The seasonal ebbs and flow in money supply are still place. Non-seasonally adjusted M2 declined roughly $47 million week-on-week to just over $10.5 trillion for the latest reporting period. Remember, money supply is reported with a two week lag from the current week. This is consistent with the seasonal trends exhibited in similar weeks in the past. It is my estimate that the money supply will increase about $100 million through the current week, about inline with season trends for the 14th week of the year and continue to do so for about two months.
I say this as the price of gold bounces around in the range of $1,550 to $1,600. An increase in money supply, which I expect considering seasonal influences and the Fed's money printing campaign, should be supportive of gold prices. Although this has not been the case lately, as an increase in negative investor sentiment and market micro structures continue to hurt the price complex, I continue to take all that glitters off the hands of those who will sell it. It is my opinion that long-term buyers will be rewarded. The timing models reflect this via the increasing amount of money supply and lower gold/gold stock prices.
The models continue to remain in an accumulative model with the 1-year model solidly below -2 at a -2.1 and the 6-month model coming in at -1.7. Together, these measures suggest a decent long-term entry into the gold and precious metal miners. The below charts are updated for the latest gold price, gold stock index price, and money supply figures/estimates.
3-Month Model, -1.6
6-Month Model, -1.7
1-Year Model, -2.1
As a point of historical reference, a 1-year model at -2.1 and a 6-month model at -1.7 has been seen in only six separate occasions since early 2000. Following these observations, the 1-year average return on gold stocks was 97% vs. an average buy-and-hold base of 12.9% and a 2-year average return of 125% vs. an average base 28.3%. I will take the odds that I am wrong in the short-term.
I say this as the price of gold bounces around in the range of $1,550 to $1,600. An increase in money supply, which I expect considering seasonal influences and the Fed's money printing campaign, should be supportive of gold prices. Although this has not been the case lately, as an increase in negative investor sentiment and market micro structures continue to hurt the price complex, I continue to take all that glitters off the hands of those who will sell it. It is my opinion that long-term buyers will be rewarded. The timing models reflect this via the increasing amount of money supply and lower gold/gold stock prices.
The models continue to remain in an accumulative model with the 1-year model solidly below -2 at a -2.1 and the 6-month model coming in at -1.7. Together, these measures suggest a decent long-term entry into the gold and precious metal miners. The below charts are updated for the latest gold price, gold stock index price, and money supply figures/estimates.
3-Month Model, -1.6
6-Month Model, -1.7
1-Year Model, -2.1
As a point of historical reference, a 1-year model at -2.1 and a 6-month model at -1.7 has been seen in only six separate occasions since early 2000. Following these observations, the 1-year average return on gold stocks was 97% vs. an average buy-and-hold base of 12.9% and a 2-year average return of 125% vs. an average base 28.3%. I will take the odds that I am wrong in the short-term.
