While daily gold price action is driven by technical order flow and interest rate expectations, secular multi-year bull cycles are governed mathematically by the expansion of global broad money supply (M2).
1. The M2-to-Gold Valuation Multiple
By dividing aggregate G4 central bank M2 by the estimated 212,000 metric tonnes of above-ground gold stock, economists derive the monetary replacement value of gold. Historically, whenever gold trades at a discount to this baseline multiple, aggressive sovereign accumulation follows.
2. Quantitative Easing & Tightening Cycles
When central banks expand their balance sheets through QE, gold attracts capital as a hard asset with zero credit risk, historically outpacing sovereign debt benchmarks.