Precious Metals as Inflation and Debasement Hedges: Evidence and Portfolio Sizing

Gold's reputation as a CPI hedge is empirically weaker than widely assumed: during the 2022 tightening cycle, surging real yields produced a flat-to-negative real return even as headline inflation ran above 8%, showing that gold hedges monetary-policy failure and debasement more reliably than point-in-time inflation. Regime analysis shows silver carrying higher inflation beta than gold in acute episodes but far greater drawdown risk. TIPS offer contractual inflation linkage gold cannot replicate, yet gold's near-zero equity correlation has regained portfolio value as the stock-bond correlation turned positive after 2021. Studies converge on a 5 to 15% precious-metals allocation as the range that improves risk-adjusted returns, with the upper bound warranted under persistent fiscal debasement. The 2023 to 2025 run through successive thousand-dollar milestones provides a live test of debasement-driven demand.