Why Gold and Silver Are Rising as the Dollar Loses Value

Let us start with the conclusion:  If the dollar preserved its purchasing power, gold and silver would not be racing higher.

But as we all know, the dollar does not preserve purchasing power.  This is by design.  Flimflammers conspired for years to remove the discipline of gold from the US dollar precisely so they could manipulate the value of the dollar.

That said, prices are rising. 

Unless you’re a vegetarian, you will have noticed that beef prices are soaring.  Beef and veal category prices are up 14.7 percent from a year ago.  

The price of coffee is at a 50 year high, up 33 percent from a year ago.

Those are headline-catching numbers, but here’s another one that Michael Shedlock calls “a health care inflation bomb.”   The average Medicare premium increase for 2026 is approximately 9.25 percent—the Medicare Part B (Medical Insurance) Standard Premium: $202.90/month (up from $185). Deductibles are rising as well.

Since inflation is a monetary phenomenon, it pays to see if the money supply is being inflated.  Is it growing?  We look at M2 money supply which is a measure of money that is readily accessible for spending.  It includes cash and checking deposits (M1), plus savings deposits, small-denomination time deposits (CDs under $100k), and retail money market fund balances.  

A year ago M2 money supply was growing at a 3 percent annual rate. The table below shows it climbing month after month this year, at a 4.6 annual rate in October.  

This represents not just money growth but accelerating monetary growth.   It is well above the Federal Reserve’s 2 percent inflation target (which itself is a license to steal at a 2 percent rate!) 

That explains why traditional dollar holders, both individuals and entire nations, are racing to protect themselves with gold and silver.  

But the best indicator of the dollar’s declining purchasing power is record-high gold and silver prices.  They are forward-looking indicators.