There were some fireworks this week. Gold went up on Tuesday (it was a shortened week due to Easter Monday), from a low of $1,215 to $1,244 over the day, a move of over 2 percent. Silver moved from $15.02 to $15.44, almost 3 percent. What happened on Tuesday to drive this move down in the dollar? (We always use italics when referring to gold going up or down, because it is really the dollar going down or up).

Janet Yellen happened, that’s what.

Our Federal Reserve Chair spoke to the Economic Club of New York. We won’t parse her words, but we can see what effect they had on the markets. Markets were up. The S&P surged 45 points, well over 2 percent. The British pound was up almost 2 percent. There was speculative mania, if not irrational exuberance, everywhere. Well almost everywhere. Crude oil was down almost 7% for the week.

When Pavlov trained his dogs to salivate at the sound of the dinner bell, he had to actually serve food. It would not have worked without the reward.

Thus, we remain puzzled at the market salivation at prospects of a greater money supply (or what passes for money nowadays, the irredeemable paper dollar). Why do speculators buy gold and silver at every Fed hint of greater money supply to come? Pavlov’s dogs had only the most rudimentary theory. Dinner occurs after that ringing sound. The market has a sophomoric theory. Higher prices will come after that printing sound. At least that’s the hope, which apparently springs eternal.

We thought we would graph the weekly money supply (MZM is Money of Zero Maturity), one of the measures tracked by the St Louis Fed and overlay the price of gold. We started the graph in April 2011, exactly 5 years ago. It happens to be just prior to the peak in the price of gold, but we don’t think we are cherry-picking the date. A five-year data set ought to be enough to show the trend or lack thereof, as we see in money supply growth and gold price growth respectively.