After the release of the ‘In Gold we Trust’ report, Incrementum Liechtenstein surpises gold bulls with a compendium of some of the most compelling charts in the form of a Chartbook.
Some of the key takeaways of the Chartbook:
The FED is NOT out of bullets, it is just very reluctant to use them before we are at least close to a full fledged crisis; currency swaps, QE and negative interest rates are all on the table. We therefore expect increasing market turmoil before the FED reverses course! Traditional protection for equities (puts) by now are somewhat expensive, especially in comparison to some short term interest rates (eurodollar). In our opinion it is quite a safe assumption, that the FED would reverse course if US equities sold off further 10-15%. Shorting equities is a tricky business in an increasing volatility environment but could prove to be aninteresting macro play until the FED gives in. A major deflationary event and (potentially internationally coordinated) reaction of central banks could finally be the trigger for the transition from deflation to stagflation! As far as gold’s outlook is concerned, the authors of the report repeat that things look very much in line with their ‘Scenario 1′, as described in Chapter 10 ‘Valuations, Scenarios and Price Targets’ (page 118 of the report).
Must read chart #1: Governments and corporations have increased their debt levels significantly Global debt levels have increased by USD 57 trillion since 2007. This amount is around three timesannual US economic output! New government borrowing has recorded the highest growth momentum!Difficult for us to spot the infamous deleveraging!
This post was published at GoldSilverWorlds on September 8, 2015.
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