Gold and inflation over the long run

Gold is often called an inflation hedge. Over long horizons, its price has broadly kept pace with or exceeded the rise in consumer prices measured by the CPI.

Over shorter periods the relationship is uneven. There have been multi-year stretches when inflation rose and gold fell, often because real interest rates were rising at the same time.

That is why many analysts focus on real yields, the return on bonds after inflation, as a key driver. When real yields fall, the opportunity cost of holding gold declines.

Patience is the practical takeaway: gold has rewarded holders measured in decades more reliably than those measured in months.