What is Monetary Velocity?
Conventional wisdom has it that “the velocity of money” is a determinant of the purchasing power of money. Velocity of money is the speed at which money (currency) changes hands and at which a single unit of currency circulates through the economy.
The purchasing power of money is of the highest importance to those who save in silver and gold, in order to determine current and future valuation of metals. Understanding the determinants of purchasing power also allows us to better predict when the mass population will discover how quickly the purchasing power of their currency is declining... and make the switch to sound money.
Shares Frank Shostak, giving us a more of taste as to why this concept is so crucial:
The factors that determine the purchasing power of money are crucial for decision making, whether your family owns dollars, gold, silver or all of the above.