Quant Weighs In On Gold,

and doesn't much like the odds in place now. The benchmark used by Dundee Securities strategist Martin Roberge is growth in the U.S. M2 money supply; that growth rate is shrinking. So, despite the 'til-recent plummet in the U.S. dollar, the odds of gold going up are low right now.



It's interesting that he uses M2. Back in the 1970s, monetarists used M2 as a forecaster for economic growth. For consumer prices, M1 was used. The graph of the M1 money supply gives a different picture. Here's a graph, from the St. Louis Fed, showing the % changes from a year ago of M2 and M1:








Both measures were actually discredited in the 1980s and '90s because the inflation rates no longer tracked either. The demand for money shifted.

[Note: The M2 graph begins at 1980. The M1 graph begins at 1975.]