Gold as an Inflation Hedge

Today’s AM fix was USD 1,594.50, EUR 1,293.29 and GBP 1,026 per ounce. Monday’s AM fix was USD 1,581, EUR 1,287.15 and GBP 1,020.66 per ounce.

Gold closed at $1,587.80/oz in New York yesterday after having hit an intraday high of $1,592.80/oz. Gold’s gain on the day was $4/oz, or 0.25%. Silver closed at $27.34/oz, with a $0.23/oz or a 0.85% gain.

Gold has been trading up in Asian and Europe this morning, and is currently at $1,595.83/oz. Silver is trading at $27.49/oz.

WGC – Gold as a Tactical Inflation Hedge and Long-Term Strategic Asset

The last of the World Gold Council reports examined this week deals with the role of gold as an inflation hedge and a long-term strategic asset. The report says that traditional assets like fixed-income bonds and equities tend to not perform well during periods of high inflation. Gold, on the other hand, has been used as an inflation hedge for centuries. It is shown that gold’s performance has been best in the years when inflation in the US has been the highest.

The report concludes that gold, as other traditional inflation hedges like other commodities, property, and inflation-linked bonds, is likely to outperform mainstream financial assets when inflation is high. Strategically, gold is recommended as a portfolio diversifier.

The full World Gold Council report is available here.

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NEWS

Gold dips as gloomy growth outlook boosts dollar – Reuters

China’s Gold Demand Seen Rising 13% As Council Pares Target – Bloomberg

Gold futures retreat in electronic trading – MarketWatch

Gold retains gains; China trade data eyed – Reuters

Mark OByrne

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