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Key Charts: The Two Strongest Forms Of Money On The Planet Over The Last 13 Years

Friday March 08, 2013 12:02

In reflecting on this two-year smash of precious metals, and in particular, mining shares, let's take a look at some currency history of the last decade to provide us with some much needed mental capital.

With the help of Nick Laird over at Sharelynx.com, I was able to track down a few charts documenting the staggering percentage growth increases of gold and silver when compared to the world's major currencies. What I found was shocking:

Despite recent setbacks, gold and silver have been the strongest currencies on the planet for the last 13 years. 

Here is a chart of percentage growth returns of gold & silver vs. major world currencies:

http://bullmarketthinking.com/wp-content/uploads/2013/03/chart-1.jpg
(click to enlarge)

What's important to note is that global supply of gold and silver remains somewhat constant---increasing at a rate of about 1% per year (and falling), while global supply of fiat paper currencies can be expanded by any percentage size, at anytime. Therefore, we must conclude that either pre-existing supplies of global currency units having been rushing into precious metals over the last 13 years, or the total global money supply of all currencies is expanding at a frightening rate---with gold and silver signaling the expansion.

Here is our second chart, showing percentage increases of gold when measured in various world currencies:

http://bullmarketthinking.com/wp-content/uploads/2013/03/chart-2.jpg
(click to enlarge)

It appears based on this chart (as well as the next) that South African & Indian Reserve Banks are far outperforming Bernanke's Fed, in terms of increasing money supply---and devaluing their currencies against precious metals. Or rather, those two currencies are "voicing" their money supply growths (through the instruments of gold and silver) more promptly than the others.

Here is our third and final chart, expressing percentage increases of silver when measured in various world currencies:

http://bullmarketthinking.com/wp-content/uploads/2013/03/chart-3.jpg
(click to enlarge)

Bottom Line: Gold & silver have remained the same over the last thirteen years while world currencies have expanded in supply by staggering sums. Will currency supply expansion continue? Will quantitative easing programs expand to preserve global financial orders?

If the answer is yes to these questions, then ignore the short-term noise of the market and hold your long-term positions in the world's oldest, strongest forms of money.

Best,

By Tekoa Da Silva
www.bullmarketthinking.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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