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 From this one, what I see is that the biggest move in precious metals is yet to come. It's just started. Hi, it's Mike Maloney and Alan Hibbert once again with the Gold Silver Show. Alan, how are you doing? I'm great, Mike, thanks. How are you? Great. So, uh, you've got a presentation that you've put together based on a tweet that somebody made, correct? Yes, exactly. One of our viewers tagged us in a tweet and basically said that there's one type of ratio he wants to look at that he doesn't hear a lot of

gold gurus talk about. So, I figured we would make a dedicated video doing exactly that. Excellent. Yeah. So, here's so here's the tweet. This comes from MJL Texas. He asks, "Gold top? You know, has gold peaked?" The ratio is right at the bottom of a long-term trend going back to the peaks in gold in the 1980s. This is M2 money supply divided by gold. Gold is actually pretty expensive versus the amount of outstanding currency, at least from a historical perspective. And he includes

a chart from incrementum. This is M2 divided by the gold ratio. And I will elaborate on this chart in just a second. We're going to see a lot of this chart throughout the video. Finally, he says, "I've never heard any of the gold gurus quote this one. plenty of debt to GDP discussion, but never have I heard a M2 money supply to gold discussion. This chart indicates that gold has peaked. So, a very interesting concept. Mike, have you thought about this one before? M2 divided by gold.

I believe I I'm I this Yes, I've thought about it many times and I have made videos on it in the past, not uh for a number of years now. uh it is one of the indicators that I use uh for myself and I I was going to do some back testing on that combined with other indicators for our insiders program for a cell signal. Uh I think it might be in my first book, but I can't remember here. Uh but if somebody believes that they're going to stop printing currency uh and that gold has peaked, they should

sell their gold and they should move into dollars. That's so one of the ways to uh see whether or not uh this has uh peaked compared to the currency supply is to measure it against uh other uh indicators to see if if it's peaked against those indicators as well. So, uh, we we talked about this a little and you put together a whole bunch more stuff. Yeah. So, the bulk of this video is is actually going to be us looking at different charts, uh, and different trend lines, different ratios.

And we're going to come at this from a few different angles. And one of the things I want everybody to notice here is in this chart, you know, he's drawn a trend line here. Uh, the chart only has one date on it, 2004. And it's very skinny and tall. So, show us your next uh chart here, your next tab. Yeah, my my hypothesis is that this gentleman put this together on his phone. So, I went I went to Incrementum's website and found the the tool that he was using to build this chart. And it's an interactive tool on

Incremenum's website. So, if anyone wants to recreate this for themselves, they can feel free to do so. And if you look at it on your phone, it's going to be really narrow and it's going to look like this, which is which is what we just saw on that. And the only date is 2004. Exactly. So So I think that's how he created it. Yeah. Yeah. I think that's how he created it. And then he added that red trend line himself that looks like uh it's not perfectly straight. So he probably used

his finger to drag it across the touchcreen. So all very sensible. Yeah. All good. No worries. So what I did is I found this data and I recreated it in Excel. Nice and clean and beautiful. In my opinion, it's beautiful, right? Excel charts are always beautiful from from uh stock charts and Federal Reserve. So Federal Reserve gave us the M2 and stock charts is the gold data. Excellent price of gold and and this is what it looks like. So we have a trend line here. Okay. And actually on here, if you drew

the if that was touching and if both of the the first and the second uh troughs were touching the trend line, there would still be room for gold to rise in price, which causes this line to fall. Um or for the currency supply to shrink, which would cause the black line to rise. Right. Exactly. Exactly. Yeah. Yeah. So, um, yeah. Okay. So, yeah. So, what I did is I drew this trend line as if this the black line went a little bit lower, which is on the next chart here. So, if the black line goes a little bit lower, it would touch

there. And the reason I did that is because in January of 1980, gold hit an intraday high of 873, a closing price of 850. and that you know and this is monthly data but on one particular day gold outperformed so I thought it would be interesting to look at both versions you used 850 uh the one from incrementum is monthly data right yeah so this is where we plugged in uh daily data in January of 1980 when gold peaked but it's the daily close it's not 873 the intraday it's 850 So okay.

Exactly. And that shows that we are right on the trend line right now. And you know if you think that uh this is going to determine uh that if if you think then that gold is overvalued compared to the size of the currency supply then you really should be selling your gold and moving into US dollars. And maybe some people think that. I'm not one of them. Okay. Okay. So let's move on. Okay. So for anyone who wants to know where this ratio comes from, um it's pretty straightforward. We basically

look at M2 and here we have in green M2 not seasonally adjusted. That's NS. So you can get that green line on the Federal Reserve website. And then gold is simply the price of gold. So price per ounce. And uh if you look at the the vertical axes here, you will notice that this chart is logarithmic. So we actually have a it's base four for anyone out there. You know, you multiply by four every time you go up to the next grid line. So it's actually on both sides you multiply by four. And this logarithmic

chart shows the uh the changes in magnitude more clearly than a linear chart would. Yes. And and here what you see in 1980 is that one of the things that log does for us is um every inch on this graph or every you know whatever measurement you're going to take half inch if you're looking on your cell phone quarter inch or on a big computer screen two inches. Uh um there's that big difference if you've got to look absolutely vertically from the peak in 1980 to the distance to the green line and then take a look at

the distance the difference in the distance in them today at the end of the graph tiny by comparison minuscule. Mhm. So it is no gold is nowhere near as overvalued you know uh according to the chart they are actually very close now. The size of the bubble that gold went into the the um percentage of global financial assets that it was in 1980 is very very different. Today nobody really owns gold. It's not a huge percentage of financial assets. It's very small. And so I know we're not comparing it to

financial assets right now. We're comparing it to the units of currency that exist. But what this shows you uh is is that um because the others were drawn uh in a linear scale instead of logarithmic where you're not seeing the percent change, you're seeing the amount change. Uh that sort of fools us a little bit. Here you're seeing the actual percentage change. So every inch on this graph is the same percentage change as the as the previous inch where on a linear graph it's not. And so

okay so keep on going. What Yeah. Yeah. Yeah. And to your point, Mike, the uh the amount by which gold is overvalued right now is even smaller than it was in the first half of the 1970s. Wow. we still had another another half of the bull run left, you know, back then. So, and look at that. It it uh in the first half of the 1970s, it retraced until it touched the currency supply and then rose. Now, again, this is the price of gold percentage change and the uh the quantity of M2, right? Yes, exactly.

Okay. Yes. So we can actually look at that same thing on a much longer time scale going back almost to the Civil War. Uh and you see here that we have two different lines for M2 because you know it's it's hard to find single continuous data sets that go back a long time. Usually you find pieces of it and then you have to splice them together yourself. And I just chose to keep them separate here so people could see that they're similar but different. Yeah. It's just the way they were

calculating uh the total of M2 back then versus today. Um you know we will probably so for the audience we will probably uh do an adjustment here. Figure out uh the two different ways that it was calculated and be able to adjust one of these data sets to splice them together evenly. But they're so close that it still works to divide these things, doesn't it? Exactly. Yeah. And uh it's also somewhat convenient um you know you might say that the price of gold was fixed. It was basically a flat line for these

different segments of history that you know um so it makes it easier when you divide it. You can you can uh sort of get around these these splicing problems a bit more easily than you otherwise could. Okay. So yeah. So, the first data set that Incrementum used and that the the uh guy that did the tweet uh that's the light green line on the top that ends at 1960. Yep. Exactly. That's what they used. And so I dug up this other one from historical statistics of the United States and it goes back even further.

Okay. Excellent. Yeah. And when we divide them together, we get this. This is a long-term version of that same chart that our viewer showed us, you know, from incrementum. N2 divided by gold. But this is annual data, so it's not it's not quite as uh descriptive, not quite as volatile, let's say. Okay. Yeah. And you can see like if I just look at this, if you if you hid the title for me, so I didn't know what I was looking at, I would say something very significant happened about halfway

through this chart where it almost seems like two different data sets. And I'm not talking about splicing, right? I'm not talking about splicing together two different things, right? You're talking about August 15th, 1971. Exactly. Exactly. Yes. Because you see you see curves. It's like the first half is a very curvaceious trend and then it's like triangular. It's jagged. It's like something weird happened here where it's almost like you're measuring two different things.

There was also a very smooth uh line going up to 1913 and then it changed direction. What happened in 1913 1914? Oh boy. And the Fed. And the Fed. They're screwing with our data. Right. Right. So, okay. Yeah. Let's move on. So, what we can do here, if we draw a similar trend line to what our viewer had, again, this is annual data, so it's not quite as granular. Um, but if we do draw a similar trend line, it would appear that we're breaking through it right now. Wow. Time to dump your gold and and

accumulate dollars. H Now, didn't the big beautiful bill just raise the debt ceiling ceiling by by five trillion dollar? You know, when I wrote my first book, the uh the debt ceiling was, I believe, at 7 trillion and now we just raised it by five from where it was. Oh my goodness. I mean, these numbers don't make any sense. Like, no, they don't. It's not a laughing matter, but I don't think you have a choice. You have to laugh. I don't know what else you could do. Yeah. Yeah. Otherwise, you cry.

Yeah. Yeah. What What is that quote? Um, life is a comedy to those who think and a tragedy to those who feel. Wow. I've never heard that. Yeah. Um, it's I forget who it is, otherwise I'd attribute it, but yeah, it's a good one. Yeah. So, okay. Anyways, all right. Moving right along here. Um, another way of looking at these two assets, we have M2, the same two lines, the same two green lines we looked at before, but here we're looking at the amount of gold in the treasury. So, this isn't this isn't just the price

of gold. So, this is just ounces or it's the ounces times the price. ounces times price to get a dollar value of gold in billions. So, this 1,00 here is a thousand billion or just shy of a trillion. That's where we're at today. Okay. Yeah. And is that okay? So just shy of a trillion. Uh and that's measured with the free market price, not the statutory price. Correct. Interesting. Okay. Correct. Well, you know, we just did uh several videos on the possibility of heading toward a gold standard. Um, and if

that's correct, then here gold is severely undervalued and has to make up uh a lot of ground. So, exactly. And yeah, that's a lot. So, this is 10x. So, that's at least double uh since it's log, it's harder to do this in my head, but yeah, that's probably at least double. Double double. Yeah, that's at least double. Um and normally it becomes overvalued before it's more it's more than double I think. Yeah. Especially because this is this is below a thousand. So

yeah. Yeah. Well, yeah. Okay. Well, yeah. So, let's divide these together and see what we get. It looks like this. M2 divided by the value of Treasury gold. And I've added a trend line here. And we're just below it. Just barely. Um again, annual data, so not super granular, but this is what we come up with. Okay. Um I'd like to point something out, too. Um you know, if you look after August 15th, 1971, when the u the first big peak there um and then it drops down and we get a uh let me see what was

happening. That was the uh gold rising and then gold fell and created. So we're looking at this. We're looking at gold basically upside down here. Mhm. So gold was going up in price causing the line to fall and then gold uh peaked in 70 the last day of 74 and then from uh first day of 1975 until I believe August of 76 gold fell by half. It had gotten up to 200 bucks and it fell down to 103 uh in August of uh August or September of uh 1976. And so that causes that peak. Then it went all the way down to the bottom of

that trough January 1980. And then it goes up again. And uh it's it's not gold going up. This is gold falling. And then gold does a dead cat bounce and rises again. and then falls. And you have an inverse head and shoulders pattern. And if you drew a neckline, which is a trend line, a neckline across those two peaks. You flip it upside down, it's predicting a move going uh rising, and it way exceeded that. Now, that was uh predicting that gold would fall and the dollar would rise. Now, take a look at

what we've got going on today. We have another slanted in uh not inverse but a normal right side up head and shoulders pattern and we've just broken the neckline. That trend line that you're drawing isn't just a trend line. It's a neckline on a tilted head and shoulders which is predicting that uh we should this is a once again a linear graph. And so if this was logarithmic, what it would be predicting probably is a return to the balance the the type of balance that we had back before 1960. What would

be the average before 1960? About seven, eight, six. Yeah. Sevenish. Right. Right. Do you see that there's there's a right side up head and shoulders in this chart? Yeah. Yeah. Exactly. And so there's a lot of different ways of looking at this from a technical perspective. You can say yes, it's broken a trend line. Um and that would mean that um either it's overvalued and you should get out of gold or you should accumulate as much as possible because it's going to make this

enormous move coming up right away because it just broke this head and shoulders. Yeah. So, could be either or. Yeah. So, what's next? All right. Well, uh I want to talk about the Dow gold ratio. Okay. This is a great way of sort of do it throwing in a confirming indicator. Uh do you believe that you should get out of gold that it's that the dollar is going to outperform it? If the dollar does outperform it, we should have a great economy. Stock market will just continue on up into a bubble. Now, there

are so many ways of measuring the stock market, and there isn't one of them that you can find that doesn't say that it's in a gigantic bubble. And it's only PE ratios uh that that show it uh not that show it being less than the greatest bubble in stock market history globally. Uh there is no bigger bubble than what we've got going on except when you measure it with PE ratios then it's like the second largest bubble in history that it's been in. But uh uh so there is a trend line and

if it's true that the trend line is the signal that suddenly one asset class is uh overvalued against another or the currency overvalued undervalued against gold being overvalued because gold hit the trend line. Well gold hit the trend line here against stocks. But um I think you've got another graph, don't you? Yes, I do. So, basically my point is the point I would make here is that yeah, this is breaking just barely breaking the trend line. I don't think this is the right trend line to draw in my

opinion. Yeah, I think I think this long-term trend line around the bottom is the right one to draw. Exactly. And from this one, what I see is that the biggest move in precious metals is yet to come. it's just started. Now again this is a logarithmic graph and so uh percent change and if you think the rise from the year 2000 to uh uh 2011 was uh breathtaking uh then you haven't seen anything yet. the the rise that we've had over the past uh year and a half is just the beginning of something absolutely

enormous. And so if you do think that there's the possibility of a monetary reset, you may want to be rethinking uh is gold overvalued or not? Because the only conclusion I come up with is no, no, no, no, no. It's still the dollar that's overvalued. And do you think that there's a possibility that we could go into a recession right now? Uh if you do, then they are going to be if if if the Fed uh senses anything wrong in the economy, they've shown their hand. There's only two things that they can

do. Light up the printing presses and drop interest rates to zero to influence the banks to light up their printing presses. actually their um I don't know what you would call a number duplicating machine. It's just a computer. You're typing in numbers. Bank credit. And so uh anyway, any comments on this? They're M2 boosters. They can fire up their M2 boosters. Yes, they can they can expand M2 faster than we can expand the supply of gold. So, uh, if they can get people to make loans, what happens though is when

things go really bad, the banks get scared. And even though the Fed drops interest rates to zero, uh, the banks may not go out and want to be willing to make loans. And that's the only way M2 gets expanded is by the banks creating more bank credit because that is basically what M2 is. Yeah. Well, that may happen. And if it does, that could be the reason why the ratio we've been looking at throughout this video, why it does revert. So, we'll see. So, we'll see. We'll see what

happens. Okay. I want to end with a meme here from Chris Martinson. What happened to the Fort Knox gold audit? It was cancelled due to lack of resources. I think they're busy replenishing those resources right now. that would account for all of the gold flows that we have seen. Uh they're ending, you know, these uh central bank leases have terms on them. They've got to end these contracts so that the the gold is not rehypothecated. It'll be very interesting to see when an audit finally does happen and if we are

headed toward any type of gold standard, anything related to gold because the world's central banks especially, you know, in the eastern hemisphere uh they are uh um collecting gold at a frantic rate and it shows that the world's central banks think that something is up and so we may be headed toward and the fact that gold just overtook the euro as the second largest uh uh central bank reserve. And uh uh this just says to me that we could be headed toward something where gold is involved in the future uh

when this monetary reset happens that there is a transition coming and it's natural and we've had you know we had one after uh in in uh 1921 or 22 uh where there the world the world went on a transition uh after World War I different monetary ary system. Uh then it broke down at the end of the 30s and uh after World War II, different monetary system. And then 1971, different monetary system. And they're very different monetary systems. The other ones affected uh they didn't affect the common man. They've affected

any international businesses and they affected countries and banks. uh the average person didn't even know they were happening. But when it comes to this transaction, the other ones were little baby steps off of gold. This one is going to be one huge step back onto something real, something that uh all of the different countries can trust each other with, something that can't be created out of thin air. And if that happens, it's an enormous step that everybody on the planet will feel.

Absolutely. Well, thank you, Mike, for your expertise and all your perspectives in this video. And thank you to everyone for watching. And thank you to our viewers for sending in your comments. Appreciate it, guys. Thanks. Bye.