U.S. money supply on the rise

The U.S. money supply is steadily increasing for the first time since topping in April 2022, a welcome sign for precious metals investors looking for inflationary pressure to bring returns. According to inflation data released by the Federal Reserve, the monetary supply has been increasing since April of this year as the Fed prepares to cut interest rates.

The U.S. went through several stages following the outbreak of the COVID-19 pandemic, which led to large fluctuations in the country’s money supply:

• April, May 2020: M1 money supply rises from just under $5 trillion to $16 trillion in a single month, sparking inflation fears as spending across the globe takes a massive hit

• Through April 2022: The M1 supply continues to increase to nearly $21 trillion.

• Through April 2024: The supply drops as interest rate hikes begin to pressure the currency

• Since April 2024: Money supply has hovered around the $18 trillion mark and is beginning to show signs of increasing.

M1 money supply is a measure of currency in circulation, not including money stored in Federal Reserve vaults.

Investors in gold and silver have long suggested mass increases in money supply, such as what occurred around the globe in 2020, are unsustainable and unrecoverable. While the Fed has succeeded at bringing periods of deflation since the M1 highs of April 2022, its recent suggestions to raise interest rates paired with an increasing supply of currency could signal strength for gold and silver into 2025.

Argentina’s crisis with currency

Argentina has experienced multiple episodes of hyperinflation, most notably in the late 1980s and early 1990s, where inflation rates soared to astronomical levels, exceeding 3,000% annually at its peak. This led to the collapse of the national currency, the austral, severe loss of purchasing power and widespread poverty.

Efforts to stabilize the economy included drastic austerity measures, currency reforms (such as the introduction of the peso), and economic restructuring, but the problem has persisted in various forms. More recently, Argentina faces high inflation rates, often exceeding 100% annually.

The impact of hyperinflation in Argentina has been profound, eroding savings, reducing living standards, and contributing to social unrest. It has also led to a deep distrust in the government and its ability to manage the economy effectively.