Abstract:
Current super-low interest rates and massive money supply in US and Europe may cause inflation in the future. Historically, gold has been used as a hedge against inflation. During the run up in to its peak price in 1980, gold was chasing the inflation rate as investors feared that their purchasing power was going to be destroyed by runaway prices. What they didn`t realize was that the inflation rate had already peaked above 13% at least a year prior to gold and it continued to fall until 1986 where it has remained in a corridor between 0% and 6% ever since.
