Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
It’s still months away, but amid all the turmoil on financial markets and chaos in the global economy, you can’t help but look forward to this year’s Oktoberfest.
Incrementum’s ninth annual In Gold We Trust report analyzes gold primarily as a monetary asset and not as a commodity like say hops or barley.
The Liechtenstein-based asset managers conclude that “the competitive position of gold relative to paper money and other asset classes has improved considerably in recent months” and have 140 pages of charts and tables to prove it.
The Economist has its Big Mac index to rate the over- or undervaluation of currencies, but you have to agree with Incrementum that when looking at a suitable comparison to gold, beer is much more appropriate:
“Many comparisons from everyday life show that gold is currently not valued at an excessively high level. While a “Mass” beer (one liter) at the Munich Oktoberfest in 1950 still cost a converted EUR 0.82, the price in 2014 stood between EUR 9.70 – EUR 10.10 (average EUR 9,90).
“Thus, the annual price inflation of beer amounts to 4.2% per year since 1950.37 If one measures the beer price in gold terms, then one received 97 liters of beer per ounce of gold in 2014.
“Historically the median is at 87 “Mass”, the “beer purchasing power” of gold is therefore currently quite high. The peak occurred in 1980, at 227 liters per ounce of gold.
“We believe it is easily possible that this level will be reached again. Beer aficionados should therefore so to speak expect a rise in beer liquidity.”
Below is the entire report, well worth the read:
[gview file=”https://mining.com/wp-content/uploads/2015/07/In-Gold-we-Trust-2015-Extended-Version-e.pdf”]

Comments
bert
another crock of crap as gold tanks this morning.