What Are The Best Investments During Inflation?

The best investments during inflation include physical gold and real estate. For fixed-income investors, Treasury inflation-protected securities (TIPS) give you a government-backed alternative. But gold has the longest track record and is currently ... per ounce after back-to-back years of 27% gains in 2024 and 2025.

With US inflation at 4.2% as of May 2026, cash is losing value faster than most savings accounts can keep up.

Why is gold a good investment during inflation?

Gold holds purchasing power when paper currencies lose it. That’s why central banks hold it as a reserve against currency devaluation, and why individual investors use it for the same purpose.

How has gold performed during past inflation?

Central banks bought over 1,000 tonnes of gold in each of 2022, 2023, and 2024, per the World Gold Council. That level of institutional buying is more than double the annual average from 2010 to 2021.

• Great Recession (2007 to 2009): Gold prices rose from around $650 to nearly $1,200 per ounce as the financial crisis and government stimulus drove investors toward safety.
• COVID-19 pandemic (2020): Gold surpassed $2,000 per ounce by mid-2020 as global uncertainty and stimulus spending drove demand.
• 2024 and 2025: Gold returned 27.2% in 2024 and another 27% in 2025, per TradingView data compiled by Visual Capitalist. Over 25 years (2000 to 2025), gold has averaged 10.9% annual returns.

What should you know before buying gold?

Gold doesn’t generate income the way dividends or rent do. It preserves purchasing power over time, which means you won’t see quarterly payouts the way you would from stocks or rental property. 

If you hold physical gold, you’ll also need secure storage, from a home safe for smaller amounts to a bank safe deposit box or insured depository for larger holdings.

What other investments protect against inflation?

Real estate

Property values tend to rise during inflation, especially in growing areas. As land, materials, and construction costs go up, so do home prices. Rental income follows the same pattern, which helps landlords hold onto the real value of their cash flow.

Homeowners with fixed-rate mortgages also benefit because inflation gradually shrinks the cost of their monthly payments.

Real estate works as an inflation hedge, but it’s not easy to get into. Down payments, closing costs, and renovation expenses make it one of the most capital-intensive options. Managing rental properties also takes time. And if you don’t lock in a fixed rate, rising interest rates can cut into your returns.

Treasury inflation-protected securities (TIPS)

TIPS are bonds issued by the US government that adjust their principal with inflation, based on the Consumer Price Index. When these bonds mature, you receive either the adjusted principal or the original amount, whichever is higher.

TIPS pay interest twice a year at a fixed rate calculated on the adjusted principal, so income rises along with inflation. Five-year TIPS currently carry a real yield of roughly 1.8% to 2.0%.

TIPS have drawbacks to consider. Yields run lower than regular Treasury bonds when inflation is mild, so in a low-inflation year, you’d earn less than you would from a standard Treasury. The IRS also taxes the inflation adjustments as ordinary income each year, even though you don’t receive the adjusted principal until the bond matures. And if interest rates rise, the market value of your TIPS can drop, which means selling before maturity could result in a loss.

How do these options compare?

Investment	Inflation protection	Strengths	Trade-offs
Physical gold	High (outpaced inflation in every major cycle since the 1970s)	No counterparty risk, globally liquid, 10.9% average annual return over 25 years	No income, storage costs
Real estate	Moderate to high	Property values and rents tend to rise with inflation	High upfront costs, ongoing management, interest rate sensitivity, and illiquidity
TIPS	High (principal adjusts with CPI)	Government-backed, preserves purchasing power	Lower yields in mild inflation, phantom tax on adjustments, interest rate risk

How do you start investing in gold?

1. Decide how much of your portfolio to allocate. Financial planners commonly suggest 5% to 15% for precious metals, depending on your risk tolerance and how close you are to retirement.

2. Choose a reputable dealer. Look for a company with at least a 10-year track record, a two-way market, and disclosure of both upside and downside risk.

3. Dollar-cost average over time. Timing the market is difficult, so buying at a steady rate can reduce the impact of price swings.

4. Arrange storage. You can store gold at home or in a bank safe deposit box. For larger holdings or a Gold IRA, the IRS requires you to use an approved third-party depository.

What causes inflation?

Inflation rises when demand outpaces supply or when the money supply expands faster than economic output. Rising production costs, from energy to wages, push prices higher across the board. 

The US hit 8% inflation in 2022 after pandemic-era stimulus and supply chain disruptions were compounded by energy price spikes. As of May 2026, inflation stands at 4.2%, driven in part by a 23.5% year-over-year jump in energy costs.

Our take on investing during inflation

We’ve guided investors through multiple inflationary cycles since 1982. Each time, investors who held physical gold through rising prices kept their purchasing power.

What stands out in 2026 is the scale of central bank buying. Over 1,000 tonnes per year for three consecutive years, from 2022 through 2024, is more than double the historical average. The institutions that issue currencies are themselves stockpiling gold.

We spoke about inflation recently on our podcast:

Final thoughts on the best investments during inflation

At 4.2% inflation, every month your savings sit in a low-yield account, you lose purchasing power. Gold, real estate, and TIPS each address that differently. Gold carries no counterparty risk and requires no management, and you can start with as little as a single coin.

To learn more about investing during inflation, connect with the Swiss America team today.

Best investments during inflation: FAQs

Does gold keep up with inflation over time?

Yes. From 2000 to 2025, gold has averaged a 10.9% annual return, well above the average US inflation rate of roughly 2.5% over the same period.

• Long-term track record: Gold returned over 1,075% cumulatively from 2000 to 2025, per TradingView data compiled by Visual Capitalist.
• Short-term variability: Gold dropped 28% in 2013 and lost 10.4% in 2015. The returns smooth out over longer holding periods.
• Real purchasing power: An ounce of gold in 1971 bought roughly the same goods as an ounce of gold buys today. The dollars you would have held instead have lost over 85% of their purchasing power.

How much of my portfolio should be in gold?

Financial planners commonly suggest 5% to 15% in precious metals, depending on how close you are to retirement and how much of your portfolio is already in real assets.

• Conservative allocation: 5% to 10% provides a baseline hedge without overexposing your portfolio to a non-income-producing asset.
• Higher allocation: Some retirement-focused investors go to 15% or 20%, especially when inflation is elevated or geopolitical risk is high.
• Gold IRA option: The Taxpayer Relief Act of 1997 made it legal to hold physical gold in a self-directed IRA. This lets you allocate retirement funds to gold with the same tax treatment as a traditional or Roth IRA.

What happens to cash savings during inflation?

Cash loses purchasing power. At 4.2% inflation, a savings account earning 2% means your money is shrinking by roughly 2.2% per year in real terms.

• The math: $100,000 in a savings account earning 2% will have about $97,800 in real purchasing power after one year at 4.2% inflation.
• High-yield accounts help but rarely keep pace: The best high-yield savings accounts in 2026 offer around 3.5% to 4%, which may cover some of the gap but not all of it, especially after taxes on interest.
• Hard assets hold value: Physical gold and real estate tend to hold or grow in value when the dollar’s purchasing power drops.

Is real estate better than gold as an inflation hedge?

They work differently and carry different risks. Neither is universally better.

• Capital requirements: Real estate requires significant upfront capital such as a down payment, and ongoing maintenance. You can buy gold in amounts as small as one ounce or less.
• Income vs. preservation: Real estate generates rental income. Gold does not produce income but has no management costs beyond storage.
• Liquidity: Gold is liquid globally, and you can sell it quickly. Real estate can take weeks or months to sell, and transaction costs are higher.

Should I buy gold or silver during inflation?

In 2025, 51% of Swiss America’s sales were gold, but both precious metals tend to rise during inflationary periods. Their behavior is different:

• Gold is the more stable hedge: Gold’s price moves are generally less volatile than silver’s. Silver can swing 2 to 3 times more than gold in either direction.
• Silver has industrial demand: About half of silver demand comes from industrial uses like electronics and solar energy. That gives silver additional price drivers but also ties it to economic cycles.
• The ratio: The gold-to-silver ratio is currently 69:1. When the ratio is historically high, some investors add silver, expecting it to narrow over time.

The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.