such a portfolio would be between 14 and 18 percent. So this gives you the best Sharpe ratio. And people were…

were laughing because they said 14 to 80% gold, that’s way too much. If I would have made that statement at the beginning of the 1980s, people would probably have ridiculed me as well, but they would have said, that’s way too low. 14%, that’s like nothing. So I think in the bond market, that’s really, that’s the most important market, obviously.

We’ve seen, for example, for the 30-year treasuries, a drawdown of 50% from the all-time highs to current prices. 50% drawdown. I mean, that’s quite significant. For the Austrian century bonds, 70% drawdown. Now it has stabilized. Why has it stabilized? Because obviously, the consensus view is that…

You know, we want that inflation is under control. It’s somewhat sticky, but there won’t be a second inflation wave. Now, if that should happen, then you know what bank of America called ABB, anything but bonds, or we call it a debondization. That’s going to happen. And I think that, you know, what we’re seeing now, Daniela is, you know, we’re seeing equity markets being close to all time highs, we’re seeing

Bitcoin being very close to new all-time highs. We’re seeing gold trading really really well, although we’re seeing a correction today We’re seeing copper breaking out. So this is already showing us that you know the market is moving into real assets and I think that’s That’s something that will will actually accelerate if a second inflation wave should materialize so Yes, I think that

what at the end of the 1970s was called certificates of confiscation, government bonds, I think that they have lost some trust, obviously, but as people, as the majority still believe that we’re going back to the old great moderation playbook, I think there’s still quite a lot of confidence in bonds.

If there’s a second wave, then I think it’s really becoming interesting. You talk gold at $4,821 an ounce by 2030. Something you say is not a crazy number. If you just look at the fact that, you know, with an annualized return of 12%, you can easily get to this price. I mean, it doesn’t seem far-fetched to me.

But I’m biased, obviously, Ronny. Pardon? I said I’m biased, obviously, but I mean, the number makes sense to me, at least. Yeah, I mean, to me too. So the thing, Daniela, is if we have a look, for example, at the price action in 2008, 2009, there was this magic barrier of thousand US dollars. And I think-

In March 2008, we broke the 1000 barrier for the first time. This was the time when Bear Stearns actually went down. And then we had the great financial crisis, especially in fall 2008. Gold corrected big time because it’s super liquid and there was just quite a lot of de-stressed selling.

And then, you know, zero interest rates and QE and so on were introduced, but it took us until I think September 2009 until we broke above that magic psychological barrier. And then from 2009 until 2011, summer 2011, the price of gold almost doubled. Now, if we compare that to the current price action, we’ve been flirting with this 2000 US dollar mark.

for basically four years. So, you know, we made some moves above 2000, but never really broke out. Now we’ve seen the breakout confirmed by high volume. We’re seeing that CTAs, Managed Futures, and so on have also entered this trade. We’re still seeing that the majority of Western investors aren’t really participating.

just as of now, May was the first month in modern, I think modern a year that ETF saw some inflows. So the Western Financial Investors haven’t joined the party yet. And I think that now we’re really in a new ball game, in a new stage of this bull market. And we’re seeing classical bull market action. We’re seeing that mining stocks are outperforming. We’re seeing some relative strength in the silver space.

So can it double within two, three, four years? Hell yes, obviously, especially if there’s a second inflation wave. On the other hand, you know, if we, that’s just the model. And we published that model in our Ingold with Trust report 2020. It’s a monetary model based on monetary growth. And with 4,800 bucks, that’s the target till the end of the year.

That would imply 2600 by the end of this year. And still it sounds like a big number, 4800. But that’s actually a CAGR, an annualized rate of 12% until the end of this decade. I think that’s clearly. Yeah.

Um, I do too, Ronnie, if it means anything. Um, okay. Like I said, fantastic report. Anyone interested, um, obviously in, in learning about gold, I urge you to read it. Um, but I think the biggest takeaway Ronnie, you know, grass, grass, so model is that you say the game folks is just getting rougher and a new era in investing is upon us. And.

We have to wake up, right? And, you know, getting back to your chess analogy, we better learn how to play this new game of chess.

Yeah, I mean, yeah, that’s a good summary. I think, Daniela, what’s really important? I mean, I think that gold is not a religion. When I’m doing presentations, it’s always black and white. People either love gold or they hate it. There’s nothing in between. It’s the same with Bitcoin. Everybody thinks that you have to have an opinion on Bitcoin, for example. If I talk about…

convertible bonds or whatever, people couldn’t care less. But I think it’s just, you know, let’s take the emotion out of it. Let’s just crunch the numbers. And I think, you know, in this environment where, from my point of view, a recession is actually on the horizon in the United States. We’ve seen it with the ISM recently, where I think that central banks have painted themselves into a corner.

with inflation being quite sticky and on the other hand, you know, economic numbers weakening. It’s tough for them to get out of that corner. And then on the other hand, with this whole geopolitical development that we’re seeing where, you know, gold has become the preferred neutral reserve asset for many, many central banks. And that in combination…

with the Western Financial Investor having not participated in that rally yet. I think that’s a pretty good setup. However, I think from a short-term view, I would see, especially based on the commitment of Traders Report, I think we could correct down to the 2180-2200 area. I think that would be healthy. But what do you want to do in the bull market? You want to buy the dips. And I think that’s…

That’s the strategy to go forward. Um, so yeah, I mean, I, I think that it’s, it’s hard to summarize 420 pages. Um, but I think, you know, um, you being Italian, um, you know, what cantenaccio is probably, that’s the, uh, especially with, I was going to say, uh, I’m happy I’m speaking with you ahead of the euros, Ronnie.

We’ll see each other in the finals. I’m familiar with the term. Yes. So cantenaccio is the typical Italian, very defensive way of playing football, playing soccer. And it’s not super attractive, but it works really, really well for the Italian football teams, the squadra azzurra. So I think.

You really have to know when to play offense, when to play defense. I can tell you if I go to presentations, it seems that there’s just only one asset out there anymore and this asset is called NVIDIA. This is, I think it’s like 90% of all the conversations happening. And that’s probably not- I love the image, you know?

of NVIDIA, sorry, holding up the whole entire financial world. So terrifying. You know, it really is market action reminds me a little bit of a football match between small children, you know, the whole pack is running after the ball, like a bunch of chickens and, you know, there’s not a trace of tactical positioning and defensive work. I think now is really the time to.

rethink your portfolio. I think the easy wins in equity markets have been made. And I have to say, Daniela, we are finding tremendous opportunities in the equity market, in emerging markets, but also in Europe. I don’t think you have to chase the US tech stocks anymore. We’re seeing NVIDIA

all the gold and silver producers in the world. So it’s about relative value and therefore I think that with just one more number, Daniela, I just had a look at the biggest commodity funds in the world and the BlackRock is by far the largest altogether the biggest commodity equity funds.

they’ve got a market cap of 10 billion. 10 billion, it’s like all the investors positioning in the area of funds in the commodity space. I think there’s quite some way to go. So it’s not only gold that I really like at these levels, it’s the majority of the commodity market, it’s silver obviously.

So there are tremendous opportunities out there and we’re super excited actually.

Well said, Ronnie. Thank you so much. Like I said, I’m glad we spoke before the Euro starts because we’re on opposing teams, but forza Zuri. All the best to you, Ronnie. Thank you very much, Anil. All the best and take care.

Yeah. Hope to see you soon. Take care of my friend. And thank you all for watching. We’ll have more great content coming your way. Be sure to get Ronnie’s report. It’s a great one. And be sure to sign up at www.danielacambone.com so you continue to stay on top of all of these really in-depth exclusive interviews. That’s it for me. Thanks for watching.























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