Gold's Worst and Best Case Scenario

Gold surpassed its most important key breakout point on Friday of $1,845 per oz and gained by $31.65 to $1,858.44 per oz.

On a longer-term weekly gold chart, this breakout is also very significant.

You can even look at gold's extreme highs/lows on a monthly long-term chart and the current gold breakout is absolutely huge.

On a one decade plus chart of the gold/NASDAQ composite ratio, this is the third straight significant up month after November's secular long-term bottom... confirming we are now officially in a new decade-long risk off environment where real assets outperform paper assets.

On the #1 most important chart of gold/U.S. M2 money supply per capita vs. the Real Fed Funds Rate, gold is now up to 2.83% of U.S. M2 money supply per capita with a Negative Real Fed Funds Rate of 7.4%. Compared to every historical instance of deeply negative Real Fed Funds Rates, gold is the most undervalued it has ever been in history.

In 2008 when the Real Fed Funds Rate was negative by 3.59%, gold hit a high of 3.98% of U.S. M2 Money Supply per capita. With current U.S. M2 Money Supply per capita of $65,587.47 a return to 3.98% today would value gold at $2,610 per oz.

In 1974 when the Real Fed Funds Rate was negative by 4.99%, gold hit a high of 4.64% of U.S. M2 Money Supply per capita. With current U.S. M2 Money Supply per capita of $65,587.47 a return to 4.64% today would value gold at $3,043 per oz.

In 2011 when the Real Fed Funds Rate was negative by 3.79%, gold hit a high of 6.24% of U.S. M2 Money Supply per capita.  With current U.S. M2 Money Supply per capita of $65,587.47 a return to 6.24% today would value gold at $4,093 per oz.

In 1980 when the Real Fed Funds Rate was negative by 4.91%, gold hit a high of 12.96% of U.S. M2 Money Supply per capita. With current U.S. M2 Money Supply per capita of $65,587.47 a return to 12.96% today would value gold at $8,500 per oz.

Gold's worst-case scenario is that it will soon make a move to $2,610 per oz. Gold's best-case scenario is that it will soon make a move to $8,500 per oz.