Over the past 50 years, gold has shown an interesting relationship with the US money supply. A unique chart tracks the ratio of gold price (in US dollars) to the total US money supply. This ratio helps understand how gold behaves compared to how much money is being printed or circulated in the economy. When equity markets do well, this ratio tends to fall. That’s because gold usually doesn’t perform strongly when stocks are rising.
But the moment things shift—when growth slows down or a crisis hits—money supply tends to spike. In such times, gold starts to move up. This pattern has repeated multiple times. A strong phase for gold was from 2000 to 2011 when it outperformed while money supply was also rising fast. Since then, the ratio has remained in a certain range, with some ups and downs.
Current Signs of a Breakout in Gold
Today, this gold-to-money-supply ratio seems to be breaking out again. If it moves back to the range it touched earlier—around 0.1 to 0.2—it would mean that gold prices could rise 30–40% more from current levels. At today’s money supply, that puts the gold price target somewhere close to $4,500 in the next few years. This is not based on hope or hype, but on historical data patterns.
Of course, if the US faces a recession in 2025, it’s possible the money taps will be turned on again. That would mean more printing of money and likely a much faster rise in gold prices, just like we’ve seen during past crises.
A Bigger Change in the Global Economy
Beyond short-term moves, something deeper may be happening. There is a slow but powerful shift happening in the world order. Many believe we are already in the middle of this change. The COVID period, rising global debt, and central banks accumulating gold—all point toward a new trend. This may only be fully understood in hindsight, but we could look back and say the 2020–2025 period changed how the world looks at money and gold.
Gold as a Hedge for Stability
All of this explains why having gold in your portfolio makes sense. Many investors who added gold earlier are now seeing the benefit. Even as stock markets are volatile, portfolios with good gold allocation are holding up better. Gold is proving to be a great hedge—one that gives balance and stability in uncertain times.
From the market chaos of the 90s to mastering momentum investing, Ravi shares his powerful ETCS model for building lasting wealth. Expect practical tips on diversification, avoiding emotional traps, and thriving in today’s India. A must-watch for both new and seasoned investors!
