Gold may top $3,000 — but as an inflation hedge it’s not worth much - MarketWatch
1. Gold near $3,000 reflects a record-high gold-CPI ratio. This may suppress real returns. 2. Researchers Harvey and Erb indicate a mean-reversion model for gold's fair value. Historical ratios predict below-average performance. 3. Past peaks in gold's real price led to negative returns over 5-10 years. Similar trends may recur. 4. Gold’s volatility as an inflation hedge is emphasized by wide fluctuations. Caution is advised in risk-on environments.