Today King World News is featuring a piece by a man whose recently released masterpiece has been praised around the world, and also recognized as some of the most unique work in the gold market. Below is the latest exclusive KWN piece by Ronald-Peter Stoeferle of Incrementum AG out of Liechtenstein.
October 1 (King World News) – An Important Reminder About Oktoberfest And Gold
There has been an astonishing synchronization between equity markets and the gold-silver ratio until 2011 (see chart below).
A rising stock market almost always coincided with a declining gold-silver ratio, i.e. with silver outperforming gold (see chart above). This may have been due to re-inflation being accomplished with conventional monetary policy – i.e., credit expansion by commercial banks – in previous cycles . This affected the real economy more quickly and fostered consumer price inflation. This time, re-inflation has been attempted by means of central bank securities purchases, which has led to price increases in investment assets, but has not been able to spur consumer price inflation.
Equity bull markets like the current one are usually not a positive environment for the gold price. From this perspective, it is plausible that the continuation of the gold bull market should coincide with the end of this equity rally (see chart below).
However, the Shiller-PE, which calculates the inflation-adjusted average price- earnings ratio (10 years trailing) since 1881, signals that the outlook for US stocks does not appear very enticing. The current level of 27x has been exceeded only twice in history.
A glance at the market capitalization of gold mining companies shows a similar valuation discrepancy. Currently, the Gold Bugs Index, which includes the 16 largest unhedged gold producers, is valued at a mere USD 55 billion. Compared to the S&P 500, this market capitalization is tiny, amounting to 0.3% of the index. The market capitalization of Microsoft alone is more than 6 times higher than that of all components of the Gold Bugs Index combined (see chart below).
Oktoberfest And Gold
Whereas the price of a “Mass” (1 liter) of beer at the Munich Oktoberfest has increased from EUR 0.82 in 1950 to EUR 10 in 2014, the price in gold terms is close to its historical median. This is all the more astonishing, considering that it is not only buying a beer, but buying a beer at an event that has enjoyed enormous hype over the past few decades, which has made the Wies’n beer more valuable (see chart below!
***KWN has now released the extraordinary audio interview with legendary Robert Arnott, where the he discusses the unprecedented chaos, turmoil and instability in the global financial system, what investors should be doing with their money to protect themselves from the turmoil in Western stock markets and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Worries Continue In Global Markets CLICK HERE.
***Within hours KWN will be releasing the powerful written interview with Dr. Paul Craig Roberts!
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