Cuba and Venezuela Offer Cautionary Tales of Socialism

Venezuela to Redenominate Its Currency… Again

Indeed, if you want to see a once-prosperous country’s economy destroy itself, there are few more effective ways than to install a hardline socialist government. Before the revolution, Cuba’s economy was larger than Singapore’s. But whereas the former’s decayed, the latter’s thrived under the free market policies of Lee Kuan Yew, who came into power the same year as Castro. Today, Singapore has one of the world’s highest GDPs per capita and ranks number one on the Heritage Foundation’s Index of Economic Freedom.

Gold and Bitcoin Could Be the Solution

Both Cuba and Venezuela are cautionary tales of hardline socialism, an ideology that, at its core, has no respect for civil liberties or private property. Citizens of these countries are tragically denied ownership over their own livelihoods, largely as a result of being locked into using disastrously mismanaged currencies.

Gold Continues to Look Undervalued

As for gold, it traded down last week, marking the first loss in five weeks, but support held at around $1,800 an ounce. I see this as an attractive entry point as the metal looks undervalued compared not only to equities but bonds as well. Ordinarily gold has traded inversely to bond yields, but as you can see below, it’s been underperforming. I’ve inverted the Treasury yield line so you can see the relationship more clearly.

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Frank Holmes

Frank Holmes

Frank Holmes is the CEO and chief investment officer of U.S. Global Investors, an innovative investment manager with vast experience in global markets.