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Take a Shot in the Dark, or Wait for the Sun to Rise: Gold’s Reliability

Gains, Pains & Capital  ( Original )
MAY 17, 2018

Gold is has been linked to humankind’s use of money for so long that it is practically woven into our psychological fiscal DNA. Depending on gold as a store of value has never failed.

Regardless of one’s view on gold’s specific place in today’s financial system, the fact of the matter is that gold has stood the test of time like no other investment option. Gold has held up through vast stretches of economies booming and busting, currencies inflating and collapsing.

You can spend the rest of life arguing what the next big investment craze will be. Or you can simply know what will retain value long after the next flash in the pan is long gone, and allocate portfolio accordingly.

Gold is a risk asset that trades based on the true cost of money as illustrated by “real rates” (Treasury yields MINUS inflation protected Treasury yields). Remember, in our current financial system, the yields on US Treasuries represent the “risk free rate of return.” When you account for inflation by subtracting the yields on inflation-protected Treasury bonds from normal Treasury yields you arrive at the TRUE cost of money.

THIS is what Gold tracks as the below chart reveals.

Having said all of this, the signs are now pointing towards Gold and other inflation hedges rising rapidly as inflation takes hold of the financial system.

Real rates have staged a CONFIRMED breakout from a massive five year triangle pattern.

This is EXTREMELY bullish. And it tells us that HIGHER real rates are coming in the future.

Put simply, BIG inflation is on its way. And smart investors are already taking steps to profit from it.

ORIGINAL SOURCE: Does Gold Still Hold Value as It Did For 5,000 Years? by The Phoenix at Gains, Pains & Capital on 5/14/18