Gold and inflation: Gold is not the best hedge against inflation

gold and inflation

Proof that being a gold bug pays poorly. The argument that Gold is an excellent hedge against inflation is faulty to a degree. You have to know when to buy and when to sell. If you hold it forever, it means that emotions are doing the talking and logic is doing the walking. The graph below clearly indicates that conservative investors usually get what they seek; steady but not significant gains.

the nominal return indices

Inflation has risen roughly 200% since the 1990s, and Gold, which is supposedly the best hedge against inflation, has surged approximately 4.5 times more, definitely outpacing inflation. Still, bonds fared even better, increasing almost 580%. Knocking the Gold is the best hedge against inflation argument right into the toilet. When it comes to Gold and inflation there are many investments that out sizzle gold.

But wait for stocks kicked Gold to the curb and generated returns of almost 2000%. As we are in the QE forever era, the argument for Dow 51K and beyond is starting to gain traction. If we take a longer-term view, and based on the current pattern, one could begin to build a case for Dow 99K. However, that is a story for another day. One needs to focus on the fact that sharp market corrections are buying opportunities. So-called crash-like events should be viewed as a screaming buy until the trend changes.

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