Loading…
Gold's most-cited investment thesis is that it preserves purchasing power — that it's a hedge against the dollar losing value. The chart tests that thesis directly: gold vs. CPI (the headline U.S. inflation index) since 1971, both indexed to 100 at the displayed start. If gold is a perfect inflation hedge, the two lines stay close. If gold is volatile relative to inflation — which it is — you'll see decade-long deviations in both directions.
Long-run yes; short-run no. Over 50+ year windows gold has roughly tracked or exceeded CPI. Over 5-10 year windows the correlation is poor — gold can lag CPI for a decade then triple in five years, or vice versa. The chart's range tabs make this easy to see.
August 1971 is when the U.S. severed the dollar's last formal link to gold (the Nixon shock / Bretton Woods exit). Before then the gold price was administratively pegged at $35/oz, so any "gold vs. inflation" comparison pre-1971 is comparing a fixed price to a moving one. 1971 onward is the floating-rate era.
Silver tracks inflation more loosely than gold — it has a larger industrial-demand component, which makes it more volatile. The /vs/silver-vs-inflation page shows the same comparison for silver.
median U.S. home prices (Case-Shiller)