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What actually beats inflation
No asset beat inflation every time. Over the long run US stocks did best: +7.1% a year after inflation since 1871, and all but 1 of the 1,630 20-year stretches beat inflation. But in the 12 years since 1969 when prices rose 6% or more, the median stock year came out at −9.2%, gold won the most of those years (4), and no asset's median hot year beat inflation.
with dividends reinvested; all but 1 of the 1,630 20-year stretches beat inflation
Gold: the best real return in the most years since 1969 with inflation of 6% or more
years with inflation of 6%+ since 1872 in which 10-year Treasuries beat it; the median one −8.6%
the fall to its low in April 2001; back at the peak only in February 2025
US home prices, while prices rose 13.9%. The only asset that kept up.
Hot years and cool years
Every number on this page is after inflation: an asset's value divided by US consumer prices of the same month, so 0% means the money kept exactly its buying power. Each calendar year, December to December, goes into one of four groups by how much prices rose that year. A cell shows an asset's median year in that group and in how many of those years it beat inflation.
The pattern is plain: almost everything does well when inflation is low, and almost nothing does when it runs hot. In the 12 years since 1969 with inflation of 6% or more, not one asset had a positive median: the least bad were gold −0.3%, homes −0.5% and cash at interest −0.7%. Stocks' median year was −9.2%, against +14.8% when inflation stayed under 3%. Switch to each asset's full history and stocks' hot years reach back to 1872: 28 of them, median −2.5%.
| Asset | Low0 to 3%27 years | Moderate3% to 6%18 years | High6% or more12 years |
|---|---|---|---|
| US stocks (S&P 500)Stockssince 1969 | +14.8%21/27 | +14.3%15/18 | −9.2%4/12 |
| 10-year TreasuriesBondssince 1969 | +4.2%20/27 | +5.4%12/18 | −8.7%2/12 |
| Cash at interest (fed funds)Cash at interestsince 1969 | 0.0%13/27 | +2.3%16/18 | −0.7%5/12 |
| GoldGoldsince 1969 | +5.4%17/27 | −1.1%9/18 | −0.3%6/12 |
| SilverSilversince 1969 | +3.4%16/27 | −7.9%7/18 | −7.9%5/12 |
| US home pricesHomessince 1969 | +2.6%17/27 | +1.6%12/18 | −0.5%5/12 |
| BitcoinBitcoinsince 2011 | +118.0%9/12 | +147.2%1/1 | −8.6%1/2 |
| Cash under the mattressMattress cashsince 1969 | −2.0%0/27 | −3.7%0/18 | −7.3%0/12 |
| Asset | Falling pricesbelow 0%33 years | Low0 to 3%65 years | Moderate3% to 6%28 years | High6% or more28 years |
|---|---|---|---|---|
| US stocks (S&P 500)Stockssince 1872 | +10.8%23/33 | +12.3%49/65 | +14.7%23/28 | −2.5%12/28 |
| 10-year TreasuriesBondssince 1872 | +8.8%33/33 | +2.8%51/65 | +1.3%15/28 | −8.6%2/28 |
| Cash at interest (fed funds)Cash at interestsince 1955 | — | +1.1%22/38 | +2.2%19/21 | −0.7%5/12 |
| GoldGoldsince 1969 | — | +5.4%17/27 | −1.1%9/18 | −0.3%6/12 |
| SilverSilversince 1969 | — | +3.4%16/27 | −7.9%7/18 | −7.9%5/12 |
| US home pricesHomessince 1954 | +1.7%1/1 | +0.3%20/38 | +0.9%12/21 | −0.5%5/12 |
| BitcoinBitcoinsince 2011 | — | +118.0%9/12 | +147.2%1/1 | −8.6%1/2 |
| Cash under the mattressMattress cashsince 1872 | +5.1%33/33 | −1.7%0/65 | −3.7%0/28 | −8.2%0/28 |
Who won the hottest years
Here are all 12 years since 1969 when consumer prices rose 6% or more, one column each; the big dot marks the asset that did best after inflation. The hottest was 1979, at +13.3%: silver won it with +234%.
The trophies are spread around: gold 4, cash at interest 3, stocks 2, silver 1, homes 1 and bitcoin 1. Not one went to bonds. In 7 of the 12 hot years fewer than half of the assets beat inflation, and in 2022 not one did. A hedge that won one inflation often lost the next.
The hottest years as a table
| Year | Inflation | Stocks | Bonds | Cash at interest | Gold | Silver | Homes | Bitcoin | Best |
|---|---|---|---|---|---|---|---|---|---|
| 1969 | +6.2% | −16.8% | −10.5% | +2.1% | −19.4% | −13.2% | +0.8% | — | Cash at interest |
| 1973 | +8.7% | −23.5% | −4.3% | +0.1% | +53.6% | +46.0% | −4.9% | — | Gold |
| 1974 | +12.3% | −34.2% | −8.7% | −0.9% | +53.3% | +24.6% | −2.0% | — | Gold |
| 1975 | +6.9% | +29.1% | −2.7% | −0.5% | −29.1% | −13.0% | −0.2% | — | Stocks |
| 1977 | +6.7% | −12.2% | −4.8% | −1.0% | +12.3% | +1.4% | +7.5% | — | Gold |
| 1978 | +9.0% | −1.1% | −8.8% | −0.9% | +18.8% | +15.4% | +6.2% | — | Gold |
| 1979 | +13.3% | +4.3% | −11.3% | −1.4% | +93.3% | +234% | +0.4% | — | Silver |
| 1980 | +12.5% | +15.7% | −14.2% | +1.3% | +5.1% | −34.8% | −4.5% | — | Stocks |
| 1981 | +8.9% | −10.5% | +0.2% | +9.0% | −30.1% | −52.9% | −3.5% | — | Cash at interest |
| 1990 | +6.1% | −8.0% | +0.9% | +2.4% | −13.2% | −31.0% | −6.4% | — | Cash at interest |
| 2021 | +7.0% | +19.8% | −10.0% | −6.5% | −10.0% | −15.7% | +11.1% | +49.2% | Bitcoin |
| 2022 | +6.5% | −20.1% | −20.2% | −4.8% | −5.7% | −2.8% | −0.8% | −66.5% | Homes |
Three great American inflations
Three of America's big inflations, three different stories. In 1941–48 prices rose 70.9%: war spending, then a jump when price controls ended. In 1966–82, the Great Inflation, they rose 207%, about 6.8% a year for 17 years. In 2021–22, after the pandemic, they rose 13.9% in 2 years.
The winner changed every time: stocks in 1941–48, gold* in 1966–82 and homes in 2021–22. Only bonds lost to inflation all three times — leaving aside mattress cash, which always does.
War spending and rationing, then a burst of prices when the controls ended.
- Stocks+30.8%
- Homes†+23.0%
- Bonds−31.6%
- Mattress cash−41.5%
Not in the data for these years: cash at interest, gold, silver and bitcoin. † Yearly averages, 1940 to 1948: Shiller's rougher index of median prices in five cities.
Rising prices through two oil shocks, until the Fed lifted interest rates far above inflation.
- Gold*+312%
- Silver*+166%
- Cash at interest+29.3%
- Homes−1.6%
- Stocks−1.8%
- Bonds−18.3%
- Mattress cash−67.4%
Not in the data for these years: bitcoin. * From the late-1965 price, which was held near the official level until 1968; Americans could not legally own gold bullion until the end of 1974.
Reopening after the pandemic, tangled supply chains and an energy price spike.
- Homes+10.2%
- Stocks−4.3%
- Cash at interest−11.0%
- Mattress cash−12.2%
- Gold−15.1%
- Silver−18.0%
- Bonds−28.1%
- Bitcoin−50.0%
1966–82: $100 in each asset, after inflation
Put $100 into each asset at the end of 1965 and follow its buying power to the end of 1982. Stocks with dividends ended at $98, after sinking as low as $60 in December 1974; bonds at $82; cash at interest at $129; homes at $98; gold at $412* and silver at $266*. Mattress cash kept $33: that line is inflation itself, upside down.
How long it took to get back
Falling behind inflation for a while is survivable; the question is how long until the buying power comes back. For each asset and each episode, the bar runs from the start of the episode to the first month, after its lowest point, when its real value was back where it started. The longest wait: bonds after 1941–48, 45.7 years, until August 1986.
Never fell behind during the episode: homes in 2021–22. Still not back as of October 2026: bonds in 2021–22 and cash at interest in 2021–22.
The recovery times as a table
| Episode | Asset | During it | Lowest point | Back at the start |
|---|---|---|---|---|
| 1941–48 | Stocks | +30.8% | −28.1%Apr 1942 | Mar 1943after 2.2 years |
| 1941–48 | Bonds | −31.6% | −33.5%Aug 1948 | Aug 1986after 45.7 years |
| 1966–82 | Stocks | −1.8% | −39.6%Dec 1974 | Jan 1983after 17.1 years |
| 1966–82 | Bonds | −18.3% | −44.3%Sep 1981 | Jun 1985after 19.5 years |
| 1966–82 | Cash at interest | +29.3% | 0.0%Apr 1966 | May 1966after 0.4 years |
| 1966–82 | Gold* | +312% | −18.0%Jul 1970 | Jan 1972after 6.1 years |
| 1966–82 | Silver* | +166% | −20.6%Nov 1971 | Jul 1972after 6.6 years |
| 1966–82 | Homes | −1.6% | −7.5%Jul 1975 | Aug 1977after 11.7 years |
| 2021–22 | Stocks | −4.3% | −9.5%Oct 2022 | Jun 2023after 2.5 years |
| 2021–22 | Bonds | −28.1% | −30.9%Oct 2022 | not yet |
| 2021–22 | Cash at interest | −11.0% | −11.9%Jun 2022 | not yet |
| 2021–22 | Gold | −15.1% | −21.7%Oct 2022 | Apr 2024after 3.3 years |
| 2021–22 | Silver | −18.0% | −33.4%Sep 2022 | Oct 2024after 3.8 years |
| 2021–22 | Homes | +10.2% | — | never fell behind |
| 2021–22 | Bitcoin | −50.0% | −50.0%Dec 2022 | Oct 2023after 2.8 years |
Asset by asset
Stocks: the long-run winner that hates the heat
Over long stretches stocks were the strongest hedge in the data: +7.1% a year after inflation since 1871, with dividends reinvested, and all but 1 of the 1,630 20-year stretches beat inflation. In a hot year, though, they were no hedge at all: since 1969 they beat inflation in only 4 of the 12 years with inflation of 6% or more, and the median one came out at −9.2%. The worst stretch was the Great Inflation: $1 put into stocks at the end of 1965 was worth 1.8% less after inflation at the end of 1982. Stocks got back to their 1965 buying power only in January 1983, 17.1 years later.
Gold and silver: a brilliant 1970s, then a 21-year hangover
Gold is the classic answer, and the 1970s earned it the reputation. Its price was held near $35 an ounce until the late 1960s; once it floated, its best hot years were 1973 (+53.6%), 1974 (+53.3%) and 1979 (+93.3%) after inflation. Over 1966–82 its buying power grew ×4.12*.
But gold was no steady hedge. It lost to inflation in 6 of the 12 hot years since 1969, and from its peak in January 1980 it lost 83% of its real value over 21 years, to its low in April 2001. After inflation it was back at the 1980 high only in February 2025, 45 years after the peak. Silver's ride was wilder: from its peak in January 1980 it fell 95% after inflation, and it is still 66% below it.
Bonds: the asset inflation hurts most
A bond is a promise of a fixed number of dollars, and inflation shrinks what each dollar buys. So bonds suffer most when inflation comes as a surprise and outruns the interest rate they were bought at. In January 2021 a 10-year Treasury yielded 1.1%; prices then rose 13.9% in 2 years, and bonds lost 28.1% after inflation; only bitcoin did worse. Since 1872 bonds beat inflation in only 2 of 28 high-inflation years. Bonds bought at the end of 1940 got their real value back only in August 1986: 45.7 years later.
Cash: a race between two numbers
Cash at interest — money earning the federal funds rate, roughly what a money-market fund pays — keeps up with inflation only while its interest rate is higher than inflation. Since 1955 that happened in 46 of 71 calendar years, but in only 5 of the 12 hot years. Its best year after inflation was 1982: +9.4%. In 2021–22 it earned +1.5% before inflation while prices rose 13.9%: a loss of 11.0%.
Mattress cash has the most reliable record of all: it lost to inflation in every year prices rose — 116 of the 154 years since 1872 — and gained only when prices fell. Over 1966–82 it lost 67% of its buying power.
Homes: keeping pace, and not much more
US home prices rose +0.9% a year more than inflation since 1953: roughly keeping pace. In high-inflation years since 1969 their median was −0.5% (they beat inflation in 5 of 12), and in 2021–22 they were the only asset that kept up, at +10.2%. In the 1940s Shiller's yearly index — rougher, from median prices in five cities — rose +23.0% after inflation from 1940 to 1948. The index counts prices only — no rent (or the rent an owner does not pay), no taxes or upkeep — and the index itself cannot be bought.
Bitcoin: too young to tell
Bitcoin's prices start in July 2010, so it has been through only 2 high-inflation years: 2021 (+49.2%) and 2022 (−66.5%) after inflation. It has never lived through anything like 1966–82, and its first years come from thin markets, so its long-run return after inflation (+130% a year since 2010) says little about how it would behave in one. A handful of years is not a track record.
Over long horizons
The longer the stretch, the clearer the ranking. Over one year stocks beat inflation 70% of the time; over 10 years, 89%; over 20 years, 99.9%. Bonds went from 64% to 76%, gold from 55% to 67%, homes from 55% to 86%. Mattress cash went from 22% to 13%: time made its losses surer, not smaller.
From the same start, December 1968, to October 2026, a year after inflation: stocks +6.4%, gold +4.2%, bonds +2.1%, silver +2.0%, homes +1.3%, cash at interest +1.1% and mattress cash −3.8%.
After inflation: return a year and the odds of beating inflation
| Asset | Whole history, a year | Since 1969, a year | Last 20 years, a year | Odds over 1 year | Odds over 10 years | Odds over 20 years |
|---|---|---|---|---|---|---|
| US stocks (S&P 500) | +7.1%since 1871 | +6.4% | +8.3% | 70% | 89% | 99.9% |
| 10-year Treasuries | +2.4%since 1871 | +2.1% | +0.1% | 64% | 71% | 76% |
| Cash at interest (fed funds) | +1.2%since 1954 | +1.1% | −0.8% | 67% | 73% | 83% |
| Gold | +4.2%since 1968 | +4.2% | +7.5% | 55% | 60% | 67% |
| Silver | +1.7%since 1968 | +2.0% | +5.6% | 46% | 46% | 52% |
| US home prices | +0.9%since 1953 | +1.3% | +0.5% | 55% | 61% | 86% |
| Bitcoin | +129.8%since 2010 | — | — | 72% | 100% | — |
| Cash under the mattress | −2.1%since 1871 | −3.8% | −2.5% | 22% | 22% | 13% |
Compound return a year after inflation, to each asset's latest month (October 2026; homes to July 2026). Odds: the share of holding periods with a gain after inflation; they overlap.
Questions people ask
What is the best hedge against inflation?
No single asset. Over decades US stocks beat inflation by the widest margin: +7.1% a year since 1871, and all but 1 of the 1,630 20-year stretches beat inflation. Within the hot years themselves the winner kept changing: of the 12 years since 1969 with inflation of 6% or more, gold 4, cash at interest 3, stocks 2, silver 1, homes 1 and bitcoin 1. And no asset's median hot year beat inflation.
Is gold a good inflation hedge?
Sometimes spectacularly, often not. Since its price floated in April 1968, gold beat inflation in 6 of the 12 hot years, with its best at +93.3% in 1979. But from its peak in January 1980 it lost 83% of its real value by April 2001. After inflation it was back at the 1980 high only in February 2025, 45 years after the peak. Over its whole free-market history: +4.2% a year after inflation.
Do stocks beat inflation?
Over long periods, yes: +7.1% a year after inflation since 1871 with dividends reinvested, and all but 1 of the 1,630 20-year stretches beat inflation. In a single high-inflation year, usually not: since 1969 they beat inflation in 4 of 12 such years, median −9.2%. Stocks got back to their 1965 buying power only in January 1983, 17.1 years later.
Do real estate prices keep up with inflation?
Roughly. US home prices rose +0.9% a year more than inflation since 1953 — prices only, without rent, taxes or upkeep. They beat inflation in 5 of 12 high-inflation years since 1969, and in 2021–22 they were the only asset that kept up, at +10.2%.
What did best in the 1970s?
From the end of 1965 to the end of 1982, while consumer prices rose 207%, after inflation: gold* +312%, silver* +166%, cash at interest +29.3%, homes −1.6%, stocks −1.8%, bonds −18.3% and mattress cash −67.4%. * Gold and silver from their late-1965 prices, held near official levels until 1968.
Go deeper
How the numbers are calculated
- After inflation (real): an asset's value divided by the US consumer price index of the same month (Shiller's CPI: the BLS CPI-U from 1913, wholesale prices before). A real return of 0% means the money kept exactly its buying power.
- Every asset sits on the monthly grid of the portfolio builder, so the numbers agree with it: monthly averages for the S&P 500, bonds, metals and homes, the start of the month for cash at interest, the last day of the month for bitcoin. A calendar year runs from December to December.
- Stocks: the S&P 500 (before 1957 its predecessors) with dividends reinvested every month. Bonds: a 10-year US Treasury bought new every month, coupons reinvested (Shiller's method). Cash at interest: money earning the effective federal funds rate, compounded daily, from July 1954. Gold and silver: the metal's price, no storage costs. Homes: Shiller's US home price index, prices only (no rent, taxes or upkeep), monthly from January 1953. Bitcoin: Coin Metrics reference prices from July 2010. Mattress cash: dollars that earn nothing. No taxes or fees anywhere.
- Groups of years: a year's inflation is the change of the CPI from December to December — below 0%, 0 to 3%, 3% to 6%, 6% or more. “Same years”: every calendar year since 1969, the first year all assets but bitcoin have (gold and silver at market prices). Hot years: those of them with inflation of 6% or more; in each, the best is the asset with the highest return after inflation.
- Episodes: fixed windows of calendar years (1941–48, 1966–82, 2021–22), from the December before the first year to the December of the last. Back at the start: the first month after the lowest real value inside the window when the real value was at least its start again. Odds of beating inflation: every holding period that starts in any month of an asset's history and ends inside it; they overlap.
- Early data is rougher: before 1953 bond yields are one value a year, so bonds look smoother than they were; metal prices before 1968 were held near official levels (used only in 1966–82, marked *); Shiller's yearly home prices before 1953 come from five cities (used only for the 1940s, marked †); bitcoin's first years come from thin markets.
- S&P 500, bonds, home prices, the long-term interest rate and consumer prices: Robert J. Shiller, Online Data (Yale University), and U.S. Home Price and Related data, for Figure 3.1 in Robert J. Shiller, Irrational Exuberance, 3rd edition, Princeton University Press, 2015, as updated by the author.
- Gold and silver: World Bank Commodity Price Data (The Pink Sheet), monthly averages; licensed CC BY 4.0. Source: World Bank.
- Cash at interest: the effective federal funds rate, Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates (federalreserve.gov). The EFFR is subject to the Terms of Use posted at newyorkfed.org. The New York Fed is not responsible for publication of the EFFR by BigCapital, does not sanction or endorse any particular republication, and has no liability for your use.
- Bitcoin: Data: Coin Metrics (Community Network Data, CC BY-NC 4.0).
- Past returns are history, not a forecast. Nothing here is investment advice.
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Source: BigCapital.org — “What actually beats inflation”, https://bigcapital.org/articles/inflation-hedges/