2006-06-06 05:32:51 · 2 answers · asked by Earl M 1 in Business & Finance ➔ Investing
The answer to that is yes AND no. Metals seem to respond to shifting underlying values and the presence of war. Inflation is an error in the banking system. More money is created than needed. The data set is too short to determine how metals respond to inflation. The reason is that metals were the money for most of economic history. You do not get a period until the 1970's where there is a true split. Too many other events occured in the interim to determine the impact of gold and inflation.
To the "yes," answer, it appears that gold holds roughly constant in value to commodities, but that relative peace in the world is a better indication of demand. Gold is more valuable during a war than in peace. That is the "no" answer.
Technically, on an infinite time scale, gold is worthless because it produces no cash flows.
2006-06-06 06:27:46 · answer #1 · answered by OPM 7 · 1⤊ 0⤋
If inflation is high, the prices of nearly all goods increase.
2006-06-07 17:58:14 · answer #2 · answered by Ranto 7 · 0⤊ 0⤋