How Does the Price of Gold Get Affected When the US Prints Dollars and Increases Its Debt?

 The Effect of Dollar Supply and US National Debt on Gold Price

     In this section, we will examine the effects of the US dollar printed (i.e. the amount of emission) and the US National Debt on gold pricing.

     In the chart above, we see the picture of the dollar supply over the last seventy years. It can be clearly observed how the momentum increased after 1995 and especially after 2008. Probably the recent decline in the money supply nowadays will not last long.

     This chart created since 2012, compares the gold price level according to the dollar supply. The low rate shows that there is an opportunity for gold to rise. There has been an upward momentum since September 2013, but there may still be a long way to go.

     It can be understood much better when we look at the chart created since the beginning of 1950 that the ratio of gold price to dollar emission is still close to the bottom points.

     Another important indicator for gold prices is the level of the US National Debt. As it can be seen from the chart, a big increase has occured at the beginning of the pandemic.

     

     The US is not contented with just printing dollars, it is also borrowing at large rates that will double this effect. The US is the most indebted country in the world in terms of size and one of the most indebted countries in the world in terms of its ratio to GNP.

     In the table above, we see the connection between US National Debt and the price of gold. An increase in the Gold/Debt Rate means that the price of gold is getting cheaper and a decrease means that it is getting more expensive.

     In 1980, the ratio was 1.32 and gold was very expensive. In 2000, it reached to 20.40, meaning that gold became very cheap. Today, we are at the rate of 13.76.

     Now it is a suitable moment for me making some forecasts.You can see these, for the year 2027 in the last three lines.

     If the gold-to-US National Debt ratio drops to 10, this means that the price of gold will increase to at least $4,918. If this ratio drops to 7.5, the ounce price of gold will increase to $6,558, and if the ratio drops to 5%, it will increase to $9,837.