Test your metals: there is a better inflation hedge than gold
Gold is the go-to asset for those concerned about a wide array of risks — but investors using it to fight inflation have missed a few tricks, write Susanne Barton and Martin Ritchie
New York — For centuries, gold has been a go-to asset among investors worried about all sorts of financial risks. In the past decade, exchange-traded funds backed by the metal drew more money than any other commodity. Even the world’s biggest central banks hoard bullion as a reserve asset. But when it comes to inflation, which can erode the value of portfolios that don’t keep pace with rising consumer prices, anyone who bought gold as a hedge over the past 25 years missed out on a much better deal — copper. While data show that broad commodity indexes provided the best bang for the buck during periods of rising costs in the US, the red metal stands out. For every 1% annual increase in the consumer price index since 1992, copper jumped almost 18%, more than three times the 5.2% gain logged by gold, according to a correlation analysis of total return commodity indexes compiled by Bloomberg. Only a broader index of energy commodities, which includes oil and natural gas, performed bette...
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