Physical gold is not a derivative - so there is no necessary statistical relationship between gold prices and other financial variables.

Mr Fandetti is absolutely correct that gold is not an ‘inflation hedge’ - but this misses three points:

1) Something does not need to be an ‘inflation hedge’ to protect your savings from inflation. This confuses statistical relationships and genuine risk protection.

The US dollar price of gold has risen 82% and 496% over 10 years and 20 years respectively. Consider the return on TIPS over the same period. One was an inflation hedge, and the other protected your savings from inflation.

2) Gold’s suitability increases with your investment time horizon. The dangers of inflation are not expressed in the next year or two or three. Prices rising 5% next year won’t hurt too much, but prices rising 30% over five years can make a huge difference on your financial well-being. Keeping up with the inflationary rat race is neither easy nor is it automatic.

3) Neither CPI nor PCE are adequate measures of inflation. Rising consumer are only one consequence of inflation, which also includes aspects of financialization, rising personal and national economic fragility, promoting a a debt-based economy, and rising economic inequality (new financial claims exceeding genuine wealth creation).

Inflation is arguably the most complex issue in economics - it can’t be nailed down and defined by an arbitrary and contrived consumer price index. Reducing it to CPI misses the forest for the trees.