Unprecedented growth

What has growed fastest this year? It is easy, tech and biotech stocks, right? Not really. It is the money supply!👶

Take a look...

As you can see in the above chart, since 1970s, the Fed has got a habit to boost money supply whenever there is a crisis, like the oil shocks in the 70s, the Latin American burst in the 80s and  of course the 9/11 and the 08/09 financial crisis both in the 2000s. But none of them were comparable to what we are seeing now, a 25% increase of the money supply which all occurred within just a short few months.  

 It is truly unprecedented!😴

According to Gavekal Research, a research firm that tracks these things, "This rate of money printing has never been seen before in the history of the U.S., or of any other G7 economy."

This unprecedented money supply has fueled the bubbly increase of nearly all the assets including stocks, one sector is especially beneficial from the runaway debt increases. And amazingly, even it has gone up a lot and is the best performing sector for the year, you still don't hear much talk in the media yet about it, not like stocks that everyday you hear new highs announced and discussed on TV. I'm talking about gold and silver. Gold has quietly jumped to its 7 years high and is very close to challenge its all time high just above $1900. Silver is still far away from its all time high around $50 but is catching up very fast these days. Precious metal stocks are doing even better. See below how much gold stocks have outperformed the stock market so far this year.  

The precious metals analysts, Otavio Costa, recently posted the following chart on Twitter. It shows the price of silver compared to the U.S. money supply (M2) over time. As you can see, compared to the amount of money that's been printed, silver prices are still historically low. 

If you have followed my blog for some time, you must know that I'm a gold bug with unwavering belief in gold and silver as well. I started to talk about gold/silver investment almost since the very beginning of my blog about 10 years ago. My personal serious buying gold was when it was around $700 or so many years ago. Although the last 8 years were very tough for gold/silver, I have never lost my faith in it! To me it is just a matter of time that it will come back and go substantially higher than $1900. Such a day is numbered and we likely will see it this year. Of course, gold and silver are notoriously volatile and swing a lot. At the moment they are a bit frothy in the near term. I won't be surprised to see some sort of mini "crash" to drive away the weak hands, sort of speaking. But in the long term, their prospects are never better now with the unprecedentedly money supply that is totally out of control moving forward. If you want to preserve your buying power, buying some gold/silver is certainly a good idea for the long run!😜