This article summarizes the views on the gold market from 4 top money managers, as well as top traders, including Jim Rickards and Ronald Stoeferle (well known in the precious metals community worldwide), during the quarterly Incrementum Advisory Board (

The main topic of the discussion during the last Incrementum Advisory Board was the increasing deflationary pressure and its consequences on markets and central bank policy, the impeding currency wars and the consequences for gold.

Jim Rickards, author of Currency Wars and Death Of Money:

Things seemed to have changed somewhat recently. We had a fairly inverse relationship between USD and gold. If you look at the dollar index and gold, the low point of the dollar-index was exactly timed to the high point of gold. So there has been this inverse relationship between gold and the USD for the past three years. This changed during the past weeks.

Why is this breakdown happening? The answer is that today governments cannot have deflation. The structure of sovereign debt and central banking today is such that it cannot allow deflation to persist for a longer time. There is a long list of reasons why governments have to have inflation, therefore when you see deflation arising despite of central bankers wishes which it did in 1929 and it is doing today, central banks stop from nothing to turn it around. Investors start to buy gold during that environment. Why would anybody buy gold during a Deflation? The answer is, deflation is a pretty good leading indicator of inflation. In other words precisely because it has to turn, you buy gold even in the deflationary stage because you can see through it.

Gold was down in USD in 2014, but up in any other currency. This is not a gold story but a USD story, now the USD is the best performing currency of the world. Gold is also an interesting facet of the currency wars. If you think of gold as money gold can’t fight back.

Zac Bharucha, former asset manager:

Investors have had plenty of time to adjust their mentality and increase exposure to risk assets, exactly as the FED wanted. These are long-term processes and I am unsure that another round of QE can create another shift of assets towards the risky end of the spectrum. It could happen that participants think “Oh hell, the global market economy is still in a stinky state and was masked over by cheap liquidity” and we’d experience weaker stock markets.

Regarding gold, let’s inspect the price action. We got a break at 1,200, a major break of support, but price did not get down to 1,050, a very important support level. At the moment, gold is $1330/ oz, just below its 200d MA (which is still downward sloping). So the chart leads me to hesitate; was the breakdown under 1200 a false break, or is their unfinished business in this bear market?

The negative for gold is that the general commodity complex looks very shaky. However, as an alternative asset in a negative real interest rate environment, gold is a good investment. If stock markets roll over, market participants might switch into gold again after a long period of portfolio adjustment out of gold into risk assets, equities, high yield bonds and the like.

Ronald Stoeferle, author of the In Gold We Trust reports and fund manager:

Gold is holding up extremely well. We are experiencing a major rally in the USD and gold held up pretty well with a minus of only 2% in 2014. In every other major currency, price action looks constructive. On the other hand, the mainstream seems to think that the gold price got completely trashed last year, although it was only a sideways trend. So there’s a major divergence between what the market says and what market participants say.

In EUR for example, we just crossed the huge resistance at EUR 1,000. Our research shows that gold works very well in deflation, but suffers in disinflation. That might be a sign that we are already in a deflationary spiral. Based on the increasingly strong disinflationary trend, we are convinced that there will be no rate hike this year in the US. Perhaps gold is already discounting that?

Heinz Blasnik, editor at and trader:

In EUR, GBP and Yen, gold is definitely in an uptrend. In USD, gold has made a few higher lows but it is not out of the woods, yet.

I have been thinking about who is buying gold at the moment and why? The only thing I can think of is that many money managers have sold during the correction and that new buyers with strong hands, deep pockets and solid long-term views have accumulated.

Another reason might be that these people are looking forward and believe that there could be problems in the banking system, triggered for instance by the bursting of housing bubbles. That might be one of the reasons attracting lots of new buyers.

But I do agree with Zac that there might be one final low in the 1,050 region. We can definitely not rule that out. In other words, the current rally could be just another bear market rally. However, gold stocks have held up very well recently. The decline in energy is quite important for miners, esp. for large open pit projects who are experiencing increasing margins at the moment.

The transcript of the full conversation between these gentlemen is here:

Incrementum Advisory Board January 2015