How Gold Continues To Prove To Be A Hedge Against Inflation

Across multiple economic downturns and bear markets, gold has proven to be a haven for investors worldwide, with many traders and investors opting to invest in it to protect their capital against value depreciation, which occurs from inflation, causing an increase in general prices. Because gold prices are related to the US dollar value due to gold being dollar-denominated, a stronger USD keeps the price of gold down and more controlled. A weaker USD drives the gold price higher due to increasing demand. Ultimately this means that more gold can be purchased when the dollar is more vulnerable, protecting investors against economic events like currency devaluation and providing a safety net during periods of political instability. Gold gained popularity for its ability to be an inflation hedge when governments attempted to protect their economies, like in 1879 when the US introduced a gold standard that began backing the US dollar with actual gold to combat inflation, and in 1971 when President Nixon decided to end the gold standard to gain better control over gold-to-dollar conversions and improve inflation. While the asset has become a go-to for many investors who wish to hedge against inflation due to its apparent low risk of price crashes, one study from Duke University found that the asset class was most successful at combating inflation when invested for periods of over a century. It found that shorter-term investments had...