Gold: Monetary Base Ratio Suggests A Significant Monetary Event On the Horizon

We could be close to major financial/monetary crisis and it is most likely that it could happen during a major stock market crash and recession.

The chart below shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. That is the gold price in US dollars divided by the St. Louis Adjusted Monetary Base in billions of US dollars. (from macrotrends.com)

More details about the chart and original commentary here.

The bottom at point 3 is now virtually confirmed and we could soon have an event similar to the 1933 gold confiscation (bankruptcy) and the 1971 announcement where the US ended the dollar convertibility to gold (at a fixed rate).

Although both of the historic events were significant, they did not occur during a stock market crash or during a recession. There is a huge potential that the coming event could happen during a major stock market crash and recession. Therefore, the coming monetary event could be the cause (or at the center) of the coming crisis, whereas with the previous two they were as a result of an ongoing crisis, and came towards the end to “correct” the situation.

Below, is a more short-term chart of the ratio of the gold price to the monetary base:

The ratio has made another breakout and is likely to go higher quickly . There is no certainty when the crisis will hit; however, it will come some time during the rally and after/during the stock market crash. Physical gold and silver will likely be key assets during this crisis.

Editor’s Note: The above excerpts* from the original article have been edited ([ ]) and abridged (…) for the sake of clarity and brevity. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)