Gold Bull & Debt Bear Market In 50 Amazing Charts by Incrementum

In an excellent collection of 50 charts, Ronald Stoeferle presents all fundamental data related to gold’s bull market and the too-big-to-fail debt bubble. Stoeferle is Managing Director at Incrementum Liechtenstein and writer of the famous In Gold We Trust reports.

The charts cover three major themes: gold, debt and economy, currency debasement. In this article, we highlight the ten most powerful charts. They tell the complete fundamental story and lay out the most likely scenario going forward. The full presentation is mandatory study material.

The debt bubble keeps on growing. The nominal amounts are beyond imagination. The key take-away here is the diminishing rate of return of a marginal unit of debt. In other words, central planners need to create increasingly more debt for less economic growth. That is worrisome, to say the least. By the way, did you know how much debt has been created per citizen (on average)? Please don’t try to imagine this figure also applies to yourself. It is no information for the faint-hearted.

credit_market_debt_vs_gdp_vs_monetary_base_1971_2013

credit_debt_per_capita_2012

central_bank_balance_sheets_vs_gold_price_2002_2013

The ongoing currency war started in 2010 according to Jim Rickards. Based on the previous two currency wars he expects this to continue till at least 2020. Gold reacts on a currency crisis by balancing the devaluation of a currency. It is like yin & yang. Gold is not going up but a currency loses value in comparison to gold. The first chart shows what happened in the past and should be considered as the most realistic future for the currencies of the major powers. The other charts show the ongoing trend which should accelerate going forward.
currency_basket_losing_value_2000_2013
Gold has a terrible year. Some experts believe it is good to let off some steam in a heated market. Did you know that gold has been the strongest and longest rising financial asset in history of the financial markets? A mid-cycle correction is a good thing going forward. It appeared that the correction of the 70’s was very similar to the current one; we all know how it ended. For the bears out there, please don’t look at the second chart as it reveals gold has not been in a bubble. The parabolic phase is most likely still to come.
gold_price_mid_cycle_correction_1970's_1974_1976
The monetary policy of the Fed will most likely result in a strong inflation down the road. Gold’s current reaction is a result of disinflation, i.e. a period in which inflation is still present but declining. Most likely, we will enter either deflation or inflation (hyperinflation is still a potential scenario). In either case, gold will be the ultimate store of value. That is undoubtedly a surprise to many disbelievers.
gold_silver_commodites_during_deflation inflation_rate_vs_gold_price
In closing, did you know why gold is money and why it is not correct to consider it a traditional commodity?
gold_stock_to_flow_ratio
And the bonus chart answers the question if it is “by accident” that equities have been rising in the light of no real economic growth.
S&P500_vs_Fed_Balance_Sheet_2009_2013
The full presentation is a must-read. 

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