Gold vs Money Supply Gap Widens as 30Y Yield Hits 5.18%

The gap between gold and global money supply has become one of the widest on record, and with central banks unlikely to reverse the monetary expansion, several analysts see higher gold prices as the only resolution.

"Arguably one of the most important macro divergences in the world today," macro strategist Otavio Costa said, pointing to the chasm between gold and broad money aggregates. Since money supply won't shrink, gold must reprice higher, Costa added.

The divergence comes as the 30-year Treasury yield touched 5.18%, the highest since April 2006, according to Peter Schiff, chief economist at Euro Pacific Capital. At that time U.S. national debt stood at $8.35 trillion. Now it is $39.6 trillion, nearly five times larger, Schiff noted. "The U.S. can't afford these rates, let alone the much higher rates we'll soon be forced to pay," he said in a social media post. Schiff called the bond breakdown "actually bullish for gold" because it reflects soaring deficits, out-of-control inflation, and fading confidence in U.S. creditworthiness.

Meanwhile, geopolitical risk in the Middle East is rising. The top U.S. military commander in the region, Adm. Brad Cooper, recommended pausing the bombing campaign around the Strait of Hormuz because it has reached the limit of its effectiveness, according to two sources cited by Axios. Chairman of the Joint Chiefs Gen. Dan Caine also privately cautioned Defense Secretary Pete Hegseth and President Trump that a shortage of air defense interceptors could hamper protection of U.S. forces and allies in the region. Fred Hickey, editor of the High Tech Strategist, said the escalation "with no end in sight" is pushing oil prices quickly toward $100 a barrel, with gasoline and diesel prices jumping too.