Inflation vs. Deflation

On October 1, the quarterly meeting of the Incrementum Fund’s advisory board took place. A new member has joined the board, well-known economist and outstanding Austrian scholar Dr. Frank Shostak, who has taken part in the quarterly conference for the first time (the transcript of the minutes can be downloaded below).

Incrementum’s proprietary inflation/deflation indicator has been extremely volatile so far in 2014, moving from negative to positive territory and vice versa several times. Consequently, developments on the monetary front and their likely effect on financial markets were once again a major topic of conversation.

The Federal Reserve is still in “QE tapering” mode, and the growth momentum of the US money supply has slowed considerably from its peak. A fact that is less often mentioned in the financial media is that money supply growth in China has slowed down even more. These developments indicate that the probability of a major financial accident is increasing by the day.

Incrementum’s proprietary ifnlation-deflation signal vs. the HUI gold mining index

The Incrementum Fund has recorded a very satisfactory performance last quarter, as positions in line with the signals of the inflation-deflation indicator were taken and proved to be quite successful. With this, the fund showed quite clearly that an “Austrian” approach to investing is not simply equivalent to being long gold all the time. :)

Readers can download the transcript of the board meeting here. We hope you will enjoy it and find it useful.