Gold as an inflation hedge? History suggests otherwise

Gold as an inflation hedge? History suggests otherwise

Gold is often touted as a way to hedge against inflation — a risk that's for investors right now. But gold hasn't lived up to the hype. Its record has been spotty, according to historical data. An investment that hedges against inflation would generally rise along with the rapid growth in consumer prices. However, gold yielded a negative return for investors during some of the highest recent inflationary periods in the U.S. Investors worried about rising consumer prices may wish to consider other asset classes instead, according to Amy Arnott, a portfolio strategist at Morningstar. "Gold is really not a perfect hedge," said Arnott, who analyzed the returns of various asset classes during periods of above-average inflation.                                         "There's no guarantee if there's a spike in inflation, gold will also generate above-average returns," she said. For example, gold investors lost 10% on average from 1980 to 1984, when the annual inflation rate was about 6.5%, according to Arnott's analysis. (The Federal