There’s no place like home

The success of the film’s adaptations and the rise in the price of gold is coincidental yet has some interesting parallels. The original Wizard of Oz book written by L Frank Baum in 1900 was a political allegory about the 1896 US Presidential election between William McKinley and William Jennings Bryan. Gold was a central election issue. Since the Panic of 1893, the US had been in a deep depression. McKinley was a staunch activist for gold, and the gold standard.

So, how does this relate to the Wizard of Oz?

Irish economist and writer David Williams covers this topic in his book, Money, A Story of Humanity, where he states that, “In the film, we can read Oz, the evil wizard, as the embodiment of the banking elite and also a stand-in for gold, oz being the symbol for an ounce.”

According to Williams, The Yellow Brick Road represents the gold standard itself. It is a path made of gold. Dorothy, from Kansas (geographically the middle of America) represents middle America. She is joined by a farmer (Scarecrow), an industrial worker (Tin Man) and the Democratic-Populist candidate William Jennings Bryan (The Cowardly Lion).

In the original book, as in the Broadway musical, before entering The Emerald City, you must put on green-coloured glasses. Green being the colour of money. “The conservative financiers who run the Emerald City, in other words, force its citizens to look at the world through money-coloured lenses,” states Williams.

Williams highlights other Wizard of Oz metaphors in his book, finishing with Dorothy’s return home.

In Baum’s book, Dorothy needed to click her silver shoes to return to Kansas at the end of the story (not red as in the 1939 film and in Wicked). The power to solve her (1896) problems were there all along – silver. Apparently, a looser, silver-backed currency was the answer in 1896.

The issue of what backs money and confidence in it has come to the fore in 2025. The days of the gold standard are long gone, but, so too has confidence, it seems, in the global reserve fiat currency - the US dollar.

Today, it seems, perhaps many central banks around the world are wearing shoes of gold, hoping to tap them if needed.

According to a recent article in The Australian, global central banks have purchased over 1,000 tonnes of gold annually for three years straight, about twice the average of the previous decade, spending roughly US$80 billion per year. A World Gold Council survey shows 95% of central banks expect to keep buying gold in the next year.

This shift has had implications on the price of gold, which has more than doubled since late 2023, reaching an all-time high of US $3,500.50/oz in April 2025. According to the Australian article, analysts, including RBC, now expect prices to stay in the US$3,200 to US$3,500/oz range through year-end. Others are forecasting gold rallies toward US$4,000/oz.

Like 1896, concerns over inflation have spurred demand for gold. The theory being that gold retains its value when other assets are losing value.

Today though, geopolitical instability and declining US dollar dominance are also motivating central banks to buy gold.

Gold, for central bankers, is also being used as sovereign wealth insurance, as it is not at risk of being frozen or subject to sanctions.

While holding gold bullion has been a successful approach in the past two years for investors, companies that mine the precious metal have also done well. We have long argued that gold miners, relative to the price of gold, remain undervalued.

In our view, it’s not too late to begin building or adding to a position in gold or gold equities. We think that in today’s environment, having zero allocation to gold is increasingly difficult to justify. Gold, we think, provides investors, not just central bankers, an important portfolio diversifier.

The other issue that took McKinley to the Presidency in 1896 was his tariff proposals aimed at returning prosperity to everyone.

Just as in 1896, debates over monetary policy and protectionism remain alive today. As The Pretenders put it, ‘Some things change. Some stay the same.’ 

Source:

¹Morningstar Direct.