# Can we stick a fork in the idea that Gold and Crypto are a hedge against inflation? **URL:** \ **Category:** Great Debates\ **Created:** [October 24, 2022, 9:59pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720 "2022-10-24T21:59:53Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [October 25, 2022, 2:38am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/21 "2022-10-25T02:38:14Z")
> [@Little\_Nemo](#): > > Gold is a good investment in bad times. Stocks are a better investment in normal times. (Ammunition and canned food is a better investment in really bad times.) Gold should never be the central pillar of your investment plans. It’s hard to say. If you held gold over stocks for the last 10 years, you lost big. Over thatbtime, gold actually declined 4% while the market gained 137%. On the other hand, over 20 years gold went up 425%, while the market gained 242%. 2008-2012 were _Very_ good years for gold. But over 30 years, gold loses again. Fun chart to plat with: [https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart](https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart) ---
**Author:** ![scudsucker](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/scudsucker/32/14101_2.png) [@scudsucker](https://boards.straightdope.com/u/scudsucker)\ **Post date:** [October 25, 2022, 3:16am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/22 "2022-10-25T03:16:04Z")
This is mildly off topic, but why is “pork bellies” the go-to comparison to gold? I mean, I like a good ramen as much as the next guy, but I don’t get the relevance of the comparison. Yet is seems common. ---
**Author:** ![gnoitall](https://avatars.discourse-cdn.com/v4/letter/g/bb73d2/32.png) [@gnoitall](https://boards.straightdope.com/u/gnoitall)\ **Post date:** [October 25, 2022, 3:18am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/23 "2022-10-25T03:18:26Z")
I doubt anyone is doing any serious comparisons to pork bellies in the current decade. > **[Pork Bellies: Commodity Overview and Examples](https://www.investopedia.com/terms/p/porkbellies.asp)** > > Pork bellies are the cut of pork that comes from the belly of a pig traded in the futures market. > Pork belly futures were a pioneering financial instrument when they were introduced in 1961, but they were phased out in 2011 due to declining market interest and changes in the bacon market. ---
**Author:** ![scudsucker](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/scudsucker/32/14101_2.png) [@scudsucker](https://boards.straightdope.com/u/scudsucker)\ **Post date:** [October 25, 2022, 3:20am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/24 "2022-10-25T03:20:00Z")
Thank you. A little ignorance fought. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 25, 2022, 4:16am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/25 "2022-10-25T04:16:42Z")
> [@scudsucker](#): > > This is mildly off topic, but why is “pork bellies” the go-to comparison to gold? > > I mean, I like a good ramen as much as the next guy, but I don’t get the relevance of the comparison. Yet is seems common. Because it takes too long to say frozen concentrated orange juice. ---
**Author:** ![solost](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/solost/32/11776_2.png) [@solost](https://boards.straightdope.com/u/solost)\ **Post date:** [October 25, 2022, 11:45am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/26 "2022-10-25T11:45:54Z")
> [@Buck\_Godot](#): > > I think investing in … [bottle caps](https://fallout.fandom.com/wiki/Bottle_cap) might be a better investment Talk about fiat currency. ---
**Author:** ![Babale](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/babale/32/15666_2.png) [@Babale](https://boards.straightdope.com/u/Babale)\ **Post date:** [October 25, 2022, 12:42pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/27 "2022-10-25T12:42:40Z")
> [@Bootb](#): > > The **actual** claim is that over long periods of time–several decades at least, if not a few centuries–gold is a stable protector of value How can anyone make any claims at all about how our modern, industrialized, globalized economy will function over decades or centuries where it has barely existed for decades? ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [October 25, 2022, 12:58pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/28 "2022-10-25T12:58:08Z")
> [@gnoitall](#): > > I doubt anyone is doing any serious comparisons to pork bellies in the current decade. Or frozen concentrated orange juice. I think the idea is that gold/silver/platinum is like any other commodity and we expect the price to go up during inflation. The advantage of precious metals is that they do not rot or degrade over time and I don’t have to get a COMEX contract to invest in it. But like any other investment, the key is buy low and sell high. Metal “investors” seem to be irrational because when it’s low no one wants it and then when it is high everyone wants some. And I will ask the OP if they are looking at spot or real price. A 1 ozt AGE carries a 12% premium and silver is crazy at close to a 100% premium, so when you are looking at the price of silver, are you looking at the $19/ozt that is spot or the $36/ozt that it really costs? ---
**Author:** ![Buck\_Godot](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/buck_godot/32/6573_2.png) [@Buck\_Godot](https://boards.straightdope.com/u/Buck_Godot)\ **Post date:** [October 25, 2022, 3:19pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/29 "2022-10-25T15:19:57Z")
I was looking at the spot price. [$1,649.59 vs around $1,800 a year ago.](https://goldprice.org/) ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [October 25, 2022, 5:54pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/30 "2022-10-25T17:54:49Z")
With premiums it’s more like $1850 today vs $1900 a year ago. ---
**Author:** ![Odesio](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/odesio/32/20003_2.png) [@Odesio](https://boards.straightdope.com/u/Odesio)\ **Post date:** [October 26, 2022, 2:28am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/31 "2022-10-26T02:28:38Z")
> [@Little\_Nemo](#): > > I saw a bitcoin selling machine earlier this year when I was in Texas. It was in the lobby of an HEB supermarket. I saw one at a shopping mall in San Diego a few weeks ago. I had no idea such a thing existed. ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [October 26, 2022, 2:53am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/32 "2022-10-26T02:53:24Z")
> [@Dewey\_Finn](#): > > she said something about how in the nineteenth century, you could buy a suit of clothes for a gold coin and you still can today. I quite frequently hear the stability of gold compared to “a suit of clothes”. Of course even just today, the price of “a suit of clothes” can vary from $50 to $10000 depending on what kind of clothes you buy. ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [October 26, 2022, 6:58am UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/33 "2022-10-26T06:58:06Z")
The size of the gold coin can also vary, although not usually by that much. I once gave my father a tiny 5-peso gold coin because he was into that stuff. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 26, 2022, 3:09pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/34 "2022-10-26T15:09:03Z")
> [@leahcim](#): > > > [@Dewey\_Finn](#): > > > > she said something about how in the nineteenth century, you could buy a suit of clothes for a gold coin and you still can today. > > I quite frequently hear the stability of gold compared to “a suit of clothes”. Of course even just today, the price of “a suit of clothes” can vary from $50 to $10000 depending on what kind of clothes you buy. There’s also the issue of how good an economic standard a suit of clothes is. In the nineteenth century, producing cloth and then making a suit out of it required a significant amount of hand labor. In the twentieth-first century, much of that labor is mechanized. So it’s far easier and “cheaper” to produce a suit of cloth today than it was two hundred years ago. If gold was holding a steady value and a gold coin bought a suit of cloth in the nineteenth century, then you would expect the same gold coin to buy several suits in the twenty-first century. If gold coins and suits of cloth have maintained a one-to-one equivalence, it’s a sign that the value of gold has been declining alongside the value of suits. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [October 26, 2022, 3:16pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/35 "2022-10-26T15:16:00Z")
I guess you could argue that it experienced deflation in line with how the price of suits experienced deflation, so it’s still a good hedge? It’s a nonsense comparison, of course. ---
**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\ **Post date:** [October 26, 2022, 5:35pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/36 "2022-10-26T17:35:02Z")
> [@Bootb](#): > > Nobody has ever claimed that gold has a perfect correlation against the dollar. You’re right, nobody has claimed gold has a perfect correlation against the dollar. I also wasn’t addressing that claim. I argued that people who invest in gold to hedge against _inflation_ rely on faith, contrary to the explicit premise from the original post, which we are asked to evaluate. > [@Bootb](#): > > over long periods of time–several decades at least, if not a few centuries–gold is a stable protector of value. It’s hard to make claims over several centuries. Before 1971 most national currencies were valued in terms of gold. Any comparison from before is likely meaningless. Failure of the national currency was _defined_ as failure of that currency to maintain parity to gold. Gold was the baseline by which value was measured. It was incapable of losing value. When there was a gold rush, local supply of gold would skyrocket. But gold didn’t lose value, everything else became more valuable. Think of that hotel by the mines charging $10,000 a month in 1890. Go further back when gold was used as currency and it becomes even more meaningless to speak of gold as a stable protector of value. Better than what, silver? We’re only talking three to five centuries back. ~Max ---
**Author:** ![Charlie\_Tan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/charlie_tan/32/12582_2.png) [@Charlie\_Tan](https://boards.straightdope.com/u/Charlie_Tan)\ **Post date:** [October 26, 2022, 6:26pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/37 "2022-10-26T18:26:48Z")
> [@Max\_S](#): > > Go further back when gold was used as currency and it becomes even more meaningless to speak of gold as a stable protector of value. Better than what, silver? We’re only talking three to five centuries back. Further reading: > [@](#): > > However, economic systems using gold as the sole currency and unit of account never emerged before the 18th century. For millennia _it was silver_, not gold, which was the real basis of the domestic economies: the foundation for most money-of-account systems, for payment of wages and salaries, and for most local retail trade. > **[Gold standard | Silver and bimetallic standards until the 19th century](https://en.wikipedia.org/wiki/Gold_standard#Silver_and_bimetallic_standards_until_the_19th_century)** > > The use of gold as money began around 600 BCE in Asia Minor and has been widely accepted ever since, together with various other commodities used as money, with those that lose the least value over time becoming the accepted form. In the early and high Middle Ages, the Byzantine gold solidus or bezant was used widely throughout Europe and the Mediterranean, but its use waned with the decline of the Byzantine Empire's economic influence. > However, economic systems using gold as the sole currency a... ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [October 26, 2022, 9:17pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/38 "2022-10-26T21:17:54Z")
> [@glowacks](#): > > If you ask someone from Venezuela or Zimbabwe, I’m sure they’ll absolutely agree that crypto and gold are good hedges against the kind of inflation they’ve experienced. Wouldn’t putting your money into a reserve currency like the US dollar or Euros have done just as well? ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [October 26, 2022, 9:33pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/39 "2022-10-26T21:33:59Z")
Surely, if gold is such a stable source of value, then other precious metals would be similarly stable. There’s nothing inherent to gold that would make it more stable than silver, or platinum. And yet, over the centuries and even millennia, the relative prices of gold, silver, and platinum have varied wildly. Clearly, at least two of those three are not stable. If at least two of them are unstable, why would one not assume that all three are unstable? ---
**Author:** ![glowacks](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/glowacks/32/5548_2.png) [@glowacks](https://boards.straightdope.com/u/glowacks)\ **Post date:** [October 26, 2022, 9:42pm UTC](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720/40 "2022-10-26T21:42:31Z")
> [@Northern\_Piper](#): > > Wouldn’t putting your money into a reserve currency like the US dollar or Euros have done just as well? That’s somewhat besides the point. While the risk is small, there’s some chance that all major currencies will suffer from extreme inflation because there’s nothing stopping it from happening such as a physical supply limit like there is with gold and crypto. The fact that central banks currently are very good at reigning in inflation doesn’t mean they always will be. I agree that it’s a silly risk to hedge against, but it’s not like the risk is absolutely zero. The problem with hedging in this way is that market forces will cause more volatility in the value of the hedge than its value will usually increase due to inflation. Whether it ends up being a good investment is most likely down to those market forces, but some people trust more in the market to balance the value of things than in governments. Lack of trust in government is basically the key for all those who espouse this view. Given what we’re seeing lately in supposedly stable western democracies, it’s not entirely farfetched, only mostly so. [Previous page](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720.md?page=1) [Next page](https://boards.straightdope.com/t/can-we-stick-a-fork-in-the-idea-that-gold-and-crypto-are-a-hedge-against-inflation/973720.md?page=3)