Writing in Slate, Matthew Yglesias argues that there is a big reason why gold no longer serves as a haven investment: There is now a better haven-alternative, in the form of Treasury Inflation Protected Securities, or TIPS.
These look like regular bonds, in that they pay interest twice a year. However, the principal on a TIPS rises with inflation, as measured by the consumer price index. Not only does the United States sell such investments, but the U.K., France, Japan, Germany, Canada, Australia and other developed countries sell them too.
“Of course that doesn’t provide absolute protection against the possibility that the government will simply confiscate your money for some reason, but nothing guarantees that,” he said. “After all, FDR confiscated everyone’s monetary gold in 1933, and the government always could expropriate your real-estate holdings or forcibly nationalize companies. But if you’re simply looking for a hedge against price inflation, buy TIPS.”
That means gold is a speculative investment – and like other speculative investments, it could rise in value or it could fall, Mr. Yglesias said. But as a hedge against rising inflation, or any other economic calamity, there are better solutions.