Written by Bryan Lutz, Editor at Dollarcollapse.com:
If you are new to DollarCollapse, we don’t just follow the collapse of the dollar.
We follow assets and investments, which respond in a positive way to chaos, crisis, and currency debasement.
As we see it, the main cause for the collapsing dollar is the rising, and insurmountable federal debt.
But right now, that debt is in the background…
Astonishingly, it’s not the sole driver of gold prices.
Here are three factors driving the price of gold:
1. Falling Federal Fund Interest Rates
For those of you who have been following gold for over twenty years, you know this one.
Whenever the Federal Reserve lowers Federal Fund Interest Rates, gold goes up.
That’s because when interest rates are lowered money supply increases, which leads to inflation, and to protect purchasing power, a greater investment in gold.
2. A Rising Money Supply (M2)
The whole Federal Reserve system requires inflation.
Because fiat money is debt, it has to be paid back by some means.
And that means more debt.
Where does the new debt come from?
New debt comes from the Federal Reserve.
So, you can see the gradual increase of the money supply over time to accommodate the system, below.
Then there’s the sharp increase in the money supply in 2020.
Since then, supply was taken off the table, but then something ironic happened.
As the Fed raised federal fund interest rate, supply went up.
Now that supply is going back up, inflation is returning, which is driving gold prices further up.
3. YoY Change in the Consumer Price Index(CPI)
Inflation is measured as a rate of change in consumer price index(CPI).
It is an index filled with categories of price measurements from different sectors.
And that means, historically, it has been easy for government bureaucrats to manipulate in favor of the current regime.
When reports are issued, sometimes one category in CPI is highlighted over others.
If gas and food have increased, then the cost of education, rent, and utilities might shared instead.
Yet, whenever inflation increases, so does the price of gold.
These factors…
And the anticipated election of both our candidates are driving gold prices up and onwards.
More on the tomorrow.