Gold level in featureless early trading
Paulson tells why he believes gold is a good investment now

(USAGOLD – 9/10/2021) – Gold is level at $1795 in featureless early trading as it continues to seesaw in a range around the $1800 mark. Silver is up 3¢ at $24.12. In a recent Bloomberg interview, David Rubenstein asked John Paulson, the highly regarded Wall Street fund manager, if he believed gold was a good investment now. Paulson began his answer by reflecting on why inflation did not occur when quantitative easing was first introduced after the 2008 financial crisis. “The Fed bought Treasuries, created money,” he said, “which wound up in the banks and then was redeposited at the Fed. And the money never really entered the money supply. So it wasn’t inflationary. However, this time it has entered the money supply. … So I think we have inflation coming well in excess of what the current expectations are.” Our Chart of the Day offers eye-opening documentation of the money supply growth Paulson references.

Chart of the Day

Sources: St. Louis Federal Reserve, Federal Reserve Board of Governors, ICE Benchmark Administration
Click to enlarge

Chart note: With inflationary concerns moving to the forefront, a handful of analysts have made strained attempts to show that gold is not truly an inflation hedge – an endeavor that generally requires the manipulation of timelines and statistics to make the point. The chart above is drawn to log scale and, as a result, provides a truer representation of monetary growth and its relationship to the gold price. As you can see, monetary growth spiked in 2021 – an event to which gold has not yet reacted.