[misja]

The value of gold is inversely correlated with the trust in government bonds. The reason is clear when reading the article; gold is the only real money so the higher the chances of defaults on bonds, the more attractive it becomes to swap paper money for gold.

The current gold rally tells us that there is a lot of global political and economical uncertainty. Think of the Brexit, the Iran troubles and the global trade war. All these issues could cost big money for governments so it makes their bonds less attractive.

[navigatesol]

>All these issues could cost big money for governments so it makes their bonds less attractive.

If bonds are unattractive, why are yields at near-all-time lows?

Gold is appealing when real rates of interest are low, as it maintains purchasing power over time.

[misja]

Good point! In a normal market situation you would expect the bond yields to increase when they become less attractive, but this is currently not the case.

Here is a hint why this happening: not all government bonds have such low yields: only some European countries and Japan have, the USA bond yield for instance is quite a bit higher.

The reason is that there is currently a huge buyer for European government bonds: the ECB. The ECB's "quantitative easening" that has been going on for the last years is artificially keeping the yields low.

[AnimalMuppet]

> The value of gold is inversely correlated with the trust in government bonds.

And government-issued currency.

> gold is the only real money

No. But gold is one of the better ways to, in essence, short fiat currency.