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Mark Hulbert: Why gold won’t save your portfolio from inflation’s bite

Think gold will be a good inflation hedge in coming months? Think again.

Consider: If gold GCJ9, -0.06% were a good inflation hedge, its inflation-adjusted price would be constant. Yet, while U.S. inflation (as judged by the Consumer Price Index) has declined in each month since last October, gold has risen nearly 12%. In the process, the gold-to-CPI ratio has risen markedly, from below 4.8 to nearly 5.3.

Of course, five months is a short period of time. But even over periods of several years, or even decades, the gold-CPI ratio fluctuates wildly. The ratio got as low as 1.5 in the early aughts, for example, and as high as above 8.0 earlier this decade.

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