That’s a great question – especially since gold has taken a beating lately. I like gold because it insures us against crisis. Despite widespread belief to the contrary, gold has never been an inflation hedge. But is a great crisis hedge.
Research shows that there is a 10:1 relationship between gold prices and bond coupon rates (which are related to inflation). Over time, the two move such that having $1 in gold for every $10 in bond principal can help immunize your bonds, while “insuring” your hard-earned income.
Don’t forget, gold is not just about individuals any more. Entire governments are buying to preserve their purchasing power – just like we are, albeit on a much smaller scale.