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This article originates from In Gold We Trust report 2015, which can be downloaded at
https://ingoldwetrust.report/reports-archive/in-gold-we-trust-2015/

Subscribe to the In Gold We Trust report at https://ingoldwetrust.report/igwt/?lang=en

The In Gold We Trust report 2020 will be published on May 27, 2020.

Ronald-Peter Stöferle
& Mark J. Valek
 2

a) Bubble territory?
“At the core, the “this time is different” syndrome is simple. It consists
of the firm conviction that financial crises only happen to other
people in other countries and at other times; here, now, in our
country, there can be no crisis. We are better at everything, we are
smarter, we have learned from the mistakes of the past. Old rules of
valuation are no longer important.

Unfortunately, a highly indebted country can stand with its back at

the edge of a financial abyss unnoticed for years, before fate and
circumstances trigger a crisis of confidence, upon which the country
plummets into the depths.” 1

There has never been before a comparable era of global zero

Apart from money, nothing is interest rate policy. Since the beginning of this year alone, 25
cheap anymore central banks have lowered their base interest rates. The
following chart shows the number of industrialized nations that have
implemented a zero or negative interest rate policy.

Number of industrialized nations with a zero interest rate

policy

Sources: IMF, Incrementum AG

Last year, we remarked the following in this context:

“Funny how bonds were
labelled “certificates of
“In view of the ongoing low interest rate policy, investors are forced
confiscation” back in the early
to take on ever greater risks in their search for yield. This hunger for
1980’s when yields were 14%.
yield is in the meantime producing rather disturbing effects.” 2
What should we call them
now?”
We believe this assessment has been confirmed. A historical
first occurred on April 8: Switzerland's government was the first
Bill Gross
—
1
See: “This time is Different”, Carmen Reinhart und Kenneth Rogoff
2
See: “In Gold we Trust” 2014, p. 37

#igwt2019
 3

„Safety’ is a tricky and to succeed in generating a nominal return for itself from issuing a 10-
paradoxical concept. The safe year bond. The bond with a coupon of 1.5% was placed at an issue
assets are often the ones that price of 116%. This “security” thus offers its buyers a guaranteed
people regard as hopelessly negative yield over its entire term to maturity. In the rest of Europe,
risky.” one can also “safely lose money”: in the meantime, bonds valued at
more than one trillion euro trade at such high prices, that their yields-
Jim Grant to-maturity are negative. In mid April, the yields of some 35% of all
outstanding European government bonds were trading in negative
territory. This means that these securities are massively overvalued.
Concurrently most market participants regard these
securities – in keeping with prevailing financial market
theory – as risk-free.

After a correction of financial market excesses, a multitude

of books is usually written about this previously
“unpredictable” bubble. We wouldn't be surprised if the topic
of negative yields were to enter a number of books as a
catastasis a few years down the road.

“Of course, this bubble is

really a bubble of faith, and its
main derivative is faith-based
currency. And it’s global.
Bubbles take time to burst
roughly proportional to their
size, and these nested bubbles
the Fed and other central
banks have engineered are by
far the largest ever in human
history.”

Chris Martenson

Source: www.wikipedia.org

From a purely evolutionary perspective, such a herd

mentality probably makes sense. If a herd is hunted, it is better for
it to stick close together – anyone who leaves the herd soon falls prey to
the hunters. However, this tactic doesn't always work. There are times
when it is definitely better to keep one's distance from the herd. Such
as in the bond markets right now. However, it appears to be difficult for
most market participants to fight against a herding instinct that is
deeply embedded in their subconscious mind. 3

—
3
See: “Die große Geldschmelze“, Hanno Beck und Aloys Prinz, p. 245
 4

In a fascinating study 4, professors Schnabl and Hoffmann

describe the main characteristics of a bubble formation:
“Although speculative bubbles are easily identifiable ex post, they are
not recognized by the majority ex ante, and carried forward by the
belief that a timely exit prior to the bubble's bursting is possible, or
that the rapid ascent will be followed by a soft landing. Decisive in this
are irrational factors like herding (“monkey see, monkey do”) or
uneasiness over seeing one's neighbour growing rich. Although
Kindleberger acknowledges that crises at the end of speculative waves
are not predictable, he identifies two factors that make them more
likely. For one, waves of speculation are tied to positive economic
expectations. Secondly, plenty of liquidity is in play, which provides
the breeding ground for the excesses.”

“You can’t make yesterday’s Investment in government bonds increasingly involves

returns tomorrow, so the only leverage, due to low yields and the generally high
question people really need to marginability of such bonds. From a regulatory perspective, it is
ask themselves is whether they for instance easily possible for regulated funds to greatly leverage a
think the next 30 years will be fund's capital in order to multiply low yields through external financing.
the same.” These funds have in recent years inter alia employed increasingly
popular “risk parity” concepts. Investment in government bonds
Jordan Eliseo specifically is thereby massively blown up beyond a fund's capital by
purchasing financial futures.

Bonds are asymmetrical investment assets. An investor cannot

receive more than the coupon payments and the repayment of
principal. The maximum return is limited, but the risk of loss is
unlimited. Moreover, interest rate risk rises when yields are low. Bond
investors have been frightened in the months of April and
May of this year. 10-year German Bunds (resp. Bund futures)
suffered a drawdown of more than 7% in just a few weeks time. The last
comparable sell-off has taken place more than a decade ago. Even after
this setback, yields are still at less than 1% for maturities of ten years.
In the event of a rapid increase to significantly higher yield
levels, the potential for losses is enormous (esp. for
supposedly safe investments).

“Eurozone bond prices have A variety of sources has for quite some time warned about possible
entered a Kafkaesque world of crash scenarios in the bond markets, as the central bank is no longer (as
negative yields.” was the case until 2014) a buyer, but possibly soon a seller of bonds.
Market participants would anticipate this step and significantly
Jeremy Warner reinforce the effect, by switching sides concurrently. In our opinion
it is especially this factor that makes the intended reduction
of the Fed's balance sheet via selling bonds the Fed has
purchased impossible.

—
4
See: “Monetary Policy, Vagabonding Liquidity and Bursting Bubbles in New and
Emerging Markets”, Gunther Schnabl and Andreas Hoffmann
 5

The party in bonds is, however, not limited to government

“Junk bonds have really gone
bonds: wherever one looks, caution has been thrown to the
to levels which under our
wind. Numerous short to medium term bonds of international corpo-
analysis are pretty much the
rations including the likes of Roche and Nestle now exhibit negative
most overvalued in history.” yields-to-maturity as well. If one considers these bonds to be too boring,
one can always invest in junk bonds, which are currently trading in the
Jeff Gundlach 98th percentile, in other words, they have historically been valued more
highly in just 2% of all cases. If “return-free risk” has ever existed,
it is alive and well today. 5

„An emerging market is one Institutional investors such as pension funds and life
you cannot emerge from in an insurance companies, and especially their beneficiaries, are
emergency.” the biggest losers of loose monetary policy. The yields of most
government bonds are once again far below the guaranteed yields on
Don Coxe life insurance policies. In Germany, this guaranteed insurance policy
interest rate currently stands at 1.25% 6, while the yield on a 10-year
German government bond stands at 0.55%. 7 As soon as higher-yielding
bonds mature, reinvestment has to be undertaken at significantly lower
yield levels. The longer this discrepancy persists, the greater
the threat to the survival of many insurance companies
becomes. The following statement by a pension fund
manager illustrates the pressure under which many
institutional investors are working:

“The money rate can, indeed, “In a world where bonds are yielding inflation minus 1 percent, if you
be kept artificially low only by can get something which yields a bit more than that, it's the way to
continuous new injections of go.” 8
currency or bank credit in
place of real savings. This can This pressure on institutional investors to produce returns
create the illusion of more has the effect that even governments that have defaulted
capital just as the addition of fairly recently are able to obtain fresh capital at extremely
water can create the illusion of favorable conditions. Ecuador, which defaulted in 2009, was able to
more milk. But it is a policy of issue USD 2 billion of government bonds. Armenia, which is considered
continuous inflation. It is “highly speculative” by the credit rating agencies, was likewise able to
obviously a process involving issue 10-year bonds effortlessly at the most favorable conditions ever.
cumulative danger.”
„I can calculate the motion of Among the biggest beneficiaries of the low interest rate
Henry Hazlitt
heavenly bodies, but not the environment are frontier markets. 9 Their bond issuance activity
madness of people.” has increased by 300% since 2012. Especially bonds from the sub-
Saharan region have recently sold like hot cakes. Thus Ghana, Senegal,
Isaac Newton Angola Zambia, Rwanda and Kenya all have issued bonds denominated
in US dollars. 10 Ivory Coast was able to place a 10-year government
bond yielding 5.6% in the middle of a civil war and only three years after
defaulting – demand exceeded supply by multiples. We are highly
—
5
See: “Junk Jumpers: The Era of Return-Free Risk“, Acting-man.com
6
It was lowered from 1.75% to 1.25% on 1.1.2015
7
As of 25 May 2015
8
See: ”Pension funds seek riskier, illiquid bets to make returns they need”, Reuters,
March 2015
9
“Frontier markets” are countries with high growth rates, which have however not yet
reached the status of “emerging market”. At the moment frontier markets e.g. comprise
Algeria, Mocambique, Tunisia, Bangladesh or Colombia.
10
In light of the recent rally in the dollar, these bonds have become a good sight riskier.
 6

critical of this bond bonanza: The questionable creditworthiness and

fragile outlook of these issuers hardly justify coupons ranging from
5.5% to 8%. One must suspect that the risks are massively
underestimated and that far higher risk premiums would be
appropriate.

In terms of bond maturities, one can also detect signs of a mania.

Mexico issued yet another “century bond”. The most recent 100-year
bond with a yield of 4.2% is denominated in euro, has a volume of EUR
1.5bn and is set to be redeemed in April 2115 (!!!). And this is not the
first of its kind. In 2010, nearly USD 2.7bn of century bonds were issued
“...when it changes it does denominated in dollars. In a historical context, a bet that a system of
so quickly, and the irredeemable currency will still exist in 100 years is extremely daring.
impossible becomes the However, if one can rely on Theo Waigel's expertise, who
inevitable without ever believes the euro will last another 400 years, then even this
having been probable.” government bond may turn out to be a sensible investment
for one's descendants. 11 We remain somewhat skeptical.
Bill Fleckenstein

Conclusion:

The most recent mania in the bond markets, which is

characterized by massive over-subscription and record
prices at increasingly speculative price levels, reminds us of
the excesses in Germany's “Neuer Markt” and the Nasdaq at
the end of the 1990s. While exponential growth can often be
observed in nature as well, it is always temporarily limited.

“The error of optimism dies in Based on the facts, it can immediately be stated that the situation in the
the crisis, but in dying it gives bond markets has reached the most extreme end of the historical range
birth to an error of pessimism. in terms of prices and yields – never has a market depended more
The new error is born not an strongly on irrational faith. Once creditors have to pay borrowers
infant, but a giant.” for the dubious “privilege” of lending them money, there is
essentially only one direction left in which this market can
Arthur Cecil Piquot possibly move.

Yield chasing such as is currently underway means individual market

participants will require a “greater fool” to be able to get out of the
market in the nick of time before the bubble bursts. While the 2008
crisis was focused on the sub-prime market and the derivatives tied to
it, we are now in an entirely different bubble dimension: government
bonds are at the epicenter of the debt money system and represent the
bulk of assets held by central banks. Ultimately the bursting of
such a bubble can be averted by launching an “infinite QE
program”. This means however that sooner or later,
—
11
See: “Theo Waigel gibt dem Euro noch weitere 400 Jahre”, Die Welt
 7

confidence in the currency will evaporate and it will lose all

purchasing power.

b) What is seen and what is not seen: the

fatal consequences of the zero interest
rate policy
Interest rates are such a
300 years ago, Newton formulated his third law, also called
crucial factor in economic
the principle of action-reaction. It states: “Forces always appear
activity, that they must not
in pairs. When one body A exerts a force on a second body B (action),
be allowed to be
the second body B simultaneously exerts a force equal in magnitude
“manipulated” by
and opposite in direction on the first body A (reaction).”
governments. They are the
market's “price of time”.
In a dynamic economy, an action not only triggers just one effect, but
always an entire series of different consequences. 12 While the cause of
Roland Baader
the first effect is easily recognizable, the other effects often occur only
later and no such recognition occurs. Frédéric Bastiat described this
phenomenon in 1850 in his ground-breaking essay “What is seen and
what is not seen”: 13

“In the economic sphere, an act, a habit, an institution, a law

produces not only one effect, but a series of effects. Of these effects,
the first alone is immediate; it appears simultaneously with its
cause; it is seen. The other effects emerge only subsequently; they are
not seen; we are fortunate if we foresee them…

There is only one difference between a bad economist and a good

one: the bad economist confines himself to the visible effect; the good
economist takes into account both the effect that can be seen and
those effects that must be foreseen. Yet this difference is tremendous;
for it is almost always the case that when the immediate
consequence is favorable, the later consequences are
disastrous, and vice versa. Hence it follows that the bad
economist pursues a small present good that will be followed by a
great evil, while the good economist pursues a great good to come, at
the risk of a small present evil.”

A similar phenomenon can be seen with the consequences of

“Right now macro doesn’t artificially suppressed interest rates and monetary stimulus:
matter. But that will change. In the short term, they appear to have positive effects, the
When it does matter it will be long term effects are however disastrous and bear no
all that matters.” relation to the advantages. If one studies these processes closely,
it becomes clear that the underlying problems cannot be solved by
Bill Fleckenstein global zero interest rate policy, but that this instead undermines the

—
12
Note: Carl Menger had already stressed causality in terms of economic laws, thus the
very first sentence in his revolutionary work “Principles of Economics” is: “All things are
subject to the law of cause and effect. This great principle knows no exception, and we
would search in vain in the realm of experience for an example to the contrary.”
13
“Ce qu'on voit et ce qu'on ne voit pas”, Frédéric Bastiat
 8

natural selection process of the market. Governments, financial

institutions, entrepreneurs and consumers, who should actually be
declared insolvent, all remain on artificial life support.

In line with Bastiat's thoughts, numerous fatal long-term

consequences of zero interest rate policies can be
identified: 14

► Conservative investors by nature come under increasing

pressure with respect to their investments and take on
excessive risks in light of the prospect that interest rates will
remain low in the long term. This leads to capital misallocation
and the emergence of bubbles.
► The sweet poison of low interest rates leads to massive asset
price inflation (stocks, bonds, works of art, real
estate).
► Structurally too low interest rates in industrialized nations due
to carry trades lead to the emergence of asset price bubbles and
contagion effects in emerging markets.
► Changes in human behavior patterns occur, due to
continually declining purchasing power. While thrift is
increasingly mutating into a relic of the past, taking on debt
comes to be seen as rational.
► As a result of the structurally too low level of interest
rates, a “culture of instant gratification” is created, 15
which is among other things characterized by the fact that
consumption is financed with credit instead of savings. The
formation of wealth becomes steadily more difficult.
► The medium of exchange and unit of account function
of money increases in importance, while its role as a store of
value declines. 16
► Incentives for fiscal discipline decline.
► Zombie banks are created: Low interest rates prevent the
healthy process of creative destruction. Banks are enabled to
roll over potentially non-performing loans practically
indefinitely and can thus lower their write-off requirements.
► Distributive injustice (Cantillon effect): Newly created
money is neither uniformly nor simultaneously distributed
amongst the population. This results in a permanent transfer
of wealth from later receivers to earlier receivers of newly
created money. 17

„Interest rates are the heart,

soul and life of the free Conventional monetary policy – this is to say the promotion
enterprise system.“ of credit creation by lowering interest rates – reaches its
limits once the “zero-bound” is reached. In order to continue
Michael Gayed the spiral of stimulus, “unconventional monetary policy”
becomes ever more important. The multitude of “newfangled”
monetary policy measures is seemingly only limited by the imagination
of central bankers, whereby recent years have shown that central

—
14
See: “In Gold we Trust“ 2014, p. 33-34
15
See: „Wenn Menschen zu Ratten werden“, Linus Huber („When men become rats“)
16
See: „Ein Staatsgeldsystem lädt Regierungen immer zum Betrug ein“, Hubert Milz,
Ludwig von Mises Institut Deutschland (“A state money system always invites
governments to commit fraud”)
17
See: “Cantillon Effect describes the uneven distribution of newly created money”, In
Gold We Trust, 2013.
 9

bankers can be extraordinarily creative. That this phenomenon is

nothing new, is inter alia shown by this quote from 1922:

“But an increase in the quantity of money and fiduciary media will

not enrich the world […] Expansion of circulation credit does lead to
a boom at first, it is true, but sooner or later this boom is bound to
crash and bring about a new depression. Only apparent and
temporary relief can be won by tricks of banking and currency. In
the long run they must lead to an all the more profound catastrophe.”

Ludwig von Mises 18

Conclusion:
“If you think as I do that this is
the beginning of the end for The seeds for the next crisis are already being sown. The
the Golden Age of the Central longer the zero interest rate policy lasts, the greater risks
Banker (or at least the end of investors will have to take, especially the ones who have
the beginning), gold is pretty certain return requirements. The point at which confidence in the
interesting here.” fragile edifice of debt will be lost is difficult to forecast. We are
strongly convinced that gold represents a sensible hedge
Ben Hunt against such a crisis of confidence.

c) Zero interest rate policy and the fatal

distortion of the capital structure
In line with the tradition of the Austrian School, we do not
regard capital as a statistic or uniform blob, but believe a
more differentiated perspective is appropriate. Thus, we
acknowledge that capital has a heterogeneous structure, which has
formed historically as the result of countless individual decisions. At
“Occasionally it may appear any given point in time, individuals are anticipating potential
sensible to heat one's house by opportunities to profitably expand on the existing state of the capital
burning the furniture. structure based on their specific knowledge and are thereby modifying
However, if one does that, one it. Some technologies become obsolete over time, and the associated
should be fully cognizant of all ends or links of the structure will accordingly regress.
consequences.”
In order to achieve a higher level of consumption, men
Ludwig von Mises began to forego some of their present consumption, in order
to employ it in investments and the creation of more
efficient production methods. In this context, there exists the
following famous illustrative example of the Robinson Crusoe
economy: Crusoe decides to no longer expend all his time and effort
on catching fish barehanded, but also on weaving a fishing net. As a
result, he has to reduce his level of consumption for the time being but
will be able to increase it in the future.

—
18
“Socialism” (1922), part II, p. 460-462, Ludwig von Mises
 10

Transposing this to a complex economy, the basic recognition remains

that solely by foregoing consumption can resources be freed up which
can then be employed in investment projects. In this more complex
economy, one not only confines oneself to creating capital goods which
serve directly in the production of consumer goods – so-called goods of
second order, such as the above mentioned fishing net (the consumer
good fish represents a good of first order, i.e., a good that directly
satisfies a need) – but also goods of higher orders, which in turn serve
to produce other producer goods, and hence are even further removed
from consumption.

„The first lesson of economics Two aspects are of key importance in this context:
is scarcity: There is never Specificity and time. The former term designates the fact that
enough of anything to satisfy available resources will take on specific forms and functions in the
all those who want it. The first largely irreversible process of investment, and with that obtain a
lesson of politics is to specific position in the capital structure. An investment's success is
disregard the first lesson of thus dependent on whether the created capital good fits well into the
economics.” capital structure as a whole (i.e., that it is capable - in combination
with other capital goods - to expand final consumption opportunities
Thomas Sowell as desired).

The second aspect, namely time, is often underestimated, or

in an environment in which investments in the real economy
appear as cash values in balance sheets or structured
financial products, even neglected completely. However, in the
Austrian tradition, the time factor is accorded a prominent role; Murray
Rothbard explicitly refers to it as a factor of production. 19 This is based
on the fact that every human action is connected with the passage of
time – and that includes the act of investing. If therefore, as noted
above, resources are set aside in the present and invested in more
efficient production technologies, time is required until these
investments bear fruit. The consumption one renounces today is thus
contrasted by greater consumption, but only at a later point in time.

Austrians approach the This brings us to the concept of interest rates, which
concept of interest rates Austrians also approach differently than economists of the
differently neoclassical or monetarist traditions. Their fundamental
assumption is that people would prefer to have a clearly defined
consumer good available for immediate consumption rather than at a
future point in time. Thus, if savers are renouncing present
consumption and are making the resources which are thereby freed up
available for investment, they are doing so on the precondition that they
will be compensated for this by having greater consumption
opportunities available in the future. In a free market, the interest rate
essentially represents a measure of the compensation payment in
return for which actors in the economy are prepared to exchange
present against future goods. This interest rate is called the “natural” or
“originary” interest rate and provides information about the time
—
19
See: “Man, Economy, and State with Power and Market”, p. 515, Murray N. Rothbard
 11

preferences of market participants. Investment projects whose

expected returns are lower than this interest rate, won't be initiated in
a free market economy, as their returns would not offset the losses in
present consumption.

Against the backdrop of the concept of the “natural” interest

Sooner or later, the scarcity of
rate, it is now somewhat easier to understand why the
real resources will become
current situation of artificially suppressed low interest rates
obvious
is not sustainable in the long run: At best, they can - akin to a
“tracheotomy” 20 - keep a foundering economy from collapsing, if a
liquidity squeeze occurs upon the outbreak of a crisis. However, since
interest rates that are kept low in the long term on the one hand foster
investments that wouldn't be profitable under different circumstances,
and on the other hand stimulate present consumption as well because
savings will produce lower returns, such a policy cannot possibly be
sustainable. Ultimately, there simply won't be enough resources
available. Unfortunately, long term investments will appear to be
especially profitable, as in the calculation of their viability, discounting
by low interest rates will result in very high net present values.
Monetary policy manipulations may be able to obscure the actual
situation for a long time, and stock markets may rally by chasing a
monetary illusion – but sooner or later, the scarcity of real resources
and malinvestments will become obvious. Then there is either a
crisis in which debts are liquidated and the money supply
contracts, or the next step in terms of loose monetary policy
is undertaken, which sustains the illusion for longer and
leads to an even greater distortion of the capital structure.

The following chart depicts the ratio between spending on

capital and consumer goods production over time. A rising
ratio indicates that relatively more capital than consumer goods are
produced. While it cannot be deduced from this chart how much capital
has been malinvested, it is quite conspicuous that the ratio left the
range within which it had historically oscillated shortly after the gold
exchange standard was abandoned in 1971 and it has risen strongly ever
since. Moreover, periods of extreme increases in the ratio are regularly
followed by recessions, which tend to go hand in hand with a decline in
the ratio.

—
20
See: „Banken liquidieren“, Mayers Weltwirtschaft, FAZ (“Liquidating banks”)
 12

Ratio of capital to consumer goods production (gray areas

indicate US recessions)

Source: Federal Reserve St. Louis, Incrementum AG

An increase in the ratio primarily allows one to conclude that

the capital structure is deepening, i.e., that production
activities are increasingly focused on higher order goods. In
an unhampered economy, this wouldn't be cause for concern: A
deepening of the capital structure would indicate that people are saving
more in order to invest in more efficient and capital intensive
technologies, which will provide them with higher consumption
opportunities in the future. However, as savings actually don't increase
in times of artificially suppressed interest rates, but will on the contrary
actually tend to decline, an accelerated increase in the ratio points to an
unsustainable distortion of the capital structure.

Conclusion:

Artificial suppressed interest Capital is a complex structure, which contains the

rates result in distortions – in decentralized knowledge of countless market participants.
the long term it will become The natural interest rate is an expression of the time preferences of
evident that real resources are acting men, i.e., it reflects to what extent market participants are
insufficient prepared to employ available resources either in present or future
consumption. Thus, a capital structure that comes into being on the
basis of natural, freely-formed interest rates, is aligned with people's
needs and wishes.

Artificially suppressed interest rates by contrast result in

distortions: A deepening of the capital structure occurs, i.e.,
investments in segments far removed from the consumption
 13

stage are encouraged, while consumption increases

simultaneously. In the long term, it will become evident that
real resources are insufficient for these investments, and that
these projects have to be abandoned and written down.
However, at present the illusion of a monetary perpetuum
mobile still prevails in the markets.
 14

About us

Ronald-Peter Stoeferle, CMT

Ronnie is managing partner of Incrementum AG and responsible for

Research and Portfolio Management.

He studied business administration and finance in the USA and at the Vienna
University of Economics and Business Administration, and also gained work
experience at the trading desk of a bank during his studies. Upon graduation he
joined the research department of Erste Group, where in 2007 he published his
first In Gold We Trust report. Over the years, the In Gold We Trust report has
become one of the benchmark publications on gold, money, and inflation.

Since 2013 he has held the position as reader at scholarium in Vienna, and he also
speaks at Wiener Börse Akademie (i.e. the Vienna Stock Exchange Academy). In
2014, he co-authored the international bestseller “Austrian School for Investors”,
and in 2019 “The Zero Interest Trap”. Moreover, he is an advisor for Tudor Gold
Corp. (TUD), a significant explorer in British Columbia’s Golden Triangle, and a
member of the advisory board of Affinity Metals (AFF).

Mark J. Valek, CAIA

Mark is a partner of Incrementum AG and responsible for Portfolio

Management and Research.

While working full-time, Mark studied business administration at the Vienna

University of Business Administration and has continuously worked in financial
markets and asset management since 1999. Prior to the establishment of
Incrementum AG, he was with Raiffeisen Capital Management for ten years, most
recently as fund manager in the area of inflation protection and alternative
investments. He gained entrepreneurial experience as co-founder of philoro
Edelmetalle GmbH.

Since 2013 he has held the position as reader at scholarium in Vienna, and he also
speaks at Wiener Börse Akademie (i.e. the Vienna Stock Exchange Academy). In
2014, he co-authored the book “Austrian School for Investors”.

#igwt2019
 15

Incrementum AG

Incrementum AG is an independent investment and asset management

company based in Liechtenstein. Independence and self-reliance are the
cornerstones of our philosophy, which is why the four managing partners own
100% of the company. Prior to setting up Incrementum, we all worked in the
investment and finance industry for years in places like Frankfurt, Madrid,
Toronto, Geneva, Zurich, and Vienna.

We are very concerned about the economic developments in recent years,

especially with respect to the global rise in debt and extreme monetary measures
taken by central banks. We are reluctant to believe that the basis of today’s
economy, i.e. the uncovered credit money system, is sustainable. This means that
particularly when it comes to investments, acting parties should look beyond the
horizon of the current monetary system. Our clients appreciate the unbiased
illustration and communication of our publications. Our goal is to offer solid
and innovative investment solutions that do justice to the
opportunities and risks of today’s prevalent complex and fragile
environment.

Contact
Incrementum AG
Im Alten Riet 102
9494 – Schaan/Liechtenstein

www.incrementum.li
www.ingoldwetrust.li
Email: ingoldwetrust@incrementum.li

This publication is for information purposes only, and represents neither

investment advice, nor an investment analysis or an invitation to buy or sell
financial instruments. Specifically, the document does not serve as a substitute for
individual investment or other advice. The statements contained in this
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