Authors: Dr Gnanadeva S
Abstract: This paper examines how inflation affects investment decisions with particular focus on two precious metals: gold and silver. The study reviews theoretical mechanisms (store-of-value, real return erosion, monetary policy response), surveys empirical evidence from cross-country and time-series studies, and discusses practical portfolio implications for investors and policymakers. While many studies find that gold (and to a lesser extent silver) can act as a partial hedge against inflation in certain periods, the literature shows that the relationship is time-varying, regime-dependent, and affected by other determinants such as interest rates, currency movements and industrial demand. The paper concludes with recommendations for asset allocation under inflationary scenarios and areas for future research.
DOI: http://doi.org/10.5281/zenodo.17699277
