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What commodities or assets, if they exist, are unaffected by the powers of inflation? How has gold prices (and silver prices) done over the last few decades compared to the dollar? Today, we shall examine these questions.
Gold and silver are renowned as a hedge against inflation. Strangely enough, the most consistent factor determining the price of gold (and silver prices - which closely tracks the price of gold) has been inflation - as inflation goes up, the price of gold goes up along with it. Since the end of World War II, the five years in which U.S. inflation was at its highest were 1946, 1974, 1975, 1979, and 1980. During those years, the average real return on stocks, as measured by the Dow Jones Industrial Average (DJIA), was -12.33%; while the average real return on gold was 130.4%!
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