Gold as a hedge for long-term inflation (study in emerging economies using the ARDL model)
No, it is a terrible hedge against inflation. The price of gold is quite volatile. Price movements of this commodity do not track movements of the general price index.
http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
It depends on the correlationship between gold and inflation which is time varying . Also it depends on the prevailing economic condition of the country under study.
yes, Not only gold but oil, natural gas etc are also used as inflation hedge.
No, it is a terrible hedge against inflation. The price of gold is quite volatile. Price movements of this commodity do not track movements of the general price index.
http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
I think all crucial sectors like oil, cement, gold, natural gas can be termed as inflation hedge
and it all depends from one economy to different economy, different conditions. I think what's interesting to note is DEVELOPING COUNTRIES HAVE ALWAYS BEEN TRYING TO JUMP THE DEVELOPED COUNTRIES BANDWAGON TOO Soon and this is where the problems arises.
it certainly isn't a good hedge against low rates of inflation. It may be a hedge against rapid inflation - but then so are a lot of toher asset classes. Gold was traditionally regarded as a hedge against noneconomic volatility e.g. political risk. But even that is a bit doubtful nowadays
Two questions, really. First, has gold been an inflation hedge in the past? For any particular economy, and any specified time period, it is a simple matter of comparing the movement over the time period of the national-currency gold price with the movement of the overall price level. Second, will gold be an inflation hedge in the future? The answer is a matter of speculation: maybe it will, maybe it won't. There are well-known arguments for both, but a fortune-teller is probably at least as authoritative on this topic as an economist.
Gold nowadays is envisaged more as a commodity.This is an article that might help you:
http://uploads.yuku.com/b/5/7/7/8/5/7/4/9/0/5/b/1/3/6/7/attachments/8b7f0ea7303aeb0ad7f32fda756b0eacb5768826/8b7f0ea7303aeb0ad7f32fda756b0eacb5768826.pdf
Perhaps a anecdote might be appropriate here. When I was a young economist in the 1980, my mother asked me about buying gold to hedge against inflation. She had noticed that gold prices were rising much more rapidly than the price level, which also was increasing and at a faster pace than in the previous few decades. Anyone living back then in the U.S. might recall double-digit increases in the Consumer Price Index.
Fortunately, I suggested avoiding the volatile gold market. If my parents had converted part of their portfolio to gold back then, that part of the portfolio would have lost about half of its value over the next two decades that they lived.
Obviously, the time horizon makes a difference. Anyone interested can view the graph I created in Excel; the data is included. It illustrates what Peter Colwell and Paul Beckerman among other indicated.
I hope this is self explanatory and that it helps.
Rob
Suppose that you had a job in which you were supposed to create a hedge against inflation. How would you do that? Well, you would begin by trying to find a market basket of commodities that together track the price index. Suppose that you were successful at this, then what? If you were in the USA, you might ask how such a fund would be taxed. It would be taxed like any mutual fund. This means essentially that it would be a disaster to produce such a fund. The Internal Revenue Service would not condone a mutual fund that is an effective substitute for government money.
Invest in gold to protect yourself against inflation. Gold is just a speculative instrument
We will go to estimate the relationship between the variables (gold prices, inflation, interest rates, exchange rates for the dollar) for some countries by used ARDL .(China, India, Turkey, UAE, Saudi Arabia) . I hope to find data for these countries to complete my project.
If the last few years have revealed any truth about gold, it’s that the yellow metal is resilient, according to Darren Capriotti
A personal gold anchor can make sense, but it is not a hedge against inflation.
Invest in gold is believed a hedge against inflation, some economists it could be a good strategy, the effectivenes of gold is in the long run, its like to invest in financial markets.
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