On the US monetary inflation front, the news is that there isn’t much in the way of news.
We most recently discussed the long-term performance of the gold/silver ratio only two months ago, but the subject is sufficiently important to warrant some repetition.
An interesting aspect of the gold market is that most analysis is off track, with the reasons put forward for being bullish generally being further off-track than the reasons put forward for being bearish.
Our original intention was to explain where we agreed and disagreed with the article by Cullen Roche at “Pragmatic Capitalism” (is there any other kind of capitalism?) titled “The Biggest Myths in Economics”.
The monetary backdrop continues to be very different in the US today than it was in earlier post-bubble periods.
The US will eventually experience hyperinflation, but “eventually” could be long after we are all dead.
The US monetary inflation rate continues its downward drift. As at the end of December the year-over-year (YOY) rate of growth in US True Money Supply (TMS) was 7.2%, its lowest level since November of 2008.
One characteristic of an investment bubble is dramatic upward price acceleration during the final 6-12 months of a long-term advance, followed by a price collapse.
The Fed’s mode of operation has drastically changed over the past 12 years.
In our 18th September Update we said that the Fed’s decision not to “taper” was not, in and of itself, meaningfully bullish for gold.