Aggregate non-seasonally adjusted M2 money stock continues track, what I would characterize as, an exaggerated, seasonally offset trend. For the better part of the last few months, weekly and 8-week changes in M2 has generally tracked seasonal norms. That was until about a month ago, when the weekly changes became exaggerated relative to the seasonal norms. This extreme volatility also threw off the relative comparisons for the two month changes in M2. Here are the latest charts below.
Weekly changes in M2
2-Month changes in M2
Theses figures are important for a myriad of reasons, one of which being that growing money supply is inflation and high levels of inflation relative to low gold prices suggest a positive environment in which to buy gold or gold/precious metal related investments. That is the thesis anyway.
As I have stated and implied a number of times over the last month, the volatility in M2 has led to me discount the seasonal factors in my M2 estimates. To bring the timing models up to present, I am solely relying upon my least squares projections. I would expect the timing models to fluctuate until money stock returns to its seasonal norms.
That out of the way, the timing models have all come the lows seen just a few months ago. I prefer and the historic results bear out that significantly positive returns on the precious metal equities follow negative readings on the timing models. In fact, the more negative the better the return. The recent uptick in the timing models would give me pause if not for the recent additional indicator I added, that is the slope of the timing models. Although by itself, the slope does not discern any buy or sell opportunity, it does convey information in relation to the timing models, i.e. negative (positive) models and rising (falling) slopes suggest positive future equity performance.
Presently, the timing models remain negative while the slope reading remains positive. This suggests a conducive environment to buy gold equities. The following charts show the updated timing models and slope
6-month model, -1
1-year model, -1.6
2-year model, -2.1
Slope
Weekly changes in M2
2-Month changes in M2
Theses figures are important for a myriad of reasons, one of which being that growing money supply is inflation and high levels of inflation relative to low gold prices suggest a positive environment in which to buy gold or gold/precious metal related investments. That is the thesis anyway.
As I have stated and implied a number of times over the last month, the volatility in M2 has led to me discount the seasonal factors in my M2 estimates. To bring the timing models up to present, I am solely relying upon my least squares projections. I would expect the timing models to fluctuate until money stock returns to its seasonal norms.
That out of the way, the timing models have all come the lows seen just a few months ago. I prefer and the historic results bear out that significantly positive returns on the precious metal equities follow negative readings on the timing models. In fact, the more negative the better the return. The recent uptick in the timing models would give me pause if not for the recent additional indicator I added, that is the slope of the timing models. Although by itself, the slope does not discern any buy or sell opportunity, it does convey information in relation to the timing models, i.e. negative (positive) models and rising (falling) slopes suggest positive future equity performance.
Presently, the timing models remain negative while the slope reading remains positive. This suggests a conducive environment to buy gold equities. The following charts show the updated timing models and slope
6-month model, -1
1-year model, -1.6
2-year model, -2.1
Slope
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