Jan 22, 2021
Investors’ Chronicle: JD Wetherspoon, IG Group, Argo Blockchain
If gold were a great short-term hedge against inflation its price in real terms - that is, adjusted for inflation - should never fall. In truth the ability of gold to protect us from inflation depends upon why inflation rises. There are some types of inflation that do see gold do well - such as those caused by rising commodity prices or a fall in the pound. Because gold pays no interest, it becomes less attractive when investors anticipate higher returns on competing assets such as cash. Instead, we should think of gold as a protection against some types of bear market in equities - such as those caused by investors becoming more risk-averse.
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