Pink Panther

Which Asset Classes Are the Best Inflation Hedges?

Nice Article. Great to see this subject broken down to some simple statistical data.

Here's a list of the CPI adj. price of the S&P, CPI aj. gold price and corresponding bond yields during the 1970 inflationary period, according to Robert Shiller's data (watch the drop in equities in 1974):

Year CPI adj. S&P Price CPI Long Interest Rate CPI adj. Gold Price
1971 229.73 5.3% 6.24% 37.6
1972 245.81 3.3% 5.95% 43.8
1973 271.82 3.6% 6.46% 65.2
1974 201.71 9.4% 6.99% 114.5
1975 136.21 11.8% 7.50% 195.2
1976 170.38 6.7% 7.74% 150.8
1977 173.53 5.2% 7.21% 145.1
1978 141.22 6.8% 7.96% 179.2
1979 142.78 9.3% 9.10% 244.9
1980 139.41 13.9% 10.80% 578.7
1981 149.51 11.8% 12.57% 641.2
1982 121.65 8.4% 14.59% 430.8
1983 144.3 3.7% 10.46% 484.5
1984 159.7 4.2% 11.67% 415

You can see that equities and gold adjust almost immediately, while bond yields change rather slowly.