Gold Fails to Protect Investors from Runaway Inflation

With inflation at a 31-year high and a 26-year record in the US and China, respectively, gold is not providing the protection it usually does.

Gold Exchange-Traded Funds (ETF) are lagging. The SPDR Gold Trust (GLD), with $56.1 billion in assets, is down 3.2% this year while the Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI) is down 10.9% this year.

Market analysts have been expecting a rise in gold prices, but this has not happened. Gold is set to suffer its first calendar year loss since 2018 as it hovers around $1,800 an ounce.

Some analysts point out that gold is suffering because other investment classes like real estate and cryptocurrencies are doing well. The most level-headed analysts say that gold has and always been a safe haven against high inflation, and so that is why the price of gold is expected to rise in the coming few months.

What does this mean for me?

As a commodities trader, you should know that gold and other precious metals like silver are “established” asset classes to which investors always turn when inflation gets out of control. The reason is simple. As inflation pushes prices up, then the very commodities that go into making consumer goods will also rise in response to higher consumer prices.

These traditional commodities are less volatile than tech and crypto stocks, and you can expect to see a steady rise in gold and other commodity prices over the coming months as inflation continues to bite.