Silver Rises Over 120% YTD 
Published: 02-20-2025, 11:45 am | Updated: 02-20-2025, 09:02 am
Research by Duke University’s Campbell Harvey and former TCW manager Claude Erb suggests gold’s current rally may be setting up investors for disappointment.
Their analysis shows gold’s price-to-CPI ratio is now at 9-to-1, even higher than the 7-to-1 ratio that preceded gold’s 50% price drop after 2012. The researchers challenge two popular arguments for gold investment: its effectiveness as an inflation hedge and its role as protection against geopolitical risks.
While gold has outperformed inflation for the past 20 years, the study found that gold only maintains its purchasing power over very long periods – perhaps a century – and shows no consistent pattern of protecting against market crashes. The research indicates that when gold reaches such elevated levels relative to inflation, it typically leads to negative real returns over the following 5-10 years.
