Silver price direction mirrors US Base Money Supply

[97guns]

This graph I created appears to show that since QE2 ended, the price of silver has quite closely tracked the increase/decrease in the US base money supply. When the money supply heads up, POS goes up. When the money supply goes down, POS goes down.

This suggests that any hint of further money injections from the Fed is bullish for silver. You can follow the US money supply figures published biweekly at http://research.stlouisfed.org/fred2/series/BASE.

[Chief]

Quite interesting and makes sense to me. We cannot keep printing/spending money and not see a significant rise in PM prices.
House o' Cards.

[68Camaro]

Interesting graph. I would be more interested in it if it tracked for years instead of months, or it correlated with other types of money supply. The larger measure of money supply continues to increase - especially government spending, which isn't tracked here - though at the private consumer level it may well be locally decreasing.

[My2Cents]

Interesting graph. I would be more interested in it if it tracked for years instead of months, or it correlated with other types of money supply. The larger measure of money supply continues to increase - especially government spending, which isn't tracked here - though at the private consumer level it may well be locally decreasing.

Agreed... track it for a longer period of time so as to lend credibility to the theory. What happened to the money supply when silver took that huge fall from $49?