Online discussions, financial websites, investment companies, news articles and many other sources either correlate the two or directly state that gold is a hedge against inflation.
Unfortunately, research from academics and other experts paints a much different picture about investing in gold.
Recent research, Gold, the Golden Constant, and Déjà Vu states “there are decades where gold underperforms inflation”. It also shows decades where gold outperforms inflation concluding that it acts unreliably as a good hedge for inflation. One of the researchers, Campbell Harvey, wrote an article in 2020, Debunking gold myth: Inflation hedge or safe haven?, and stated that gold also was an unreliable safe haven investment because “gold is just too volatile. Indeed, the volatility is not much different than the S&P 500 volatility.”
Other research confirms these findings:
Gold as an Inflation Hedge (PDF)
Theories of Gold Price Movements: Common Wisdom or Myths?
Harvey’s research had shown that gold works as an inflation hedge when looking at time spans in the decades or even hundreds of years. In almost all situations that investors are considering an investment in gold, their time horizons would not fit this type of strategy.
Credit Critics Conclusion:
Fact Check: “Gold is a Hedge Against Inflation”