Gold's Value Against Inflation

A look at how gold holds up against inflation.


Brian Wallace

2 years ago | 1 min read

Gold is something that has permeated throughout all of history as something of value. Initially it was a shiny and glamorous mechanism for royalty and the rich to show off their wealth, but as time passed it has slowly moved into the role of an investment.

The main appeal and sway of gold is the fact that it’s one of the few remaining physical investments for the common consumer. While the stock market is typically more profitable it is clearly unstable and is constantly going through dips and rises. There are alternatives like bonds that are much more secure, but at the end of the day can still be defaulted on because they’re not a tangible asset.

Gold, on the other hand, has a 0% counterparty risk. Assuming there is no magic way to suddenly produce more gold, there is a finite amount, and its value will stay the same. Owning gold means one owns some percentage of the 244,000 metric tons in existence. This doesn’t mean gold won’t increase in perceived value though.

This is where inflation comes in. While gold will always retain the same actual value, its market value will continue to rise with inflation. This is why gold tends to boom in times of economic downturn, the worse the economy, the better the investment in gold. This means that gold has a very unique sense of value that almost no other assets possess. Gold is consistent, but the market isn’t, and that’s where its value comes from.

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Brian Wallace







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