MEASURED · 26 SEPTEMBER 2026

Is gold a good hedge against inflation? 55 years of US data

Gold’s reputation as an inflation hedge was made in the 1970s. Between August 1971, when the US stopped exchanging dollars for gold at $35 an ounce, and January 1980, US consumer prices rose 91% and gold’s average price rose about 16-fold. We measured all 661 months since then against the official US consumer price index, to see how that reputation has held up.

The short version

Is gold a good hedge against inflation?

Over decades, yes. Since January 1975 gold has beaten US inflation by 2.67% a year. As protection for the years in which inflation actually rises, it has been unreliable. Over holding periods of one to ten years, gold beat inflation only 53% to 57% of the time, and in each of the 4 years since 1981 in which inflation ran at 5% or more, it lost ground.

Every monthly starting point since August 1971 counts, so the periods overlap and are not independent: read each share as how often someone who bought in a random month came out ahead of inflation. Even over 20 years, gold lost to inflation in 37% of periods. For ten-year holds starting in 1980 or later, the share that beat inflation falls to 51.6%.

What is the gold price adjusted for inflation?

In August 2026 dollars, gold’s January 1980 average of $675 an ounce is worth $2,906. After inflation that stood as the record for 45 years: gold’s monthly average first passed it in February 2025. The widely quoted $850 was a single day, the London fix of 21 January 1980; in August 2026 dollars it is $3,660, a level monthly averages first passed in September 2025.

In between, gold lost 83% of its 1980 value in real terms, bottoming in April 2001 at $260 an ounce, $492 in today’s money. Its 2011 peak ($1,772 in September 2011, or $2,616 after inflation) took 13 years to regain. The highest monthly average ever, after inflation, is February 2026: $5,020, or $5,146 in August 2026 dollars. In August 2026 gold averaged $4,411.

Gold price adjusted for inflation, every year since 1972

Averages of monthly prices, restated with the US consumer price index. Single days ran higher and lower than any average here.

Does gold go up when inflation goes up?

Across 54 calendar years, 1972 to 2025, years with higher inflation did tend to be better years for gold: the correlation is 0.42, and a permutation test puts the chance of seeing that by luck at 0.3%. But the whole relationship lives in the 1970s. From 1983 on, the correlation is -0.10 (p = 0.50): over the last 43 years, a year’s inflation has told you nothing about gold’s return that year.

11 years had inflation of 5% or more. Gold beat inflation in 6 of them, every one between 1973 and 1980. In the 4 since, it lost every time.

Inflation is December to December, as BLS reports it; gold is the change in its December average price.

What happened to gold during the 2021–22 inflation?

US inflation peaked at 9.1% in June 2022, the highest 12-month rate since November 1981. Between December 2020 and December 2022, consumer prices rose 13.9% and gold’s average price moved -3.2%: a 15.1% loss after inflation.

Gold’s big rise came afterwards. From December 2022 to August 2026 it gained 145%, or 117% after inflation, while inflation cooled to about 3.4% a year. Whatever drove that rally, it was not a burst of inflation in the same period.

How much has gold returned after inflation since 1971?

It depends almost entirely on where you start.

The 1971 figure flatters gold: the price had been held at $35 for decades, so part of the 1970s rise was catching up. From the 1980 peak, gold has returned 0.9% a year after inflation over 47 years, and measured from that peak it was still 30% behind inflation at the end of 2022. It is 52% ahead now. All of gold’s gain on inflation since 1980 arrived after December 2022.

What this means if you own gold for inflation

• Over the next year or two, it is close to a coin flip. Gold beat inflation in 55% of one-year and 53% of three-year periods. If you need to keep up with prices on that timescale, the record does not support relying on gold alone.
• Your purchase price matters more than your patience. A buyer at the 1980 average waited 45 years to break even after inflation; a buyer at the April 2001 low had about 9 times their money after inflation by August 2026.
• Its best stretches have not lined up with inflation. Gold lost ground in 2021–22 and made its largest real gain in decades once inflation was falling.
• These returns are before costs and tax. The IRS taxes net gains on collectibles, a category that includes coins, at up to 28%, and storage, dealer spreads or fund fees come off too. Real returns after all of that are lower than the tables show.

How gold behaves day to day is a different question, measured in our gold vs the dollar study and our gold trading statistics, and what real yields, the dollar and the Fed explain of gold’s moves in why is gold going up? Whether silver would have done the job better is in our gold-silver ratio study, and how gold compares with owning the stock market in gold vs the S&P 500. Every year’s price since 1925, and every fall of 20% or more, is in gold price history, and how often a buyer in any month since 1971 was ahead, and how long they waited to break even, in is gold a good investment?

How we measured it

Gold: the World Bank’s monthly commodity price data (the “Pink Sheet”), which is the London afternoon fix averaged over each month, and a spot average of daily rates since June 2025. Inflation: the US Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U), US city average, all items, not seasonally adjusted. October 2025 was never published — in BLS’s words, “Data unavailable due to the 2025 lapse in appropriations” — so we filled it between September and November.

Before relying on the World Bank series we checked it against our own broker’s gold prices. Over the 151 months from February 2014 to August 2026, the two differed by 0.12% on average, and their month-to-month changes correlated at 0.998.

Every month from August 1971 to August 2026 counts, 661 in all, and real prices are restated in August 2026 dollars. Because these are monthly averages, peaks and falls are smaller than daily prices show; the $850 day is the clearest example. The returns ignore storage, fund fees, dealer spreads and tax, and they measure US inflation in US dollars, so a saver in another currency had a different experience. Correlation across calendar years rests on 54 observations and says nothing about causes. The method behind all our studies is published alongside them.

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