Gold vs. the S&P 500: With Inflation at a 3-Year High, Which Does History Say Wins?
Will the top precious metal consistently outperform the largest companies in America?
Overview
Rising energy costs and the Middle East conflict drove U.S. inflation to a three-year high in May. According to the Bureau of Labor Statistics, prices rose 4.2% over the previous 12 months, accelerating from its 3.8% increase in April. That pressure could force the Federal Reserve to raise its benchmark interest rates to throttle economic growth and tame inflation.
However, the S&P 500 is still trading near its all-time highs and looks historically expensive at 32 times earnings. Meanwhile, gold -- the conventional hedge against inflation -- has retreated about 24% from its record high of $5,589 per troy ounce in January.
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Originally published at www.fool.com.