Record-Setting Money Makes Hard Assets More Attractive

Gold hasn’t been getting much love from investors lately due to rising bond yields, and bullion-backed gold mutual funds and ETFs have seen significant outflows so far this year through the end of February.

We still have a strong conviction in gold and believe one of its most convincing long-term investment cases is the alarming growth in money supply in the U.S. Let’s look at highly liquid M1, which includes cash outside the U.S. Treasury, money market deposit accounts and other forms of so-called “near money.”

As you can see, the amount of cash floating around the economy is up a head-spinning 355% compared to last year. This is a record rate, and it’s not even close. To combat the economic impact of the pandemic, policymakers flipped on the printing machines and never bothered to shut them off, flooding the U.S. with easy money.