Preheat oven to 325F. Generously grease and flour a 10″ bundt pan. Sprinkle chopped nuts evenly over the bottom of the pan.
Mix together the rest of the cake ingredients in a large bowl using an electric mixer until well blended. Pour batter into the pan.
Bake for 50-60 minutes, or until a toothpick inserted into the center comes out clean. Let stand for 10 minutes in the pan.
Meanwhile make the glaze: in a small saucepan, combine butter, water and sugar. Bring to a boil over medium heat and continue to boil for 5 minutes, stirring constantly. Remove from heat. Carefully and slowly whisk the rum (it will bubble).
Invert the cake onto a serving plate. Brush the top and all sides of the cake with the glaze. Repeat until all the glaze is used, or reserve half the glaze for serving. Let the cake stand for 15 minutes to absorb all the glaze.
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