After the newest stimulus package, inflation has become a clear and critical risk to the economy, causing everyone to ask about a good market hedge right now.
And many are turning to the most famous safe-haven asset: gold.
But that’s not what investors or traders should be asking. It’s this:
“What’s the best hedge for gold in an inflationary market?”
You heard me right. Gold has lost its glimmer.
Gold prices are falling into a bear market pattern we haven’t seen since 1979. This down period lasted until 2000, when gold was in constant decline, dropping from $1,500 down to $390.
Its other bear market was from 1934 to 1970, dropping from $700 to $250 levels.
And while the S&P 500 has rallied 5% year-to-date, SPDR Gold Shares (NYSE: GLD) shares have lost 9% in the same time period.
Signs of inflation are presenting themselves more strongly than they have in recent years. Interest rates’ sudden jump to 1.6% has inflation bulls rattling the market’s nerves, and right now it’s critical that you prepare your wealth for what might unfold.
So, let’s take a look into the past.