The following chart tells a very big story, and may be some of the reason why gold has taken off in the face of low inflation and reduced QE from the Fed. It shows clearly that people are beginning to borrow again in the United States, for the first time in years. In fact, consumer spendngn has outpaced wage growth for the last few months, confirming the validity of the chart below.
The chart shows that the velocity of money is now in positive territory and rising, and this will create a money supply multiplier effect in the wider US economy. Inflation can only occur when money is being multiplied through bank loans (aka fractional reserve banking). The fed has printed over $3 trillion, but most of that has been soaked up by banks by. The only way it has been able to get into the economy is by government spending and stock investing, and this has not been enough to reverse the velocity of money. With mountains of dollars parked at the banks, there will be plenty of money to throw at consumers as banks relax their lending criteria.
It is no coincidence that there has been a breakout in the three year bear market in commodities at the same time as this chart has ticked up. The chart below illustrates this very clearly.
So perhaps the gold price is now immune to threats of curbing QE. It has an old friend, inflation, beginning to take the stage for the second act in its secular bull market. If so, then we could have a few very good years of price rises on our hands.