Gold / M2
Selected range · January 1959 — May 2026
About this chart
The Gold-to-M2 Ratio compares the price of gold with the size of the U.S. M2 money supply.
Gold and the money supply represent two different parts of the financial system. Gold is a globally traded asset often associated with inflation protection, currency confidence, real interest rates, and demand for stores of value. M2 measures a broad amount of money held by households and businesses in forms such as cash, checking deposits, savings deposits, and certain money-market instruments.
The ratio rises when gold becomes more expensive relative to the size of the money supply. This can happen because the gold price increases, M2 grows more slowly, M2 contracts, or several of these changes occur together.
A higher ratio means that one unit of the M2 money supply corresponds to a relatively higher gold price than usual. This may reflect stronger demand for gold, concerns about inflation or currency purchasing power, lower real interest rates, or slower growth in the money supply.
The ratio falls when M2 grows faster than the gold price or when gold weakens relative to the money supply.
A lower ratio means that gold is relatively less expensive compared with the amount of money circulating in the economy. This may reflect weaker investment demand for gold, higher real interest rates, stronger confidence in financial assets, or rapid expansion of the money supply without a matching rise in gold prices.
The absolute level of the ratio is not especially meaningful on its own because the two inputs use different measurement units. The model therefore focuses on how the ratio changes over time and how far it is positioned from its estimated long-term trend.
The deviation line shows how far the current Gold-to-M2 Ratio is above or below that trend.
A deviation of 0% means that the ratio is equal to its estimated long-term trend.
A positive deviation means that gold is relatively stronger than M2 compared with the model’s historical trend.
A negative deviation means that gold is relatively weaker than M2 compared with the model’s historical trend.
The standard-deviation zones show whether the current deviation is relatively common or historically unusual. Values farther above the trend may be described as historically elevated, while values farther below the trend may be described as historically depressed.
The ratio can provide useful long-term context about the relationship between gold and U.S. monetary expansion. It should not, however, be interpreted as a direct measure of inflation, a precise gold valuation model, or an investment signal.
Limitations
- The ratio compares the gold price with the M2 money stock, so it is a relative historical indicator rather than a direct measure of gold’s intrinsic value.
- The gold series excludes storage costs, transaction costs, financing costs, and investment-product fees, while M2 is a monetary aggregate rather than investable capital.
- The ratio does not show what share of the money supply is invested in gold or how much M2 is available specifically for gold purchases.
- Changes in M2 do not translate mechanically into gold demand because the relationship also depends on real interest rates, inflation expectations, exchange rates, credit conditions, and investor behaviour.
- The Federal Reserve’s May 2020 redefinition of M1 and M2 introduces a structural break that limits comparability across the full historical series.
- The historical average or trend and the standard-deviation zones depend on the selected sample period and model specification.
- An unusually high or low reading can persist and should not be interpreted as a precise fair-value estimate or a market-timing signal.
Methodology
The Gold-to-M2 Ratio is calculated by dividing the monthly gold price by the monthly U.S. M2 money supply. The natural logarithm of the ratio is then fitted to a linear monthly time trend, and converting the fitted result back into normal values creates an exponential long-term trend.
The standard deviation of the full deviation series is used to create the ±1σ, ±2σ and ±3σ historical zones. The model uses monthly observations beginning in January 1959.
Data sources
Monthly gold price in U.S. dollars per troy ounce
Range: January 1959 to the latest available observation
Source: DataHub, Gold Prices, based on historical records compiled by Timothy Green and World Bank Commodity Markets data; https://datahub.io/core/gold-prices
U.S. M2 money stock, seasonally adjusted
Range: January 1959 to the latest available observation
Source: Board of Governors of the Federal Reserve System (US), M2 [M2SL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/M2SL