Last night the mavericks in the splinterlands discord were having a fun discussion about gold. It all started with someone asking the question if there was insurance for inflation. Aggroed and I both said "gold?"
And it went from there.
During that time, I wanted to look at the history of gold as it relates to the money supply and was able to create the above graph at https://fred.stlouisfed.org/graph/?g=pLu9. What it shows is the total assets of the commercial banking system (blue) and the price of gold (red). Both are indexed to 100 at the start of the '08 financial crisis so that the numbers would be on the same scale.
2 things look immediately apparent to me.
1, the price of gold does roughly correlate to banking assets. It's not a perfect relationship, but the trend seems clear. The more money created, the higher the price of gold. Like any trading asset, there are periods of overvaluation and undervaluation around the trend.
2, the price of gold reminds me a lot of crypto prices, but stretched out longer in time.
When we look at the price of BTC (log scale)
We can see the same kind of blow off peak followed by longer periods of consolidation.
That makes sense to me as both gold and BTC are "alternative" monetary assets. They both gain when trust in the traditional monetary system is low.