Economy
Is Gold An Inflation Hedge?
Many investors consider gold as a safe-haven asset, particularly during times of economic uncertainty. It has been valued for centuries due to its beauty and scarcity. However, one question that often arises is whether gold can act as an effective hedge against inflation. In this article, we will examine the relationship between gold and inflation and explore the reasons why many investors turn to the precious metal in times of rising prices.
Before delving into the topic, it is essential to understand what exactly inflation is. Inflation refers to the persistent increase in the general price level of goods and services in an economy over a certain period. When this occurs, each unit of currency loses purchasing power over time.
Why Investors Turn To Gold During Inflationary Times?
When significant inflation looms on the horizon, individuals tend to worry about their investments losing value.
This fear prompts investors to seek out assets that have historically acted as hedges against rising prices. While younger investors choose to invest in gold stocks, people who prepare for retirement usually choose from the best gold IRA accounts to safeguard their hard-earned funds. Below are the most popular reasons why people choose to invest in gold in the first place.
Historical Track Record
Gold has a long history of being used as a store of value throughout human civilization. Its scarcity and durability make it an appealing investment option during times when traditional currencies lose value due to inflation.
Limited Supply
Unlike fiat currencies controlled by central banks that can be printed at will, new sources of gold are relatively rare and costly to extract from the ground. This limited supply ensures that gold maintains its intrinsic value over time.
Universally Accepted Store Of Value
Gold has been widely accepted as a form of currency across cultures for centuries. Even today, central banks around the world hold significant quantities of gold in their reserves as a safeguard against financial instability or economic crises.
Tangible Asset Class
One crucial aspect that sets gold apart from other investments is its tangibility – you can actually touch it! Unlike stocks or bonds that exist only on paper or in digital form, gold can be held, admired, and worn. This physical presence can provide a sense of security during uncertain times.
What is The Relationship Between Gold And Inflation?
While gold has many qualities that make it an attractive investment during inflationary periods, the relationship between the two is not as straightforward as some might believe.
Historical Analysis
Looking back at past data provides us with evidence of gold’s potential as an inflation hedge. Historical analysis shows that gold prices have often increased during periods of high inflation or economic uncertainty. For example, during the Great Recession of 2008-2009 and more recently during the COVID-19 pandemic, gold prices soared.
Supply And Demand Factors
Demand for gold tends to rise when there are concerns about currency devaluation or rising prices. As investors seek out safe-haven assets, increased demand leads to higher prices. Economic uncertainty and inflationary pressures amplify this effect.
Investor Sentiment
Another factor that influences the relationship between gold and inflation is investor sentiment. When individuals anticipate inflationary conditions, they may rush to buy gold as a hedge against their fears, which subsequently drives up its price further.
Correlation vs Causation
Despite these correlations between gold and inflation, it is essential to acknowledge that one does not necessarily cause the other. Correlations show how two variables move together but do not always demonstrate cause-and-effect relationships. The increase in gold prices during times of rising inflation could also be attributed to other factors such as shifts in investment preferences or changes in international geopolitical dynamics.
Different Ways to Invest in Gold
Now that we understand why investing in gold holds such allure let’s explore some popular methods:
Physical Gold: Holding Tangible Wealth
One classic way of investing in gold is through physical ownership. This includes purchasing bullion bars or coins directly from reputable dealers. By holding tangible assets like these shiny golden coins right at your fingertips, you become an owner of wealth that can be easily accessed or sold when necessary.
However, storing physical gold does require consideration regarding security and insurance measures. For those who prefer a hands-off approach when it comes to storage, reputable companies like Goldco offer secure vaulting services along with flexible options for acquiring precious metals.
Exchange-Traded Funds (ETFs): Golden Access without the Weight
If you’re seeking a more convenient and flexible approach to gold investment, exchange-traded funds might be your golden ticket. These funds allow investors to own shares in a trust that holds physical gold under its custody. This indirect ownership grants you exposure to the price movements of gold without the need for storage or insurance concerns.
Well-established ETFs such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) have gained popularity due to their liquidity, transparency, and ease of trading on major stock exchanges.
Gold Mining Stocks: Uncovering Hidden Potential
Investing in gold mining companies can offer additional opportunities beyond owning physical bullion or ETFs. By investing in well-managed mining companies with strong track records, you gain exposure to not only the price of gold but also potential company growth and dividends.
Keep in mind that investing in mining stocks carries additional risks compared to physically holding gold or ETF investments due to factors like operational challenges and geopolitical uncertainties. Thorough research and diversification within this sector are crucial steps when considering this avenue.
Sparkling Preparation: Setting Up a Gold IRA
Now that we’ve explored some prominent ways of investing in gold, it’s worth highlighting an exceptional option for long-term retirement planning – a Gold IRA! A self-directed Individual Retirement Account (IRA) allows you to hold precious metals such as gold within your retirement portfolio.
Companies like Goldco and American Hartford Gold specialize in helping investors set up these unique accounts, enabling them to grow their wealth while enjoying tax advantages associated with IRAs. Consulting with experts from reputable firms will ensure you make informed decisions regarding asset allocation within your retirement account.
Is Gold The Only Inflation Hedge?
While most commonly associated with hedging against inflation, it is crucial to recognize that several other assets can serve as hedges too.
Real estate has traditionally acted as a store of value over time due to its potential appreciation and income generation capabilities. During periods of high inflation, real estate investors can raise rents in response to rising costs, thus protecting their purchasing power.
Investing in commodities such as oil or agricultural products can also serve as an inflation hedge. These assets have direct links to the economy and tend to rise in value during periods of high inflation when demand exceeds supply.
Treasury Inflation-Protected Securities (TIPS). TIPS are government-issued bonds that provide protection against inflation by adjusting for changes in the Consumer Price Index (CPI). As inflation rises, the principal value of TIPS increases, providing investors with a real return above inflation.
Conclusion
By embarking on your gold investment journey, whether through physical ownership, ETFs, or mining stocks, you have the opportunity to participate in the enduring legacy of gold. And for those looking to secure their retirement savings with the radiant glow of gold, a Gold IRA can be the golden ticket to long-term financial success.
While gold has historically demonstrated an ability to retain its value during times of rising prices, it is essential to understand the complex relationship between gold and inflation.
Economic factors, supply and demand dynamics, investor sentiment, and historical precedent all play significant roles in determining gold’s performance during inflationary periods. It is always advisable for investors to maintain a diversified portfolio that includes a mix of assets suitable for various economic conditions.
By Adedapo Adesanya
Manufacturers are yet to benefit from relief on the burden of multiple taxes and levies despite the enactment of the Nigeria Tax Act 2025, according to the Manufacturers Association of Nigeria (MAN).
The association, in its Manufacturers CEO Confidence Index (MCCI) report for the second quarter of 2026, said manufacturers continued to face multiple tax collectors and regulatory agencies during the period.
Director-General of MAN, Mr Segun Ajayi-Kadir, said the new tax law, which was expected to reduce the burden of multiple taxation, had yet to deliver the intended benefits.
“Manufacturers complained that they were still met with multiple tax collectors and regulators in Q2 2026. It follows that the implementation of the Nigeria Tax Act 2025 is yet to achieve its objective of relieving manufacturers of the burden of taxes and levies,” he said.
According to the report, Nigeria’s business environment remains largely unsupportive of manufacturing growth, with local sourcing of raw materials emerging as the only indicator that recorded noticeable improvement.
MAN, however, warned that the gains in local sourcing could be undermined by worsening insecurity in parts of the country.
The association attributed the improvement largely to persistent foreign exchange constraints, which have forced many manufacturers to source inputs locally.
Despite this, it said excessive regulation and multiple taxation continue to weigh heavily on manufacturers.
The report showed that manufacturers recorded a modest increase in sales volume during the second quarter, but rising production, distribution and logistics costs continued to erode profitability.
It added that capacity utilisation, production levels, investment and employment remained broadly unchanged during the review period.
MAN further observed that although recent foreign exchange reforms had helped stabilise the naira, inadequate foreign currency supply remained a major constraint to manufacturing operations.
Other key challenges identified in the report include poor infrastructure, high production costs, raw material shortages and unfavourable trade policies.
The association said the findings underscore the continued pressure on manufacturers despite recent fiscal and foreign exchange reforms, stressing the need for more effective implementation of policies aimed at improving the operating environment for the real sector.
By Adedapo Adesanya
The federal government spent N3.14 trillion on servicing its domestic debt in the first quarter (Q1) of 2026, according to the Debt Management Office (DMO).
The figure, contained in the DMO’s latest domestic debt service report for Q1 2026, comprised N2.97 trillion in interest payments and N169.68 billion in principal repayments.
According to the report, the government spent N741.82 billion on domestic debt service in January before the figure rose to N967.67 billion in February.
Debt service increased further to N1.43 trillion in March, bringing total spending for the quarter to N3.14 trillion.
The March figure represented a 47.7 per cent increase from the N967.67 billion recorded in February and was 92.7 per cent higher than the N741.82 billion spent in January.
The debt office said interest payments accounted for approximately 94.6 per cent of the total domestic debt service during the quarter.
Treasury bills accounted for the largest share of interest payments at N1 trillion, while interest payments on Federal Government bonds stood at N1.96 trillion.
The government also paid N4.24 billion in interest on FGN savings bonds during the period.
The debt management body said the principal component of the debt service comprised N169.68 billion in repayments on local-denominated promissory notes.
Overall, domestic debt service rose significantly throughout the quarter, with March alone accounting for nearly half of the N3.14 trillion spent between January and March.
By Aduragbemi Omiyale
The Director-General of the Securities and Exchange Commission (SEC), Mr Emomotimi Agama, has outlined how the Federal Capital Territory Administration (FCTA) can leverage Nigeria’s capital market to raise long-term funds for critical infrastructure projects instead of relying solely on annual budgetary allocations.
According to Mr Agama, the capital market offers the FCT a sustainable financing model for roads, rail, housing, water, transport and other infrastructure through instruments such as infrastructure bonds, green bonds, real estate investment trusts (REITs), asset recycling and tokenised municipal securities.
Speaking at the Abuja Business and Investment Summit and Expo (ABIE 2026) in Abuja, the SEC chief noted that Abuja’s development demonstrates that economic growth is driven by investment, stressing that “cities are not built by budgets alone. Cities are built by capital markets.”
He advised the FCT to establish a long-term infrastructure bond programme backed by dedicated revenue sources such as ground rents, tenement rates, tolls, parking fees and land-use charges, noting that this would enable the territory to finance major projects without overburdening annual budgets.
“A budget can only spend what a single year has collected. A bond can spend what 30 years will collect,” Mr Agama said, explaining that infrastructure projects generate long-term economic value that can be used to service debt over time.
The SEC boss said the territory could also access cheaper financing through green and sustainability-linked bonds for projects including mass transit, light rail, solar-powered street lighting, waste-to-energy facilities and water infrastructure.
He further proposed the creation of an FCT Real Estate Investment Trust to unlock value from Abuja’s extensive property portfolio while giving ordinary Nigerians an opportunity to invest in the city’s real estate market.
Mr Agama also urged Abuja Investments Company Limited (AICL) to consider listing some of its businesses or establishing a listed infrastructure fund, saying this would raise capital without increasing government debt while improving corporate governance and transparency.
On the long-abandoned Millennium Tower project, he said the estimated over N400 billion completion cost should not be viewed as a budgetary burden but as an investment opportunity that could be financed through a special purpose vehicle and offered to investors via the capital market.
“The question is not whether Nigeria can afford the Millennium Tower. The question is whether we will let ordinary Nigerians own it,” he said.
Mr Agama further proposed an asset recycling programme under which completed income-generating public assets, including terminals, markets, commercial properties and the International Conference Centre, could be securitised or concessioned to institutional investors, with proceeds reinvested in new infrastructure.
He also called on the FCT to pioneer a regulated tokenised municipal bond programme that would allow citizens to invest as little as N10,000 through mobile phones in specific infrastructure projects.
According to him, the recently enacted Investments and Securities Act (ISA) 2025 has strengthened the legal framework for sub-national governments to access the capital market while providing enhanced investor protection and clearer regulation of digital assets.
Mr Agama disclosed that Nigeria’s capital market has grown significantly, with total market capitalisation exceeding N217 trillion as of May 2026, comprising about N160.5 trillion in equities and N56.7 trillion in bonds.
He said recent reforms, including the migration to a T+1 settlement cycle and regulatory measures to deepen market participation, have improved market efficiency and strengthened investor confidence.
The SEC DG assured the FCTA of the commission’s readiness to provide technical support for structuring and registering capital market instruments, saying the agency would work closely with the territory to unlock financing for infrastructure projects.
He added that Nigeria’s capital market remains critical to mobilising domestic savings for national development, insisting that “money is not scarce; delivery capacity is scarce, and financing follows delivery capacity.”
