Gold Vs m2 and SPX have more room to grow than u thinkPast week, gold only followed dxy moves, how many more days left?
M2
BTCUSDT/M2 - The Beginning of the End?BTC has had an extended bullish push up from the March 2020 "Black Swan" lows and by most metrics this recent sell-off looks like just another one of its large corrections the crypto is known for.
As many have noted, throughout the covid crisis most world economies have been printing money like there's no tomorrow nor consequences of doing so (insert "money printer go brrrr" meme here). So, we have hugely over-inflated fiat currencies (most notably the US dollar) and crypto currencies (USDT supply at ATH), and a surplus of money to be injecting in to the market following massive bailouts of corporations - pumping up prices and giving us all the illusion of safety. Looking at traditional markets' indices, the SPX500USD & NAS100USD have both recaptured and soared past their previous all-time-highs when not accounting for the M2 money supply.
However, what story do these charts tell us when we do take the M2 supply into account? Looking at BTCUSDT in particular, we can see that we had a clean break of the bearish market structure line in November last year and despite the 170% pump we've seen this year, we've failed to push above the weekly bullish market structure and have instead rejected the key resistance point of the quarterly premium taken from June '19 highs to March '20 lows. We are now creating a series of lower highs and lower-lows after having broken the 3-day bearish market structure at these key levels - indicating further long-term bearish price action if we fail to recapture above the 12060 level.
Could this year's pump have simply been a return to a key liquidity level for smart money to have taken their exit positions? It's certainly starting to look that way.
Inflation is distorting the way you perceive pricesTriple bottom bounce incoming? Money printer go brrr.
Green = inflation adjusted (negated from price, representing a lower price)
Orange = actual market price
Of course I didn't take LTC inflation into account. Is it useful? You be the judge.
The myth of hyperinflation series #5- Velocity of moneyEven if the purchasing power is rising, without the increase of velocity of money, there will be no inflation and sustained economic growth.
Circulation/velocity of money measures the interval between money transactions, decline means less transaction is taking place and the interval between money transactions is getting longer.
According to the July 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices, senior loan officers have tightened their standards and terms on commercial and industrial (C&I) loans to firms of all sizes. Furthermore, banks reported weaker demand for C&I (commercial & real estate) loans from firms of all sizes and weaker demand across all three major commercial real estate (CRE) loan categories- construction and land development loans, nonfarm/nonresidential loans, and multifamily loan over the second quarter of 2020.
Next, we will look at demand and consumption.
Every time M2/Silver RSI hit these levels S&P500 had a setbackEvery time the M2/Silver ratio RSI hit these levels S&P500 had a setback. Will this time be different?
So is the printing over?July seems to indicate the first monthly decline in M2 in many years. Is the Fed reigning things in?
Velocity of Money (M1 and M2)M1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks.
M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.
The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.
SPX / M2 paints a very different picture of the global marketThis chart shows the SPX/M2 and essentially paints a picture of the SPX when accounting for inflation.
All the "gains" made in the time following the 2008 crash, after factoring inflation in, simply put price or "value" back to where it peaked.
How interesting that the 2020 crash should occur at such a pivotal TA level, forming a near perfect sweep of highs and double top.
From this view, it looks as though the price action following the 2020 march lows is simply amounts to a bearish retest.
Will be an interesting one to watch as the money printer fires up yet another round of QE.
Brrrr, brrrr, brrrr.....
Gold vs M1 and M2 Money SupplyM1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks.
M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.
We are looking at the GC1! gold futures vs these money supplies
As we print more we expect these money supplies to increase, so we can start to see the 'real growth' in terms of how much $ is 'out there'
I examine lots of these 'composite' charts as I call them, but let me know your thoughts as well!
**NOTE** Because sometimes there are scaling issues; attempt to line the angles up with the black lines with same origin, thanks!
Manage your own risk
Much Love
GL HF
xoxo
snoop
Indexes vs M1 & M2 Money SupplyM1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks.
M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.
We are looking at the major US Indexes Dow 30, SPX 500, Nasdaq 100, & Russell 2000 vs each of these types of money supplies
As we print more we expect these money supplies to increase, so we can start to see the 'real growth' in terms of how much $ is 'out there'
In the more liquid M1 Money supply it looks like we may have bottomed here on the indexes by testing the 'all time' trend line
But in the less liquid M2 Money supply we /could/ expect a fall further if things really go south here. We never tested the 'all time' trend line. No /need/ to but if we did it would be within reason.
I examine lots of these 'composite' charts as I call them, but let me know your thoughts as well!
Manage your own risk
Much Love
GL HF
xoxo
snoop
20% Increase in Currency Supply in 4 months!Just making an observation that the total amount of currency in circulation (Physical + Bank Credit) has increased an unprecedented 20% in the last 4 months. I believe, when we are looking at this chart, we are looking at a Credit Bubble.
Something that bothers me. Current National Debt is around $24.2T, however, we have $18.4T in total dollars in circulation. So even if you use every dollar in existence to pay off the National Debt, you still have $5.8T USD in debt remaining... how does that get paid off?? Need to dig more into this.
Commodities will continue to fly!This chart (XAUUSD/M2) is why I believe Commodities are going to rise in price for some time. I do not believe they have fully accounted for all the excess of currency supply we have accumulated in the last 4 months (from $15.4T to $18.4T USD), which has risen an unprecedented 20% from March until now according to the M2 chart. I believe we are now only at the start of seeing Commodities account for inflation due to excess Bond, Cash, and Bank Credit creation, partly fueled by the low lending rates. As you can see below, the last time this chart peaked was back in 2011. This seems to line up with when Gold reached its historic all time high (around $1920USD/oz) which held for the last 9 years. We are now back at this ATH and have gone beyond, however this chart is still does not seem to line up with this recent peaking of Gold. For this reason, I believe this chart has waaay more room to fly and take all Commodities up with it, and I can already see the patterns emerging indicating this. I believe you can park your cash in any Commodity for the time being and expect a return. The red flag for me to exit would be when the Fed decides to raise interest rates to curb inflation.
XAUUSD performance in recessionsWanted to show how Gold price performs during recessions. We are way out of scheme right now.
SPX Bear Market RallyJust like in May 2001 and May 2008, we appear to be in a bear rally. This is difficult to see by just looking at SPX because SPX is manipulated by the money supply; However, if you look at SPX/M2, this becomes more clear.
See the similarities on the RSI and MACD. This seems to suggest that some time before the end of July 2020, we will see a top in the market.
The Fed has stated they are not considering negative interests rates. However, if you notice during the previous two recessions at the top of the bear market rallies marked with the red vertical lines, the Fed had to continue lowering rates. Therefore, if the Fed stays true to their word and does not push rates into negative territory, it's possible that this 2020 Recession/Depression will be significantly worse.
If the Fed does not push rates negative, it's possible that some form of sustained "helicopter money" could be coming.
bullmarket or excess money supply?top is SPX/ money supply...
did we get richer in 10 years??
funny to see how we rejected the 2007 top and bounced back of the 2002 low...
I think the story is far from over...
Help me, FED Printer. You're my only hope.With S&P 500 closing on the 50 weekly MA. Markets are standing on the edge. All time highs are still totally possible if public sentiment allows for more printing. Months ago I suggested a possible crazy crash in DJI it's far for a certain reality though I found it eye opening to downside potential. I have linked it below. I am relatively neutral on market direction FED influence is to impact. Volatility is still high enough that stop positions could have a lot of downside risk. Looking at hedge strategies to cover those losses. Any suggestions welcome.
SPX vs M2 will it continueLooking at the M2 charts the the money printing seems to be slowing a bit still at a rate of over 8% per year. Comparing these to i'm considering 3 factors of what could be next.
1. Deflation stock market crashes and value floods into the dollar with another mass sell off. Looking for weakness in S&P as the printing slows.
If deflation happens having USD is ideal.
2.Back to normal M2 money levels off to normal's. The stock market maintains gradual growth, GDP increases. Velocity of money increases and exponential growth in cost of goods is not felt.
If back to normal happens having stocks might could be profitable. The biggest risk being the increase in cost of goods because of velocity of money increase.
3. Hyper Inflation this is least probable to happen next though still very much possible. In that case M2 would need to increase much more.
Cash would be worthless, stocks would be next to worthless though increasing in price daily in relation to uses currency. In this case gold, silver and cryptocurrencies would be ideal.
I think if this were to happen cryptocurrencies would have to compete with gold and silver to see which is better money.
USD in troubleThe numbers seem to indicator we are now at 17% inflation of M2 this year. It's just getting faster. It's likely May ends at 20%. If you don't understand why markets don't reflect this please read my post Can't feel inflation yet I linked it at the bottom. At this rate by next September M2 inflation would be equal from start of 2020 till 2021 September and 2008-2020. Based on the currently numbers it's likely to be faster then that. As for the simplicity of the math I calculated staying at our current growth rate. The numbers so the rate increasing unless something changes it will happen faster. Many people think Covid-19 being over might stop this growth though that does not factor time for businesses to start recovering. Also when businesses start to recover and consumer confidence increases so will spending. The velocity of money increasing will mean people start to feel the effects of inflation.
Can't feel inflation yetCan't feel the affects of inflation yet because the money that has been added to the financial system has not started to move yet. If we look at the comparison M2 money has increased by over 100% since 2008 yet the flow or velocity of money is down 30%. Keeping in mind that since the start of 2020 there has been an increase of M2 money around 16%. While many assets crashed against the dollar showing signs of deflation even though on paper money supply should be causing inflation. That is caused by money not moving and as a result there can be a steep devaluing of the currency once people start to spend again.
"What is M2?
M2 is a calculation of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds, and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits."
www.investopedia.com
"What is Velocity of Money?
The velocity of money is a measurement of the rate at which money is exchanged in an economy. It is the number of times that money moves from one entity to another. It also refers to how much a unit of currency is used in a given period of time. Simply put, it's the rate at which consumers and businesses in an economy collectively spend money. The velocity of money is usually measured as a ratio of gross domestic product (GDP) to a country's M1 or M2 money supply."
www.investopedia.com
Funny not funnyIt's funny how fast this is going up 16% in the since the start of the year. Sadly most people don't know anything about M2 money or Fed money printing. They will be the victims of this. Though I do believe it's best to not live the victim life. People should be educating themselves rather then blaming others. Regardless it's hard to watch people go rough times. Including the 120 Million people globally predicted by world food program to be at risk of starving due to lock down impacts on economics.
M2/GDP RatioThis ratio is indicating more pain to come from macro indicators such as the ISM Manufacturing PMI..
