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Visualizing U.S. money supply versus precious metal production in the Covid-19 era

by Jenna Ross | posted with permission of Visual Capitalist | October 8, 2020

Visualizing US money supply versus precious metal production in the COVID-19 era

 

Gold and silver have played an important role in money throughout history. Unlike modern currencies, they can’t be created out of thin air and they derive value from their scarcity.

In the Covid-19 era, this difference has become more prominent as countries print vast amounts of currency to support their suffering economies. This graphic from Texas Precious Metals highlights how the value of U.S. precious metal coin production compares to U.S. money creation.

Year-to-date production

In this infographic, we have calculated the value of money supply added as well as bullion minted, and divided it by the U.S. population to get total production per person. Here’s how the January-September 2020 data breaks down:

  Total (ounces) Dollar value Dollar value per person
U.S. gold ounces 826,000 $1.6B $4.79
U.S. silver ounces 22,261,500 $544M $1.65
U.S. money supply $3.4T $10,250.16
U.S. debt $3.8T $11,578.36

(Gold and silver dollar values based on October 5, 2020, spot prices of $1,915.93 and $24.47 respectively.)

The value of new U.S. money supply was more than 2,100 times higher than the value of new gold minted. Compared to minted silver, the value of new U.S. money supply was over 6,000 times higher.

Production per day, per state over time

Here’s how production has changed on a per-day, per-state basis since 2010:

  2010 2020 YTD (Jan.-Sept.) Min-max production, 2010-2019 
Minted gold coins  78oz 61oz 12oz-78oz 
Minted silver coins  1,945oz 1,631oz 899oz-2,633oz 
U.S. dollars $19M $255M $19M-$50M 

Year-to-date, U.S. precious metal coin production is within a normal historical range. If production were to continue at the current rate through December, gold would be above historical norms at 81 ounces and silver would be within the normal range at 2,175 ounces.

The issuance of U.S. dollars tells a different story. Over the last nine months, the U.S. has already added 400% more dollars to its money supply than it did entirely in 2019—and there’s still three months left to go in the year.

A macroeconomic view

Of course, current economic conditions have been a catalyst for the ballooning money supply. In response to the Covid-19 pandemic, the U.S. government has issued over $3 trillion in fiscal stimulus. In turn, the U.S. Federal Reserve has increased the money supply by $3.4 trillion from January to September 2020.

Visualizing US money supply versus precious metal production in the COVID-19 era

 

Put another way, for every ounce of gold created in 2020 there has been US$4 million added to the money supply.

The question for those looking for safe haven investments is: Which of these will ultimately hold its value better?

Posted with permission of Visual Capitalist.

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