Excess Money Supply Has Been Like Miracle-Gro For Gold Prices

The $2.2 trillion coronavirus [hoax] relief package that President Donald Trump signed into law on March 27 is just the beginning. The Treasury Department is now seeking some $250 billion more to replenish small business loans, and there’s hope that the president and House Democrats can agree on a “Phase Four” spending deal, one that may target infrastructure. Trump has asked for $2 trillion.

According to Evercore ISI’s Ed Hyman, as many as 285 stimulus measures have been announced around the world in the past eight months, “the most ever by a wide margin.” Japan, which only this week declared a state of emergency, approved a $1 trillion relief package on Tuesday.

Last month I predicted that at least $10 trillion would be spent to mitigate the economic impact of this virus, and it appears as though we’re already there, with much more to go. And this is all before considering monetary stimulus in the form of near-zero rates and quantitative easing (QE).

Gold touched its all-time high of $1,900 an ounce in 2011 when M2 money supply growth soared above 10 percent year-over-year. With supply growth now at 12 percent––and likely headed higher––liquidity has flowed into physical gold as well as paper gold. On Monday, spot gold traded above $1,700 for the first time since December 2012. The next test, I believe, is $2,000, and as I’ve said before, $10,000 gold isn’t crazy.

DYI