I undertake money supply analysis through examination of total commercial bank liabilities in domestic currency. The rate of commercial bank lending explains the business cycle better than traditional measures of the money supply. Further analysis, conducted into the composition of bank liabilities, reveals the predominance of business lending over other types of lending up to [...]
Short-term movements in price suggest gold is a risk-off asset. The gold correlation with risk-on assets like oil and equities should be negative in this scenario. However, the evidence suggests that gold behaves like a commodity in the long-run. Gold has a positive correlation to oil and a negative correlation to stocks. The magnitude of [...]
What is the relationship between gold and money supply? Many believe that changes in the gold price are simply the product of money supply changes. More money relative to a fixed supply of gold leads to a higher gold price and vice-versa. In reality, the relationship is not quite so simple. Gold is not driven [...]
It is widely believed that the relationship between gold and inflation is a strong one. But when one looks at the relationship between gold and CPI, it can be demonstrated that there is no enduring relationship. So what is the explanation for this finding? I will demonstrate that the CPI does not act as a [...]
Is gold a good investment? Well, let’s be clear from the outset: I don’t regard gold as a long-term investment at all. However, gold will preserve the purchasing power of your wealth through time. The performance of the economy is the key factor when assessing the attractiveness of gold verses traditional investments. Traditional investments are [...]
By re-basing the S&P 500 in gold, we see the true magnitude of the equity cycle over the last 80 years. Although the dollar based series is volatile, the true size of swings in the S&P 500 has been masked by movements in the dollar. The current equity bear market began in 2000 and still [...]
There is perhaps no more effective means of valuing silver than through the silver gold ratio. Historically, both gold and silver have been used as money and so expressing one by means of the other is a powerful valuation technique. Both silver and platinum are looking CHEAP relative to gold at the moment. Not only [...]
By using gold as a currency, we can value the price of crude oil price using the oil gold ratio. This ratio is independent of the US dollar and the unreliable CPI measure of inflation. The oil gold ratio suggests oil is evenly priced at the moment. Does the oil gold ratio support the arguments [...]
By rebasing US GDP in gold rather than the CPI, the true extent of the economic cycle is revealed, from expansion to depression. Using gold to rebase nominal variables avoids the distortions and smoothing effect brought about by the CPI. The gold rebased GDP reveals the depths of our current economic malaise and past economic cycles show how we may recover from it.