Gold Facts: How gold helps against inflation

Gold helps protect against inflation in a few key ways:

1. Maintaining Value

• Intrinsic Value: Unlike paper money, which can lose value when inflation rises, gold has intrinsic value. Over time, it tends to hold its purchasing power, meaning that the same amount of gold can buy similar goods even as prices increase.

2. Price Increases with Inflation

• Inverse Relationship with Currency: As inflation causes the value of paper currency to fall, more money is needed to buy the same amount of gold. This typically leads to an increase in gold prices during periods of high inflation, helping to protect the value of your wealth.

3. Limited Supply

• Scarcity: Gold is a finite resource, and its supply is much more limited than fiat currency, which governments can print more of. This scarcity helps gold maintain its value even when inflation is high.

4. Safe Haven During Economic Uncertainty

• Investor Behavior: During inflationary periods or economic instability, investors often turn to gold as a “safe haven” asset. This increased demand can drive up gold prices, offering protection against the eroding value of money.

In summary, gold acts as a hedge against inflation by holding its value when currency values decline, increasing in price as inflation rises, and being a finite, globally recognized store of wealth.