Are Precious Metals a Good Hedge Against Inflation?

Inflation rates have been in the single digits for 40 years. Although not the double digits of 1979 to 1981, the rate still represents a continuous dollar value decrease. For you to increase your net worth, your investments must first overcome the inflation rate. You can use your return on investment (ROI) rate and the current inflation rate in this formula to calculate your inflation-adjusted return:

[((1 + return) / (1 + inflation)) – 1] x 100

Most forecasters agree that the chance for hyperinflation is low in the United States and many countries around the world. However, the room still exists for the unknown due to geopolitical risk and other factors. Some analysts believe that as the Federal Reserve begins to raise interest rates, there is a greater possibility for higher inflation.

Since precious metals have held their purchasing power for the long haul, they are worth considering. To best understand how precious metals are a good hedge against inflation, consider how gold, silver, palladium, and platinum have performed historically.

How Gold Has Performed

The most recent low point in gold prices was $1,065 per ounce in December 2016. Since then, the price has climbed steadily, with a few corrections along the way. In the last quarter of 2020 and the beginning of 2021, the price has hovered between $1,800 and $2,000 per troy ounce. Had you invested in gold in 2016, you would have had a return of nearly 90 percent for the four years.

Even when you factor in the inflation rate that has hovered between 0.6 and 2.9 over that same four years, you can see that an investment in gold would have provided a favorable increase to your net worth.

Another exciting thing is that while gold returns have historically been below the Dow Jones Industrial Average (DJIA), that began changing this past year. Gold outperformed the DJIA from March through October of 2020.

How Silver Has Performed

Silver has also done well between 2016 and 2021. Other than a 9.4% dip in 2018, every year has seen anywhere from a 7.12% increase to a 47.44% increase. The closing price in 2016 was $15.99 per troy ounce, and the closing price in 2020 was $26.40, representing a 65% return over four years. While not as good as gold, silver did perform well above the inflation rate.

How Palladium Has Performed

Palladium prices have been on a steady upward trajectory since the 1980s. The price hovered near $600 per troy ounce in 2016. By 2020, the price stood steady between $2,150 and $2,500 per troy ounce. If you had invested at the lowest price and sold at the highest price, you would have achieved more than a 300% return on your investment.

How Platinum Has Performed

Platinum prices are considerably higher today than the low of $100 per troy ounce in 1970. However, in the past four years, the prices have remained relatively steady, hovering between $900 and $1,100 per troy ounce for the most part. One dip in 2020 to $622.50 and a spike in February 2021 to $1,293 per troy ounce have been the outliers.

Had you taken advantage of those two extremes, your return on investment would have been nearly 108%. Barring that, your return over the same four-year period would have been somewhat flat and perhaps would not have served as strongly as the other precious metals as a hedge against inflation.

Should You Invest in Precious Metals?

The usual advice about “not putting all your eggs into one basket” when investing applies to investing in precious metals. A diversified portfolio is your best hedge against inflation. Since precious metals have intrinsic value, they are unique in terms of inflationary protection. They also have no credit risk.

As long as economic uncertainty and other positive market factors exist, precious metal prices will likely continue to climb. While you might not want to eliminate all other investments—such as real estate, stocks, and bonds—from your portfolio, investing in precious metals can help you reduce overall risk and volatility.

As is the case with any investment, it is wise to learn about the precious metal market and consult with experts.

How to Invest in Precious Metals

woman thinking of investing in precious metals

You have various ways to invest in precious metals. You can:

  • Purchase silver, gold, platinum, or palladium bullion (coins or bars) and hold them yourself
  • Rollover or transfer your retirement account funds to a Gold IRA or Silver IRA that in turn invests in bullion, mutual funds that invest in bullion, gold or silver shares in production or mining companies, or gold ETFs
  • Purchase bullion through a self-directed IRA to be held in a depository
  • Invest directly in precious metal ETFs
  • Purchase a precious metal mine operation

Most precious metal investors prefer the hands-on approach of purchasing bullion or setting up a self-directed retirement account for investing in precious metals. The advantage of buying bullion is that you have them in hand to do with as you please. The advantage of a gold & silver IRA is the tax benefits, which provide an additional hedge against inflation.

Choosing Between the Precious Metals

Each precious metal has its investment characteristics, making it difficult to advise any investor on which precious metal to choose. Those entering the market often begin with gold or silver because they are more familiar with them. Diversification in any portfolio is a good thing, and that can extend to investing in each of the precious metals eventually. Let’s take a look at the options:

  • Gold: A plus about gold is that it does well during all economic conditions, including economic slowdowns, recessions, periods of high inflation, and deflation periods. While it costs more than silver or platinum, it is lower than palladium.
  • Silver: Silver is a good option for investors looking to start small and add to their portfolio a little at a time. With many industrial uses, including in the solar energy industry, the demand for silver should continue. One drawback is that you would need more space to store silver than an equal investment in gold.
  • Platinum: Platinum doesn’t experience the same price spikes that gold and silver do, so it makes a solid choice for investors that desire stability. The primary uses for platinum are vehicle catalytic converter manufacturing and jewelry.
  • Palladium: The palladium market is similar to platinum, although its rarity has drastically increased prices in recent years. The high cost per troy ounce makes investing in palladium bullion more challenging for beginning investors.

Where Can I Buy Precious Metal Bullion?

Purchasing gold, silver, platinum, or palladium bars and coins is an investment in your future: a good hedge against inflation and the uncertain economic times ahead. It is normal to feel overwhelmed about the many choices, especially if you are new to precious metal investing.

The experts here at The Oxford Gold Group are always happy to assist you. You can begin by browsing our selection of precious metal products. Feel free to call us at 833-600-4653 to obtain professional advice before making your selection.

How Can I Invest in a Gold & Silver IRA?

Four simple steps are involved in establishing a gold & silver IRA. At The Oxford Gold Group, we do all the work for you!

  • Step #1: We walk you through the simple application to establish a precious metals IRA account. Your options include a Roth IRA, SEP IRA, or traditional IRA.
  • Step #2: We reach out to your current IRA custodian to arrange the tax-free rollover.
  • Step #3: Once the funds are in your new IRA account, your account partner will work with you to determine which precious metals you would like to purchase that fit IRS standards for IRA qualification.
  • Step #4: Your precious metals will be shipped to the Delaware Depository Service Company (DDSC) for placement in high-security vaults.

You can continue to make contributions to your new account. You will have online access to your account and receive quarterly statements to watch how your portfolio performs. You will pay an annual flat fee charge of $175 for accounts under $100,000 or $225 if over.

When you need a distribution, we’ll make the arrangements for you. You have the option to liquidate the precious metals or have your metals shipped to you. You can reach out to us at any time with questions about your account.


Regardless of how you choose to invest in precious metals, you can have confidence that you are taking a positive step towards hedging against inflation. Only in very few periods in our nation’s history has inflation not occurred, so it makes sense to choose investments with a return higher than the most recent historical inflation rates. Precious metals have historically had reasonably high returns and performed better than more volatile investment options.

We founded The Oxford Gold Group to assist investors with tailored investment strategies, and we are proud to have become the industry leader in precious metals. We are here to help you reach your personal financial goals, whether you are a first-time precious metals buyer, seasoned investor, or collector. We will guide you every step of the way—please contact us today at 833-600-GOLD.


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The precious metals market may seem intimidating, but it’s not as it seems. Our team has compiled a summary of our tips and information into a free guide so you can learn how to begin securing your future.


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