The huge increases in global liquidity have been driving markets. Stocks, real estate, bitcoin, bonds (of course), and even strange concoctions called NFTs have all benefitted from the massive increase in the money supply. The exception of late appears to be gold—the asset one would have expected to be the prime beneficiary.

Why has gold not responded more?

Gold investors are asking why gold is not higher given the unprecedented money printing and rising inflation, as well as when that might change.

Certainly, if we go back to when the new age of money printing began, after the 2008 credit crisis (when gold was at $718), or just look at the period since the COVID-induced money mania (with gold at $1,471), we can say that gold has, in fact, responded. But certainly, in recent months, it has frustrated gold investors and is down nearly 8% so far this year, even as the money printing continues and inflation has entered the public consciousness. Why is this?

To some extent, gold has simply been in a long consolidation after the extraordinary move early last year, when gold jumped over 30% from its end-March low to early-August high (the gold stocks more than doubled).  That kind of move—in only four months—is extraordinary for an asset that is intended as a hedge and insurance. Gold is not supposed to do that. Bitcoin or Tesla perhaps, but not gold! Since then, it has been a long consolidation, as month-by-month more and more people give up, while potential buyers feel there is no rush to invest.