very few people own precious metals i it just amazes me that the opportunity still exists to get into this market with everything that is going on in the world right now hi this is mike maloney and i've got ronnie stropalay on the phone with uh from incremental ag and they've got their latest in goldwe trust report and i'm looking at his chart book ronnie how are you doing very good mike how are you great great so uh you know you've got one chart in here on page 13 of did the everything bubble burst


can you tell me a bit about this chart and what you see in it well it shows um financial assets of households versus disposable personal income and you can see on this chart it starts in 1970 and then basically it was um in an uptrend since the beginning of of the 1980s and normally in the course of a recession this ratio goes down significantly because normally financial assets drop dramatically now i have to say that the discharge is based on quarterly data because those numbers that we use aren't updated more often but if we have


a look at financial markets over the last couple of months i mean i think this was um really a a a a a development uh a reversal um that nobody would have expected uh in spring i i think that um i expected some sort of a dead cat bounce but i i really didn't expect that um most markets speed equity markets real estate markets but also the art market luxury things and so on would actually go um go bananas and and my explanation for that would be that we are really in the so-called crack up boom


like ludwig von mises famed austrian economist described and i think this is a stage where people are really losing confidence in paper beat paper currencies beat bonds and i think that um you know actually i i i was in munich uh quite recently and it was interesting you know um those those little informations that that that i find always fascinating i talk to to somebody who runs a really really expensive restaurant and i said you know how is business going and he said it's going so great and this is really a


very very expensive place and he says actually you know everything is reserved for the next couple of weeks and i said you know what about like the the normal um restaurants the the cheaper places where you go for for a decent meal while where the middle class goes to and he said they're all suffering big time they're really having a hard time so i think this also some sort of design uh some some sign of this so-called cantion effect so that basically the one percent that own assets that own real estate equities


that are perhaps levered they profit from actually this enormous reflation that central banks just started and i thought that the cracker boom would happen earlier but i think this is it i have to agree with you uh this is uh um an amazing chart and it just shows i mean things are sort of in balance when uh you're down you know on this chart in that uh four range where uh their uh financial assets are uh four times their disposable income um and uh you know it was financial assets were undervalued in


in 1980 but you can see where the bubbles are and and you look at the peak that this hit and it's never been that high in history in all of human existence so let's move on to the next one um i think uh the we'll go down to gold we'll get right to gold and silver and uh on page 17 you have uh a table of gold's performance in all the major currencies and then you've charted it on the next page since the year 2000. uh can you just give us a quick overview of that your take on it


yeah i mean green numbers obviously show that it's a positive year and and read that it was a negative performance and you can see that basically since the year 2000 um there's the overwhelming majority is green so um of course we saw this big correction in 2013 this this this mid-cycle correction it actually already started in 2011. um but i think what's really interesting is is first of all that already starting in 2016 you're seeing in basically all currencies positive performances


and now last year 2019 gold did well in every currency it was up on average seventeen point seven percent and this year since the beginning of the year on average it is up twenty twenty two point three percent now in dollar terms it's twenty two point six percent in euro terms it's a bit less but i think another important thing is the average um over this very long time span 20 years and and i think you know in dollar terms gold was up on average 10.3 percent every year but i think this


very little difference between the us dollar performance the euro performance the british pound the australian dollar and so on it shows you that basically all feared currencies are just devaluing versus gold there are of course years when the euro is stronger there years when the dollar is stronger but over the long term they just devalue so from my point of view and i think this is something that you would agree with it is not the price of gold that is rising it is the purchasing power of feared


money measured in gold that is falling so you need more ounces more units of dollars of euros etc to buy one unit of gold and i think if you once you have changed this perspective i think you see many many things from a completely different angle yes that's uh you know i had a chapter basically on that in in my book and it's the hardest thing to get through to people that uh you really can't use fiat currencies as your baseline and if you do you can't see if you're actually making gains or if if


something is going up but you're really experiencing losses because other stuff is going up quicker than whatever you're invested in i called it wealth cycles and uh i've i'm hopefully i've got a book coming out on it we'll see so the next chart uh goes back to 2009 but it shows that uh every currency that you're measuring here the uh japanese yen the euro the british pound uh and so on they're all uh past their 2011 peak and setting record highs uh so i you know is there anything you


want to say on that chart well well i think you know um i think last time when we spoke i said gold is is is making new all-time highs in every currency but in the us dollar and i said it's only a question of when we will see new all-time highs in in dollar terms as well so we we have seen this and now gold is taking a a small breeder um but i think it's it it it's just normal and and from my point of view and that's that's really the important thing um you know we are in a bull market


and and and this bull market is just getting started and and i think that people underestimate the power of price action the power of momentum i know so many people that now really get interested in gold although you know the facts are not really different compared to one two or three years ago but as the price is rising it's it's reappearing on their radar screens and they also need some sort of a confirmation from the market and makes the decision much easier and also for many institutional players


per definition they cannot be contrarians they cannot try to pick the button they need because they've got huge career risk um in the banks in in for the big fund management companies and so on so they need um some sort of confirmation from from the price action that that they can recommend their investment committee committee hey why don't we take like five or ten percent in gold um and now i think the likelihood that this is being accepted is much higher than in 2016. um so you know we are we're we're all


hurt um hurt animals and and and therefore i think um this this this train is just getting started and and i can see from so many different um things and and and viewpoints that um there's investors with extremely deep pockets standing on the sidelines and they want to get in and they will get in and and i think this will really be um 2021 will probably the year um when first of all inflation becomes a concern and and and secondly uh when large institutional players will will really enter the


the field yeah i i do think that uh you know funds are just getting started there's only been a few of them that have announced that they're adding gold to their portfolios pension funds and things like that the really big money isn't even here yet very few people own precious metals i it just amazes me that the opportunity still exists to get into this market with everything that is going on in the world right now now in the next chart on page 19 you've added it all up you've


got uh gold in u.s dollars versus the world price of gold so all of those other all of the currencies sort of added together the sum of all those currencies uh and this is a very amazing chart and there will come a day where you know if the dollar was outperforming the other currencies uh it it suppresses gold uh and there's going to come a day where that reverses do you agree with that yeah absolutely and and i think you know i think this this chart is is is important because everybody uh is just staring at the


dollar price of gold but you know for for the people in india they don't care about the dollar price of gold they care about the exchange rate between gold and the indian rupee people in turkey they don't care about the dollar price of gold they care about the price of gold in the turkish lira and and i think it's it's it's it's nice to see on this chart that actually the the bull market in this world gold price started already in 2014 when it started making uh higher lows and from


from my point of view um i i think with the with the us dollar you know the bullish case was was mainly driven by the fact that the rate differential between the us and most other large currency areas was was big so um the federal reserve did i think hike rates like eight eight seven or eight times while the european central bank for example um did not hike rates at all but this argument of a rate differential is not existent anymore and and this is basically also the reason why the euro developed


um quite well over the last couple of months but as we as we saw in in on the previous chart from my point of view um it is um every field currency is devaluing against gold um we know that um that that there's uh you know the the big question probably should be um do i think that the euro the us dollar the british pound whatever preserves my purchasing power better than gold if you say yes then you have to sell your gold but my answer would be no if you say yes you need to get a psychiatrist


or something wrong stop drinking right right um okay uh the very next chart uh shows the gold bull and bear markets on page 20 here um tell us what you think about this but you know i can see i see the the 1970 to 1980 as one big bull market with a cyclical correction in the middle i don't see them as separate bullet markets so first of all what is your definition that you're using here of bull and bear markets to determine uh when it's in a bear because i do i could i consider uh 1980 to 2009 i mean i'm sorry to 1999


2001 that area where it reversed a single bear market with mid-cycle corrections in it i i guess i use a much broader definition of bull and bear markets than most people uh but uh the reason is is because i don't find these mid-cycle corrections tradable to me you can measure the overvaluation or undervaluation of an asset class when you measure it against other things but in the middle of the cycle it's approaching sort of you know that if pendulum is going to swing all the way to the other side


but you know in in the middle of the cycle it's nearing fair evaluation and i can tell when the cycle is if the cycle is done yet but i i can't trade that information of uh of you know uh now it's doing a pullback i i can't nail that talk so tell me what the methodology is here of uh what how you determine bull and bear markets and tell me everything that you see in this chart because i think it's a fascinating chart a lot of people won't understand it so really define uh what this chart is when you're going


through it well well the official definition for bull and bear markets is for a bear market it would have to see a drawdown of 20 then the bear market has started and and the same other direction for bull market so it's 20 um and for this chart we use uh weekly data so um i i think the the the the beauty of this chart is that that we're seeing first of all this this poor market um you know it made 74 which is okay but it's uh it's uh fairly small compared to the previous bull market or


for example compared to the 1970s but you can also see but it's not over yet yeah that is it's just stage yeah like for example at the end of the 1970s we didn't see that yet so it's a it's a fairly stable um uptrend and and i think one one of the most powerful arguments at the moment is um in 1970 uh 1979 there was a very tall gentleman called paul foca and you know back then as we know the 70s were were highly inflationary or stagflationary environment and 79 nobody believed


that paul folker would could actually kill and stop inflation and now we are com seeing completely the opposite nobody believes that central banks can create inflation everybody says well they're trying so hard and they didn't get any inflation yet but i think mike one of the the biggest um uh changes in central bank policy over the last couple of years was announced in summer and i think it was a bit underreported because many people were probably lying on this on on the beaches and and and


having a good time but i think this move to average inflation targeting is really the best thing that hap can happen to a gold investor because now we know the federal reserve will leave interest rates until 2023 at zero and now they also said okay two percent inflation rate is not the ceiling it is actually what we want to see on average now as inflation was undershooting over the last couple of years now we want inflation to overshoot nobody believes that they that they will succeed i think at some point


they will succeed because they will be have to become very very aggressive and i think the combination of monetary stimulus and fiscal stimulus this this marriage that that happened over the last couple of months is very very powerful to to ignite inflation so i think it's very very powerful but it's also very very dangerous and i think that you know when this thing reverts to the other extreme uh that they have there's a big potential that they could lose control over it so anyway uh this sort of wraps up uh


the purely gold section and uh we're gonna get to the uh gold versus stocks section next so i wanna thank you so much for uh being here for this interview it was great hearing your thoughts on these charts and i encourage everybody to go to increments website and download the chart book for uh the in gold we trust report the latest version uh you want to give them that url john uh ronnie yeah absolutely it's uh in gold we trust dot report you can download the chart book um for free you can


download the recent edition of the in gold we trust report it's 350 pages so it's a it's a long read for a rainy november weekend and you can subscribe to to all our research totally for free on our webpage in goldwe trust.report thank you very much okay thank you and uh we'll move on to the next video you