VGSH - Gold And Inflation: An Unstable Relationship
2024-06-06 04:20:00 ET
Summary
- Does gold hedge inflation?
- Rolling 36-month regressions of gold on median inflation yield results like those for headline inflation - the relationship is unstable and variable.
- If underlying inflation captures economic forces of excess demand and rising inflation expectations as embodied in Phillips curve-type models, gold doesn’t appear to hedge the price pressure they can cause.
Does gold hedge inflation? On average, the answer is no, empirically speaking. But gold's relationship with inflation is complicated, making any blanket statement about its role in portfolio construction unwise....
Gold And Inflation: An Unstable Relationship