If it is correct that the unlimited supply of capital/fiat currency caused the price of money to fall, the same phenomenon can be seen in this chart. The velocity of money calculation is a straightforward ratio of the value of transactions divided by the supply of money available for those transactions.
In today’s economy, the ratio has two problems: First, the underlying economy is disturbingly weak and getting worse. That will mean that the numerator is shrinking, not rising as the Fed would hope. The bigger problem is the denominator. If we expect that the Fed is going to continue to create unlimited amounts of money as we do, the denominator is only going to grow exponentially. A shrinking numerator and a massively increasing denominator mean that the velocity of money is destined to converge on zero. If so, we will be at “pedal to the metal” toward economic oblivion.
Investors need to convert paper assets to real assets with a great sense of urgency. Prices of precious metals and particularly shares in mining companies are sprinting ahead of traditional stocks and bonds. Despite the lack of coverage by the traditional financial media, the HUI has outperformed the Dow Jones Industrial Index by a staggering 26% so far in 2014.
It could very well be that the gold suppression scheme is finally on the run in the face of huge demand for physical metals. If a short-squeeze develops, we will see dramatic increases in prices for both metals and the miners. This is only the beginning of the reversal. Sentiment will follow, but at the present time still remains dismally low. Institutional and individual ownership is virtually non-existent. In the absence of raw financial repression, we should expect 2014 to be the year in which the great bull market in precious metals reasserts itself in dramatic fashion."
at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/17_This_Will_Shock_The_Markets_%26_Send_Gold_Soaring_In_2014.html
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