By Michael Maharrey
September 29, 2022
There are a number of factors that have weighed on precious metals, but as the World Gold Council points out, it’s important to put gold and silver’s recent price movements in a broader perspective.
In fact, gold has been one of the better-performing asset classes in 2022.
Gold has outperformed US bonds, foreign bonds, the S&P 500, foreign stocks, the NASDAQ, and US Treasury Inflation-Protected Securities (TIPS). The only things that have outperformed gold are commodities, especially oil and agricultural goods, and the US dollar.
So, while gold has fallen more than 5% over the year, it has fallen far less than most other assets, and if you hold gold in your portfolio, it has helped hedge some of those other losses.
The Mighty Dollar
Dollar strength has been the story of 2022. As the World Gold Council put it, “Rising rates and a strong dollar have had a significant negative effect on gold’s performance despite support from geopolitics and inflation.”
We’ve seen the dollar index at 20-plus-year highs. This seems kind of crazy given the level of inflation. After all, high inflation means the dollar is devaluing, right?