Here’s what I wrote: In general, gold behaves like a very-long-duration inflation-linked bond with a zero coupon. This makes sense – if we were to issue a bond that, in exchange for the current gold price, offered to pay the bearer no coupons but redeem for 1 ounce of gold in 100 years, it would have the same payoff as holding one ounce of physical gold for 100 years. If gold is a true inflation hedge over time, which means its price rises with the price level, then that bond would have the same payoff if we defined the payoff not in terms of an ounce of gold, but in terms of the change in the price level over that ... (full story)