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About Black Swans, Gray Rhinos and Golden Bulls

Ronald-Peter StöferleManaging Partner & Fund Manager

Incrementum AG

World Gold Forum April 20-23, 2020

@IGWTreport

2In Our Partners We Trust

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Agenda

I. Black Swans and Gray Rhinos

II. (When) Will Trust in Central Banks Start Eroding?

III. What Is Gold - The 7th Sense Of Financial Markets -

Telling Us?

IV. Inflation and Stagflation - The Ultimate Pain

Trades?

V. The Golden Future – Why All Roads Lead to Gold

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1. The Black Swan That Wasn‘t

„[...] what you see is likely to be less Black Swannish than what you do not see.“

Nassim Taleb

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Bilder white/gry/swan

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What a Difference A Month Makes…

Source: Investing.com, Incrementum AG

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US Inverted Yield Curve Was Already Flashing Red!

Source: Tavi Costa, Crescat Capital LLC, Incrementum AG

0%

20%

40%

60%

80%

100%

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Recession Percentage of US yield curve inversions

?

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2. The Sceptics

The Everything Bubble: A Bug In Search Of A Wind Shield

Source: Jesse Felder, Reuters Eikon, The Economist, Incrementum AG

300%

400%

500%

600%

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Financial assets of households/Disposable personal income

Dot-Com Bubble

Housing Bubble

Everything Bubble

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2. (When) Will Trust in Central Banks Start Eroding?

„We’ve counteracted this existential shock with the greatest fiscal and monetary bazooka. It’s not even a bazooka.

It’s more like a nuclear bomb.”

Paul Tudor Jones

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• PEPP (Pandemic Emergency Purchase Program)

• CPFF (Commercial Paper Funding Facility)

• PMCCF (Primary Market Corporate Credit Facility)

• TALF (Term Asset-Backed Securities Loan Facility)

• SMCCF (Secondary Market Corporate Credit Facility)

• MSBLP (Main Street Business Lending)

• MMLF (Money Market Mutual Fund Liquidity)

Unprecedented Monetary & Fiscal Stimulus

UNLIMITEDQE

UNPRECEDENTEDFISCAL STIMULUS

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US Inflation Expectations (lhs), in %, and Gold (rhs), in USD,01/2008-04/2020

Source: Federal Reserve St. Louis, Reuters Eikon, Incrementum AG

600

800

1.000

1.200

1.400

1.600

1.800

2.000

0

1

2

3

2008 2010 2012 2014 2016 2018 2020

US inflation expectations Gold

?

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Deflation Has To Be Avoided – Whatever It Takes! US CPI yoy%, 1785-2019

-30%

-20%

-10%

0%

10%

20%

30%

40%

1785 1800 1815 1830 1845 1860 1875 1890 1905 1920 1935 1950 1965 1980 1995 2010

Deflation in 43% of all years Deflation in 12% of all years

Gold/Silver Backing (short interruptions) Classic GS Partly Debt Based Pure FIAT

Source: Nick Laird, goldchartsrus.com, Incrementum AG

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3. GOLD:What Is The 7th Sense Of Financial MarketsTelling Us?

„When gold speaks, every tongue is silent“

Italian proverb

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Gold (lhs) and VIX (rhs), 2008 vs. 2020

Source: Reuters Eikon, Incrementum AG

0

10

20

30

40

50

60

70

80

80

90

100

110

120

130

0 50 100 150 200 250 300

VIX

Gol

d (in

dexe

d)

Number of trading days

Gold 2008 Gold 2020 VIX 2008 VIX 2020

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Annual Gold Performance in Various Currencies

Source: www.goldprice.org. Incrementum AG, as of April 6

EUR USD GBP AUD CAD CNY JPY CHF INR Average2001 8.1% 2.5% 5.4% 11.3% 8.8% 2.5% 17.4% 5.0% 5.8% 7.4%2002 5.9% 24.7% 12.7% 13.5% 23.7% 24.8% 13.0% 3.9% 24.0% 16.2%2003 -0.5% 19.6% 7.9% -10.5% -2.2% 19.5% 7.9% 7.0% 13.5% 6.9%2004 -2.7% 5.3% -2.3% 1.8% -1.9% 5.3% 0.7% -3.4% 0.6% 0.5%2005 36.8% 20.0% 33.0% 28.9% 15.4% 17.0% 37.6% 37.8% 24.2% 26.1%2006 10.6% 23.0% 8.1% 13.7% 23.0% 19.1% 24.3% 14.1% 20.9% 17.2%2007 18.4% 30.9% 29.2% 18.3% 12.1% 22.3% 22.9% 21.7% 16.5% 21.7%2008 10.5% 5.6% 43.2% 31.3% 30.1% -2.4% -14.4% -0.1% 28.8% 15.5%2009 20.7% 23.4% 12.7% -3.0% 5.9% 23.6% 26.8% 20.1% 19.3% 16.5%2010 38.8% 29.5% 34.3% 13.5% 22.3% 24.9% 13.0% 16.7% 23.7% 25.2%2011 14.2% 10.1% 10.5% 10.2% 13.5% 5.9% 4.5% 11.2% 31.1% 11.2%2012 4.9% 7.0% 2.2% 5.4% 4.3% 6.2% 20.7% 4.2% 10.3% 7.5%2013 -31.2% -28.3% -29.4% -16.2% -23.0% -30.2% -12.8% -30.1% -18.7% -24.1%2014 12.1% -1.5% 5.0% 7.7% 7.9% 1.2% 12.3% 9.9% 0.8% 6.2%2015 -0.3% -10.4% -5.2% 0.4% 7.5% -6.2% -10.1% -9.9% -5.9% -3.8%2016 12.4% 9.1% 30.2% 10.5% 5.9% 16.8% 5.8% 10.8% 11.9% 12.3%2017 -1.0% 13.6% 3.2% 4.6% 6.0% 6.4% 8.9% 8.1% 6.4% 6.3%2018 2.7% -2.1% 3.8% 8.5% 6.3% 3.5% -4.7% -1.2% 6.6% 2.6%2019 22.7% 18.9% 14.2% 19.3% 13.0% 20.3% 17.7% 17.1% 21.6% 18.3%

2020 ytd 11.7% 7.5% 16.4% 25.8% 17.0% 9.5% 7.4% 8.6% 15.3% 13.2%Average 9.7% 10.4% 11.8% 9.8% 9.8% 9.5% 9.9% 7.6% 12.8% 10.1%

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Gold in Local Currency vs. Domestic Stock Index, ytd 2020

Source: Reuters Eikon *as of April 3rd, Incrementum AG

7%

17%

11%

31%

9%

25%

6%

-23% -24%-28%

-16%

-9%

-26%-23%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Gold in local currency Domestic stock index

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Gold/S&P-Ratio: Breakout!

Source: Reuters Eikon, Incrementum AG

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Gold/S&P 500-Ratio 90-Tage-Linie 200-Tage-Linie

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4. INFLATION and STAGFLATIONThe Ultimate Pain Trades?

„The two main risk factors for the average portfolio are less than expected growth and more than expected

inflation.“

Ray Dalio

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Rising Inflation, The Ultimate Contrarian Call?

-3%

-1%

1%

3%

5%

7%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

InflationSource: Federal Reserve NY, The Economist, Bloomberg, Incrementum AG

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Rising Inflation: The Biggest Pain Trade in History?

Source: Bloomberg, Incrementum AG

0

2

4

6

8

10

12

14

16

18

2012 2013 2014 2015 2016 2017 2018 2019 2020

Global negative yielding debt market value

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Which Asset Classes Perform Best In Rising Inflation?

Source: Incrementum AG, Reuters Eikon

15%

7%

-10%

11%

4%

-4%

5%4%

14%

2% 3%

24%

-11%

4%

26%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Falling inflation rates Stable inflation rates Rising inflation rates

Stocks Bonds Mining stocks Precious metals Commodities

24OFID, July 20 2011 It‘s not a sprint, it‘s a marathon!

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Source: Incrementum AG

Performance of the S&P and Gold During Various Phases of a Recession

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5. Gold Mining Stocks

„In a bull market, the sidelinesis the worst place to be!”

Michael Kosares

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Homestake Mining and S&P 500 During The Great Depression,indexed 100 = 01/1920 (log), 01/1920-01/1940

Source: Longwave Group, Nick Laird, goldchartsrus.com, Incrementum AG

40

200

1.000

1920 1922 1924 1926 1928 1930 1932 1934 1936 1938 1940

Homestake Mining S&P 500

Are we here?

+600%

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BGMI/Gold Ratio (log), 01/1940–02/2020

Source: Nick Laird, goldchartsrus.com, Reuters Eikon, Incrementum AG

0

1

2

3

4

5

6

7

1940 1950 1960 1970 1980 1990 2000 2010 2020

BGMI/Gold ratio Median (BGMI/Gold ratio)

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Source: Nowandfutures, TheDailyGold.com, Barrons, Nick Laird, goldchartsrus.com, Reuters Eikon, Incrementum AG

Bull Markets in Mining Shares: The Party Has Only Started!

0

100

200

300

400

500

600

700

800

0 40 80 120 160 200 240 280 320 360 400

10/1942-02/1946 07/1960-03/1968 12/1971-08/1974

08/1976-10/1980 11/2000-03/2008 10/2008-04/2011

01/2016-03/2020

current bull market

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6. The Golden Future

„Bull markets are more fun than bear markets.”

Bob Farrell

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1. Accumulation Phase

2. Public Participation Phase

3. DistributionPhase

We are here

Source: Incrementum AG

Gold Now in Public Participation Phase

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Generalists and Institutional Investors Have Not Joined The Party YetETF-Holdings as % of Total US Market Capitalization

Source: Atlas Pulse, Reuters Eikon, World Gold Council, Incrementum AG

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

1,2%

2008 2010 2012 2014 2016 2018 2020

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Actual Gold Price and Projections, in USD, 1971–2049

Source: Pierre Lassonde, Reuters Eikon, U.S. Global Investors, Incrementum AG

0

5.000

10.000

15.000

20.000

25.000

1970 1980 1990 2000 2010 2020 2030 2040

Actual gold price Compound annual growth rate (from 1971)Compound annual growth rate (from 1990) Compound annual growth rate (from 2000)

from 1971: 7.7% p.a.from 1990: 4.8% p.a.from 2000: 9.5% p.a.

2030:4,100 USD (growth rate since 2000)3,420 USD (growth rate since 1971)2,530 USD (growth rate since 1990)

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Commodities – The Biggest Contrarian Investment? GSCI TR/S&P 500 Ratio, 01/1971–02/2020

0

1

2

3

4

5

6

7

8

9

10

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

SPGSCITR Commodity Index/S&P 500 ratio

Median: 4.09

GFC 2008

Gulf War 1990

Oil Crisis 1973/74

Dot-Com Bubble

Source: Reuters Eikon, Torsten Dennin, Lynkeus Capital, Incrementum AG

Everything(except commodities)

Bubble

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Bullish on Gold? Then Silver Provides Relative Value! 300 Years of Gold/Silver Ratio, 1718–2020

Source: Nick Laird, goldchartsrus.com, Incrementum AG

0

20

40

60

80

100

120

1718 1768 1818 1868 1918 1968 2018

Gold/silver ratio Average Median

2020: G/S ratio = 113~2.8x above average~5.6x above median

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Our Core Views

I. Welcome to “The Mother Of All Stimulus”

II. After the corona crisis comes the debt crisis!

III. Rising price inflation continues to be priced by the market as tail risk.

IV. Mining stocks and commodities will be major beneficiaries of monetary and fiscal policies.

V. Gold is back in a bull market. Gold (and BTC) on the way to new all-time highs, not a question of if, but when!

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Our 14th In Gold We Trust reportwill be published on May 27th!

Subscribe for free at:

https://ingoldwetrust.report/?lang=en

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„All roads lead to gold.“

Kiril Sokoloff

www.incrementum.li

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Addendum

Because we care…

About our Clients. About the Society. About the Future.

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Managing Partner at Incrementum AG, focusing on Research and Portfolio Management

Business Administration and Finance Studies at Vienna University of Economics and University of Illinois

Chartered Market Technician (CMT) and Certified Financial Technician (CFT)

Erste Group Research 2006 - 2012

Manager of a global macro fund that is based on the thoughts of the Austrian School of Economics

Since 2007 author of the annual „In Gold we Trust“-Report, one of the most widely followed publications on gold

2014 Publication of the bestseller „Austrian School for Investors“ and 2019 „The Zero Interest Trap“

Advisor for Tudor Gold (TUD), a Canadian junior gold explorer

Member of the advisory board of Affinity Metals (AFF)

Married, proud father of 3 daughters

Biography: Ronald-Peter Stoeferle

#igwt2018

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@IGWTreport

About the In Gold We Trust report

• The gold standard of gold research: Extensive annual study of gold and gold-related capital market developments

• Reference work for everybody interested in gold and mining stocks

• International recognition – newspaper articles in more than 60 countries; almost 2 million readers

• Published for the 13th time in English and German and for the first time in Chinese on May 28, 2019

• Further information and all editions can be found at: https://ingoldwetrust.report/?lang=en

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About Incrementum AG

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Independence is the cornerstone of our philosophy. The partners own 100% of the company.

Our goal is to offer solid and innovative investment solutions that do justice to the opportunities and risks of today’s complex and fragile environment.

Our core competencies are in the areas of: Wealth management Precious metal and commodity investments Active inflation protection Crypto and alternative currency exposure Special mandates

more information onwww.incrementum.li

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Contact Us

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Disclaimer

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