Gold is a monetary metal. As such, it trades in line with the world’s other major currencies. When the US dollar — the global reserve currency — declines, gold will usually rise…and vice versa.
Over the past 100 years, the financial establishment has done its best to remove gold from the financial system. That’s because, in its ultimate representation as debt-free money, gold represents an existential threat to government-controlled fiat currency.
Despite gold no longer being a part of the commercial banking system, it still plays an important role in the larger, central banking system. It represents the ultimate form of trust, and it has no counterparty.
For that reason, The Rum Rebellion strongly advocates that gold should be a part of all investor’s portfolios. However, we are not gold bugs. We believe there is a time to own gold and gold stocks and a time to stay away.
We’ll write on the topic of gold and currencies (including the Aussie dollar) often, and keep you up to date on where we think gold is sitting within the bull/bear cycle.
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