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Money, money everywhere
A consequence of the extraordinary speed, breadth, and magnitude of the monetary and fiscal responses to COVID-19 is that money supply has increased at an unprecedented rate. The most commonly-used measure of money supply, the Federal Reserve’s M2 measure, has grown by over 12% ($1.9 trillion) since the beginning of this year and is expected to grow even more as the Federal Reserve implements the asset purchase commitments that it announced last month.
Investors concerned about the potential impact of this monetary impulse may be interested in assets whose prices are responsive to an increase in money supply. In this month’s market commentary, we examine how one of humanity’s oldest stores of value—gold—may behave in the current environment.