Broker Check

Gold and Inflation

| September 13, 2022

Conventional wisdom suggests that investing in gold during times of inflationary pressures may yield a more favorable total return outcome than being invested in stocks. The observed reality, however, is less exciting. In tracking the six most volatile inflationary environments in the United States since 1972 (this was the first full year after the U.S. abandoned the gold standard), there have been six occurrences that deserve attention. Table 1 below provides the observed outcomes that reveal a mere 50% success rate for those investors that followed a strategy of favoring gold relative to equity market participation.

Table 1: Six major inflationary periods in the United States since 1972

For those investors seeking a more definitive answer on ways to outpace inflation, the long-term solution is equity market participation. Table 2 below provides a performance breakdown of gold to the S&P 500 relative to annualized inflation (CPI). It bares notable significance to highlight the immense relative outperformance of the S&P 500 over the past 50 years.

Table 2: Annualized performance of Gold and the S&P 500 relative to annualized inflation (CPI)


Investment advice offered through CX Institutional, a registered investment advisor.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted.

All data is sourced from Bloomberg, through the release of monthly figures from the U.S. Bureau of Labor Statistics or from the Federal Reserve and any of its affiliated regional locations.