“While some analysts are keeping an eye on inflation, others argue that it’s not as an important factor for the yellow metal compared to previous generations. George Milling-Stanley, head of gold investments at State Street Global Advisors, said that gold’s investment appeal has evolved over the years from more than just an inflation hedge. He explained that the yellow metal also provides important portfolio diversification during period of rising volatility and market turmoil. ‘We haven’t seen real inflation pressures for nearly 50 years,’ he said. ‘However, over the years gold has still seen significant gains despite the lack of inflation.’”
USAGOLD note: Gold is also a solid disinflation hedge, stagflation hedge and deflation hedge. In short, it is the one investment you can count on no matter which specific economic malady is visited upon the economy and financial markets at any given point in time. That is why knowledgeable investors continue to hedge their portfolios with it despite the low inflation threat under present circumstances. That said, though inflation obviously remains subdued at the present, its history is one of sudden, unannounced outbursts when the majority of the population and financiers alike were unaware that it was rumbling just below the placid surface.
BlackSwansYellowGold – How gold performs during periods of deflation, disinflation, stagflation and hyperinflation (A detailed, open-access study for those who would like to learn more about gold’s universality as a portfolio hedge.)