Articles
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Gold too volatile to act as reliable inflation hedge
Gold prices have been too volatile to play a reliable role as a hedge against inflation, a study of financial assets over the past 112 years showed on Tuesday.
While inflation does not reduce gold’s real value, it has no yield or income flow and the precious metal has given a far lower long-term return than equities.
In the period since 1900, gold gave a real return of 1.1 percent in sterling terms and its value fluctuated widely, the study published by Credit Suisse and London Business School’s Elroy Dimson, Paul Marsh and Mike Staunton.
“Gold is the only asset that does not have its real value reduced by inflation. It has a potential role in the portfolio of a risk-averse investor concerned about inflation,” it said.
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