February 12, 2012
Monetary Inflation versus "Price Inflation"
By: Steve Saville, The Speculative Investor
In our 11th January 2012 commentary we argued that a certain 'technical analyst' was wrong to extrapolate gold's recent price action into a forecast of imminent deflation. We did so by pointing out that a) the year-over-year (YOY) rate of growth in US True Money Supply (TMS) was about 14% at the time, b) December-2011 was the 36th consecutive month in which the YOY rate of TMS growth was 10% or more, and c) if the YOY rate of TMS growth remained above 10% for two more months then it would be the longest period of double-digit money-supply growth in US history. That is, we pointed out that far from being in 'danger' of experiencing a serious bout of deflation, the US was in the midst of a record-breaking period of monetary inflation.
Based on preliminary data for January-2012, the YOY rate of growth in US TMS has accelerated to 15.4% over the past month. The situation is illustrated below. This leaves no doubt that a new US monetary inflation record (the longest period of double-digit money-supply growth in US history) will soon be set.
The question is: considering that there has been so much monetary inflation over the past few years, why hasn't there been much "price inflation"?
Full story: http://news.goldseek.com/SpeculativeInvestor/1329235200.php
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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