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@ StackSats ⚡️
2025-02-10 12:17:40
Normally, gold prices and interest rates have an inverse relationship – when interest rates rise, gold prices fall, and when interest rates fall, gold prices rise.
This is because gold does not yield interest or dividends. Rising interest rates make interest-bearing assets like government bonds more attractive, leading investors to move capital away from gold. Conversely, falling interest rates reduce bond yields, making gold a more attractive store of value. Additionally, low interest rates are often accompanied by expansionary monetary policies and inflation, which increases demand for gold as an inflation hedge.
The fact that both interest rates and gold (as well as Bitcoin) are currently rising indicates a loss of confidence in the financial system. Normally, higher interest rates would draw investors into bonds and weaken gold. However, when markets fear that rising debt levels are unsustainable and that fiat money is losing credibility, they flee into energy-linked, scarce assets instead.
This signals that investors no longer trust the long-term stability of the financial system. They anticipate either persistently high inflation, an impending debt crisis, or a significant currency devaluation. The market is effectively indicating that printed currency and the debt-based system are losing credibility, while real, limited-supply assets are being prioritized. This is exactly what is happening right now: interest rates are rising – yet gold and Bitcoin are also rising.