Posted 3/28/2024, 2:14:06 AM
Gold Prices Lagging Behind Inflation and TIPS Despite 2022 Rally
- Inflation-adjusted gold prices are still 12% below 2020 highs and 5% below 2022 highs, underperforming cash
- High real interest rates mean gold will likely continue underperforming even if decoupled from historical relationship with yields
- Speculative positioning and volatility suggest significant headwinds and potential for correction in gold prices
- TIPS offer similar volatility to gold but with over 2% yield above inflation currently, presenting better risk-reward
- Gold bulls rely on increasing real prices to outperform, but TIPS benefit more from eventual decline in real yields expected