My fellow Hivers,
The amount of gold in the world remains approximately constant. It is this constant that makes gold stable.
Of course you cannot say the same about the amount of money in circulation. It dares to swing. And usually this number fluctuates higher. Or as in the past weeks: massively higher!
You have to compare the gold price to the 'monetary base'
The more money central banks put into circulation, the greater the potential of gold.
Gold may increase in value, but if the money supply rises even faster, gold becomes relatively cheaper in relative terms.
Today a year ago, the US monetary base was $ 3,200 billion. We are currently at $ 5.068 billion.
The money supply has increased by 58%. Gold has “only” increased 33% in value during this period, making it actually cheaper today than it was a year ago.
How much gold is there now? The United States government owns 261 million ounces of gold. At current rates, that stack is worth $ 453 billion.
The US has $ 5.068 billion in money in circulation, and there is a $ 453 billion gold supply in return.
Each dollar is therefore barely 8.9% covered by gold.
That is very little, as can be seen in the graph below.
Gold is historically cheap when the value is 20% of the monetary base.
Gold remains a bargain despite the increases in price we've seen to date. And if the Federal Reserve continues to operate the money presses at this rate, the undervaluation will even increase.
So now is the time to load up on gold!!
Thank you for reading!
beurs.com