Ronald Stöferle at Sprott Gold Talk

The angry Bear

We are currently witnessing tremendous market turbulences. Bonds are currently experiencing the worst first half of the year in over a century. Stocks are also down. Overall, they have depreciated even more than in 2008. So far, no end is in sight. Through all of this mayhem, gold has stayed relatively stable. In US-Dollar turns, it’s going sideways and in Euro or Japanese Yen, it is up quite considerably.

Gold miners

A look at the gold miners is providing a similar story. While the small caps have certainly suffered, the big names are holding up quite well. And this is despite the extreme bearishness we are witnessing in markets. You can find companies that pay great dividends and other lucrative opportunities.

The debt problem

Rising interest rates make our already big debt problem even worse. The higher the debt, the more sensitive we are to interest rate increases due to the amount of money that is needed to service this debt. We are reaching critical levels. This does not only affect governments. Once people enter the “inflation mindset”, it will be difficult to get them out of it, even if inflation rates go down by a bit. This will have big effects on consumption.

Commodities and ESG

During the last years, we have seen extreme underinvestment in the commodities sector. Even though we need more and more commodities overall. This problem gets exacerbated by the fact that ESG and the commitments surrounding it have turned away many investors from commodities. This is obviously affecting the price. Even with demand increasing, you cannot simply ramp up production to the decree needed or open new mines. This dynamic will drive prices up even higher.

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