Gold Macro & Fiat Valuation Barometer Flags Favorable Conditions for Gold
The Gold Macro & Fiat Valuation Barometer is an indicator that synthesizes five core macroeconomic feeds into a continuous composite score. This score ranges from 0% to 100%, and it's used to answer two critical questions: whether the global macroeconomic backdrop is actively devaluing fiat currency and favoring hard assets, and whether current spot pricing of gold is historically cheap or dangerously overextended relative to underlying fiat liquidity.
The barometer uses five macro driver pillars, each with a different weightage. The first pillar is real yields (10-Year TIPS), which measures the true opportunity cost of cash after inflation. Low or falling real yields force capital into hard assets, while high real yields create headwinds.
The second pillar is the M2 money supply ratio, which evaluates the Gold/M2 ratio against its rolling 5-year percentile rank. This helps to identify when gold is historically cheap or expensive relative to printed currency.