Gold doesn’t protect us from inflation. This is one thing we’ve learned from the current inflation scare.
Since last July inflation expectations have soared: the five-year breakeven inflation rate (the gap between conventional gilt yields and index-linked ones) has risen from under three percentage points to over four. And during this time the price of gold has fallen almost ten per cent in US dollar terms and 12 per cent in sterling terms. The metal, then, has failed as insurance against inflation fears.