The Relationship Between Gold and Inflation

Last Updated:
September 1, 2022
Brian Wallace

America has been through a few economic crises since its conception, operating in a typical boom and bust system, this comes at no surprise. Especially considering a lack of foresight into markets that caused especially dramatic busts such as in the 2008 market crash. Given the state of affairs and Russian sanctions, it's anyone's guess as to when we will have relief from inflation.

Inflation is one force that has remained steady throughout all periods of American history. Looking back at 1922, six cents were equivalent to one dollar today. This is a dramatic change, and the rate of inflation only seems to be slowly increasing. In 2022 alone inflation rose 9.1%, the fastest since 1981.

Looking at more practical resources, things like the food index have increased 10.9% from July 2021 to July 2022. Energy comes out as the most noted and dramatic change, having a near 33% increase. Inflation isn’t posed to slow down either.

Looking at the price of something like gold, the rate of inflation has moved in a near exponential curve. After the turn of the 21st century, prices of things like college, gold, cars, and even milk have skyrocketed. This can be a scary statistic when looking at the way wages have moved in that same time period. For something like college tuition, it has not been a proportional rise.

This has put a lot of fear into Americans' hearts, especially in relation to their currency. Gold is one market of economic confidence that is commonly used. Gold remains valuable because of its physical nature and its consistent and ever increasing value, although it does little to supplement the economy in and of itself.

Gold then represents the less secure and more wary Americans interests. It’s then no wonder that in an era of extreme inflation, gold is looking more and more valuable everyday. At the end of the day Americans desire security, and if the government cannot supply it, they’ll look for it in other resources. Learn more about the relationship between gold and inflation below:

In An Era Of Inflation, Gold Still Reigns Supreme
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