While gold is often perceived as the best hedge against inflation, a report by author Kelsey Williams now questions this long-held claim. In the report, Kelsey Williams argues that the current gold price of around $1,810 an ounce is much lower than the commodity’s average price in 1980. See Kelsey Williams’ analysis for gold comments on whether it really protects against inflation. cryptocoin.com we have compiled for you.
Increase in gold price lagged behind inflation
Kelsey Williams’ comments on gold show that the yellow metal’s rate of appreciation over the past 41 years has lagged behind inflation. Instead of looking at the nominal price of gold, the author emphasizes its real value. Kelsey Williams uses nominal and inflation-adjusted gold prices to illustrate this point in his report.
For example, the nominal price of gold rose from $664 per ounce recorded in February 1980 to $1,825 by August 2011, according to a table shared in the report. Adjusted for inflation, however, the fastest increase in February 1980 was $2,309 compared to the August 2011 price, which was pegged at $2,220.
A similar trend is observed in August 2020, when gold recorded an all-time high of $2,070. For example, the same chart shows that the commodity’s inflation-adjusted price was actually $2,078 at a point in August where the price was $1,970.
Kelsey Williams’ aGold comments show investors failing to protect
This example of Kelsey Williams may mean that investors who have traditionally held gold positions are not actually getting the best protection. The author himself explains his thoughts on why the gold price fell in real terms as follows:
Gold cannot be expected to exceed previous price peaks on an inflation-adjusted basis, as the higher price of gold over time reflects the continuing loss in the purchasing power of the US dollar. Likewise, it is not unreasonable to expect it to reach heights. One factor limiting the price of gold from matching previous price peaks is that the overall effects of Federal Reserve inflation continue to have less and less impact.
While author Kelsey Williams doesn’t suggest a better alternative store of value to gold, his report shows that the precious metal doesn’t match the dollar’s rate of deterioration.
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