Most analysts remain oblivious of the underlying causes and attribute the move in gold prices to economic uncertainty, geopolitics, Fed rate cuts, higher price inflation, Trump's tariffs, and other secondary factors. However, the Numero Uno factor is the return of Gold to the centre of the world's monetary system, and these are very early days as part of that transition.  I would not be entirely surprised by an addition of "0" to the current gold price over the next 5 years.

The Case for $24,000/oz in the book "RIP USD: 1971-202X …and the Way Forward"

The book laid out the base case for gold prices hitting $24,000/oz by the end of the decade based on a return to "some form" of the Gold Standard by the US Fed. The $24,000/oz number was based on a 100% backing for the M0 component of the then (Q1 2024) Money Supply and is shown below. The graph (reproduced from the book) indicates that at twelve times the then price of $2000/oz, the Fed could have backed the base money (or "M0" component of the Money Supply) with its existing gold reserves.

What has happened since the book was published in June 2024? The one change is the election of Trump as President of the US, effective January 2025. Unquestionably, Trump inherited a horrendous fiscal situation. However, despite his pre-election promises to balance the budget and pay down the debt, he has only exacerbated the problem. Consequently, it is time to upgrade the targets, and as explained below, $40,000/oz does indeed seem to be a reasonable projection.

Funding the National Debt

The growth in the National Debt for FY2025, ending September 30, has been $2.1 trillion and this is in line with the trend of the previous 5 years. However, the "Big Beautiful Bill" of Trump is expected to add at least $3 trillion per year to the National debt – a near 50% increase from the recent trends of $2 trillion annualized additions to the debt. FY2025 might well be the last year in which the annual additions to the national debt had a "2" handle.

Additionally, approximately $7 trillion of the existing debt is maturing over each of the next three years. The implication is that nearly $30 trillion of US debt will need to be sold over the next three years. What will that do to the Monetary Base?