Lots and lots of people like to point to the rise in the price of gold as evidence that inflation is just around the corner, if not already here. (I don’t know why the increasing price of gold indicates inflation but the decreasing price of housing and labor doesn’t indicate deflation. Housing and labor are a lot more important to most people than the price of gold.) Barry Ritholtz takes a different look at whether gold is cheap or expensive. He includes this great chart:

One could argue that the renminbi is pegged to the dollar so that accounts for the run-up in prices. But what policies is India pursuing causing the Rupee to devalue? The story of gold is one of supply-demand and price expectations, not inflation.

As always: gold is not an inflation hedge.

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