Research from Professor Campbell Harvey Shows Gold Is Not an Inflation Hedge

July 11, 2012

Campbell Harvey, a professor at Duke's Fuqua School of Business, and his research colleague asset manager Claude Erb, have completed a comprehensive study which shows findings that run counter to the traditional view that gold is an investment hedge against inflation.

Here are some of the key findings from the research:

  • For almost all reasonable investor time horizons gold is not an effective inflation hedge.
  • For most real world circumstances gold is not an effective currency hedge.
  • The real price of gold rises and falls with the short-term supply and demand imbalances.
  • There is not enough gold in the world to satisfy the possible demand from China and India.
  • The price of gold may rise because of a surge in demand unrelated to inflation.
  • This creates a "damned-if-you-do, damned-if-you-don't" dilemma: buy an overvalued possible inflation hedge because someone else might come along and pay more for it or avoid a possible inflation hedge just because it is expensive.

Learn more about these findings by viewing the complete study (free to download but you need to register) and access a powerpoint overview.

Contact Info

For more information contact our media relations team at media-relations@fuqua.duke.edu.