Ronald-Peter Stöferle talks to James Turk about gold

Subscribe to our newsletter at http://www.goldmoney.com/goldresearch. Ronald-Peter Stöferle, Analyst at Erste Bank, and James Turk, Director of the GoldMoney Foundation, talk about his "In Gold we trust" report. They explain why gold's high stock-to-flow ratio makes it very different to commodities. Gold is not consumed, it is accumulated, which is why it is great for monetary purposes. Mine production and supply of gold in general is not very important in setting the gold price, whereas demand for gold is. All economic goods are subject to supply and demand, including money, something that many economists overlook. The decreasing trust in fiat currencies, which are gold's real competitors, is what really drives bullion prices. It is Gresham's law that we should use to model gold's demand. ╪

They talk about the gold price correction in September. Ronald explains that it was a normal, healthy correction within the bull market. He explains that negative sentiment is a good indicator that we are far from a mania or bubble. The parabolic move to over 1900$ in August was too fast too soon. October's negative seasonality will mean a consolidation and then another leg up in the present and continuing uptrend. Considering fundamentals, Ronald asks whether real interest rates have turned positive or structural debt problems have been solved... in the absence of such a development the positive fundamentals are well in place for gold. They talk about Chinese and Indian demand. Gold is increasingly seen as money and less as a commodity, which is how it was seen in the first stage of the bull market. The lack of counterparty risk is an important quality of gold, which gives it an advantage over the euro and the dollar. Fiat currencies, backed by nothing, will eventually lose all trust.

Ronald explains that he is very confident on gold mining companies because they provide leverage on the price of gold, especially the juniors. However he is not bullish on mining stocks in the very short term, since he is bearish on the stock market and has not yet seen gold miners decoupling from the crowd. He also talks about his forthcoming report on silver.

This interview was recorded on October 1st 2011 in Vienna

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