The MOST Important Thing

What you DONT know about GOLD - The INSIGHT you cant afford to ignore!

• Ivan Yates & Dr Alan O'Sullivan

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In this the second episode of our educational sub-series “The MOST important Insight”, Alan highlights the 5 key takeaways from his conversation with Gold expert Ronald-Peter Stoeferle. 

Dive into this compelling discussion on the evolving role of gold in the global monetary system, the influence of emerging markets, and how geopolitical shifts shape gold's future value. Discover insights on market phases, valuation models, and the rivalry between gold and Bitcoin. Main Topics: 

  • The growing influence of emerging markets like China, India, and the Middle East on gold demand
  • Key geopolitical triggers influencing gold prices, including sanctions and BRICS alliances
  • The stages of market trends in gold, based on Charles Dow's framework
  • Gold's role as money versus commodity, and its comparison with Bitcoin
  • Future price predictions based on monetary valuation models
  • The shift from bonds to gold and other assets in portfolios


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SPEAKER_00

Welcome to the Most Important Insight, the short form series from the Most Important Think podcast. Each episode is still an hour-long conversation with some of the world's leading investors, economists, and thinkers. It's the essential ideas you need to know in just 10-15 minutes. Our aim is simple to separate the signal from the noise, identify what matters most, and leave you with insights that can improve the way you think about markets, investing, business, and the world around you. I'm Allah Sullivan. Thank you for joining me. So few people understand gold markets better than Ronald Peter Staffle. As managing partner at Incrementum AG and co-author of the Globally Respected In Gold We Trust report, he's become one of the world's leading voices on precious metals, inflation, and the future of money. In this episode, he explained why gold may be entering one of its most important decades yet. I'll go through the key learnings in five chapters. Chapter one, gold is becoming an emerging market story. So in this chapter we explored why gold is no longer just a Western market story. For decades the gold price was shaped largely by London, Zurich and New York, but that influence is shifting. Today the major centers of demand are increasingly China, India, the Middle East, Turkey, and other emerging markets. This is not just central bank buying, it is also private demand, institutional demand, and a growing preference for physical gold. We also discussed the impact of sanctions against Russia and why many countries are now questioning their reliance on the US dollar-based monetary system. The key idea is simple. Gold is increasingly being seen as a neutral monetary reserve asset.

SPEAKER_01

Then I think it's a topic that that isn't covered enough in the Western world, which is emerging markets. So, from my point of view, gold is more and more becoming an emerging market story. The majority of the physical demand is now coming from China, India, from the Arabic world, from Turkey, and so on. And that's not only central bank demand, it is also private demand and institutional demand. So I think the price of gold is more and more being influenced by Shanghai, Mumbai, Dubai, and less London, Zurich, and New York. And they prefer physical gold, obviously. Then I would say that the next trigger were obviously the sanctions against Russia. So the US is basically the back office of the global monetary system. And if basically the back office says, well, game over, we don't want to deal with you, then you're kind of stuck. And I think that not only Russia but many other BRICS countries. And we we all saw those pictures from um the Shanghai Corporation Organization meeting recently, where it seems that uh Putin, Xi Jinping, and and Modi were like, you know, really good buddies, and and you know, the I think the symbolic character of those pictures is is really um is really really interesting. So so from my point of view, um this neutral monetary reserve thing is definitely something uh a trigger for this enormous amount of central bank demand. More than a thousand tons of gold were being bought over the last three years each. And then I think what I'm seeing now is that institutional players in the Western world they finally wake up. So, you know, there was a survey by UBS, for example, for family offices. So the really, really rich um um family offices, on average they hold 2% of their whole allocation in gold. So my take is that inflation isn't dead, that we'll actually see another wave of inflation. And if you're running like, you know, typical balanced portfolios, 60-40, whatever, but if you heavily overweight fixed income, then you you probably want and you need some further uh inflation hatches. So I think those are really the the the main drivers that uh that I'm seeing. There's there's lots of additional drivers uh uh uh at play, but I think that those are the most important things.

SPEAKER_00

Chapter two, who is really buying gold? In this chapter we ask a very important question. Who is actually buying gold and why? Gold is often seen as a rival to equities, but the stronger argument is that gold is really competing with bonds. In an inflationary world, fixed income may no longer provide the same protection it once did. If real rates turn negative, if government debt loses credibility, and if investors begin to question the traditional sixty forty portfolio, gold becomes far more attractive. We discussed why gold may take market share from bonds, why sovereign debt looks less compelling, and why investors are increasingly searching for an alternative source of portfolio protection.

SPEAKER_01

I think that gold is often being um being labeled as a as a competitor to equities. I think there's still a strong case for equities, and we find tremendous amount of value on on the balance sheets of of lots of companies in in Europe, um, also in emerging markets, obviously, uh also in the US, if you don't uh follow the the you know the Mach 7 too closely, but I think there is like in traditional uh sectors there's like still very attractive valuations. So, from my point of view, the the enemy, if you will, the competitor for goal is actually fixed income, it's bonds. And you know, in in the 1970s, so so so we really try to understand the the big picture. Um and and if you look at the 1970s, for example, which was a highly inflationary or let's say a stagflationary decade, then there is like lots of examples of bond funds that actually had a an allocation of 30 to 40 percent in gold. There was a point when when when actually the US had to issue bonds denominated not in US dollar terms but in Swiss franc and in Deutsche Mark. So I think this loss of trust that we're seeing also on the currency side, US dollar as the you know global reserve currency, this is another factor that that I I haven't mentioned before. But I think you know, if you believe that inflation will remain a topic, and I think we just have to look at the fiscal stimulus that we're seeing, we just have to follow official inflation statistics and also the pressure that, for example, Donald Trump is putting on the Federal Reserve to really aggressively lower rates, then I would say that the gold market is already kind of feeling and sniffing that that we'll see negative real rates over the next couple of years. And that's a very positive environment for gold, obviously. So so I would say if you heavily overweight fixed income, um, I mean we had like four, almost five years of negative returns now. Is it a good buy? Um I'm not so sure if if I really want to hold too much government debt um at the moment. I think there's attractive uh valuations on the emerging markets, also on the corporate side in the bond market, but but for sovereign risk, I'm not really sure. Um so so I think that gold will kind of steal quite a lot of the market share of that that bonds currently have, um, because more and more investors will realize that that this old 60-40 portfolio just doesn't work anymore. It's broken. So bonds will no longer give you safety. And and I think this this this vacuum creates a huge tailwind for gold because investors still need an asset they can rely on, and and and gold will be filling that role.

SPEAKER_00

Chapter three, the role of gold in a portfolio. In this chapter we look at the role of gold through the lens of investor psychology. Every major secular trend tends to move through three stages. First comes accumulation, when nobody's interested, and contrarian investors quietly buy. Then comes public participation when prices are rising, the media begins to notice, and more investors start paying attention. Finally comes the mania phase when enthusiasm becomes excessive and caution is required. The argument here is that gold may already be in the public participation phase. Corrections are being bought, capital is waiting on the sidelines, and investors who missed the move are looking for an entry point. Now, since we recorded this interview, gold has had a major correction, but the teachings are still relevant, basically.

SPEAKER_01

So that's basically the foundation of technical analysis. And and Charles Dau, the publisher of the um the Wall Street Journal, and you know, he he calculated the first index. Um he said that every big secular trend has three different stages. First is there's the accumulation phase. That's when when when you know the prices are still falling, perhaps going sideways, but nobody's really interested in that asset. I don't know, Alan. Do you do you enjoy going to the pub? Occasionally. Okay. A little less a little less than I used to, but yeah, I know what you mean. But let's make the example. You you go to the pub and say, I'm buying gold, and people would say, Oh, Alan, come on. Yeah, I mean, that's ridiculous. This this asset has, you know, had a it has a the the the worst track record and it's um it's useless capital and nobody needs it, and there's Bitcoin and the dollar is is is uh too important, whatever. So people will ridicule you. That's kind of a sign for this first phase where you have to, and that's from a psychological point of view, that's not easy going against the hurt, um, against the the mainstream. But this is really the time where contrarian players pick up assets. Then there's the largest phase of the trend, which is the public participation. This is when the the the prices start rising, when there's an established uptrend, when again the media picks up on the topic, when when the banks launch new products, uh when when there's like uh you know more positive attitude. And when you go to the pub again, we say, Well, I'm buying gold, people say, Yeah, I was considering it. Um gold sounds interesting. I just heard that it's there's there's better alternatives. It's already pretty expensive, so I will buy when it corrects like 10-20%. So this is the longest phase of the trend. And and I think we're in this in the middle of this public participation because you can see that every minor consolidation, every small correction is being bought, and that's a sign that there's lots of capital waiting on the sidelines. They they they've missed the gold train and they now want to enter. And then the last stage is obviously the mania phase, that's a distribution phase. Where if you go to the pub again, Alan, and say, I'm buying gold, people will say, Yeah, I mean, gold is boring. You should buy silver, you should buy silver chonium mining stocks, and you should take leverage on that actually. Yeah, silver will go to 800. I mean, that's guaranteed, it's so obvious. So this is the time where you should get more cautious and and and start selling against this very positive uh um um attitude.

SPEAKER_00

Chapter four, the gold cycle and doubt theory. In this chapter we step back and ask a deeper question. What is money? Most people try to earn money, save money, and provide for their families, but very few stop to ask what good money actually is. Gold is not just another commodity, it has historically functioned as money because it is scarce, durable, and difficult to create. Unlike fiat or paper currencies where supply can expand rapidly, gold has a very stable supply profile. Only a small amount is added each year relative to the enormous existing stock above ground. We also discuss Bitcoin not as a gold's enemy, but perhaps as its younger digital relative. The real competitor may not be Bitcoin versus gold, but hard money versus fiat money.

SPEAKER_01

I think you know, one mistake that many people make, and I would say that Bitcoin is making a difference in that discussion. Nobody is asking the question, what is money? We all try to make a living, we all try to to save some money, we all try to save some money for for for our kids to provide them with a you know solid foundation. But nobody is really asking the question, what is money? What is good money? What's monet what's our monetary history? And therefore, you know, I never regarded gold as a commodity, I always regarded it as money. And you know, it's just very, very hard money, this high stock-to-flow ratio, meaning that there's um an enormous amount of gold above ground, and every year there's a little bit more than 3,000 tons of gold added to this enormous gold vault. So therefore, you've got a very low and a very reliable inflation of your money supply. And that's a big difference compared to not only the US dollar, but also the euro and basically every other currency. I think the creators of Bitcoin, whoever it was, they clearly understood gold. They understood our monetary system, the Austrian School of Economics. Um, and we'll see if if Bitcoin will be around in 10, 15, 20 years. I would say yes, and I know that there's lots of discussion between the gold camp and the Bitcoin camp, and it that it's a rivalry. I don't see that because you know Bitcoin is kind of the little brother, and uh I think the enemy or let's say the competitor should be Fiat Money.

SPEAKER_00

Our final chapter, chapter five, looks at valuing gold and what comes next. In this final chapter we discussed one of the hardest questions in markets. How do you value gold? Gold does not produce cash flows, as famously equipped by Buffett, so traditional valuation models do not work neatly. Instead, we look at it from a monetary perspective, money supply growth, trust in fiat currency, and the gold backing of broad money. I taped my interview with Ronnie well before the huge run-up in gold in 2026. So while the comments may seem a bit out of date in the main interview, the context is still relevant. For instance, our discussion included a base case of gold reaching around four thousand eight hundred dollars triounce by twenty thirty in a more inflationary scenario where the price, according to Ronnie, would move significantly higher. But secular pool markets do not move in straight lines. Corrections of twenty percent or thirty percent can happen along the way. We also explore why silver, commodity commodities, and mining stocks often begin to outperform later in the cycle after gold has already led the way.

SPEAKER_01

Yeah, well, you know, valuing gold is is a tough one. Um but in 2020 we we came up with our monetary valuation model, which is based on on first of all monetary growth, and then also let's say the trust factor of M2, so so so the gold backing of M2. And we said that in our base case, 4,800 US dollars by the end of this decade, so 2030. Um that's that's our base case, but in an inflationary scenario, we expect the price of gold to reach 8,900 US dollars by the end of this decade. Now that sounds still extremely optimistic. I think it's a kager of 19%, something like that, until 2030. It's not impossible. So it's it's not gonna be a straight line, but secular bull markets, they always come with corrections, sometimes 20 to 30 percent. But I think that we are, as I've said before, we are in the middle of this public participation phase. This golden decade will end in the mania phase, and therefore I think that um if you if you value it from a monetary point of view, and if you have like um um if you look at the relative valuation, I wouldn't say that gold is dirt cheap anymore. Um, I would say the prices are reasonable, but they're not super expensive. And now is really the time when what we call performance gold is picking up momentum. And this is this is exactly the case that we've made in our lasting gold we trust report called the big long. Now is the time when silver, when mining stocks and when also commodities start outperforming gold, they're coming basically, you know, gold always goes first, and then with a time like silver starts, commodity starts, and the mining space starts.

SPEAKER_00

So that was a very brief overview summary of my interview with Ronald Peter Staffle, and you should definitely follow Ronnie. I'm gonna try and get him back on the podcast for an update to his gold position, given he was very bullish obviously when we first spoke, but also was quite circumspect in relation to the incredible rally that gold had. And essentially gold went parabolic in 2026, blew out well through $5,000 an ounce, and we were very cautious at that stage. Clients of ours have done extremely well in gold, and we paired off positions in the precious metal after that huge rally. So, again, gold as part of a broader portfolio may be considered, but you need to be very, very careful with your weighting and allocation of gold because it is a volatile asset. You need to do your homework, you need to get advice. Hope you found that useful and educational. This part of our series is purely for education purposes and also to provide some more context in relation to the main interview. For those interested in the main interview, I would strongly suggest go back. It's nearly an hour long, and again, uh, it's useful in terms of Ronnie provides insights in terms of his advice to young people, advice to career professionals, books he would recommend, and who he's following and what his interests are. So thanks for tuning in. I will see you next week, Tuesday, Wednesday with our long form interview. Really special guests coming up and back then with Louis Vincent Gadd, Educational 15 Minutes. Thank you, TV.

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Dr Alan O'Sullivan CFP® TEP

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Ivan Yates

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