If we count from 2009 to today, gold has indeed far outperformed the RMB CPI.
With 100,000 yuan to buy gold in 2009, it’s now roughly close to 400,000.
So, from the perspective of inflation in everyday consumer goods, gold not only outperforms RMB inflation—it does so very clearly.
But there is an issue in here that’s easy to overlook:
CPI does not equal the true cost of living for a real Chinese person.
The inflation we’re truly facing isn’t only about food, clothing, and daily necessities—it also includes housing, rent, education, healthcare, eldercare, and all kinds of service costs.
So “gold outperforms the CPI” doesn’t directly mean:
Gold is the best investment asset.
I think the truly important value of gold is not just protection against CPI.
Rather, it’s:
Hedging against fiat currency credit expansion.
The RMB, the dollar, and the euro are essentially all fiat credit currencies. Money and credit can expand endlessly, while gold’s supply growth is very slow.
So from a very long time scale:
As fiat currency keeps expanding, gold will reprice in terms of fiat.
That’s also an important reason why gold can preserve purchasing power over the long run.
But here’s the problem.
If you draw a conclusion because gold performed so well over the past ten-plus years:
“Holding gold long term will definitely make you a lot of money.”
That conclusion is wrong as well.
Because gold’s history is not a curve that keeps going up forever.
For example, from around 1980 to 2000, gold went through an extended slump of about 20 years, with nominal prices moving sideways for a long time and even falling significantly.
In other words:
If you bought gold in 1980 and waited a full 20 years, it only returned to a level close to the price from back then.
What does that mean?
This means that although gold can preserve wealth over the long term, it can still make you experience low-return periods lasting more than ten years—even twenty years.
So never interpret “protection against inflation” as “buying gold at any time will make money.”
Gold’s real advantage is that it has no issuer; it doesn’t depend on any company’s profits, and it doesn’t depend on any single government’s credit.
But its biggest downside is also very obvious:
It doesn’t create cash flow by itself.
Without profits, without dividends, without buybacks, and it won’t automatically create more value just because production efficiency improves.
Great companies are different.
Companies can raise prices, expand revenue, increase profits, buy back shares, and even reinvest the money they earn back into production.
That’s compounding.
So if you simply categorize assets:
Cash has the advantage of liquidity, but over the long term it can be eroded by currency devaluation.
Gold’s strength is wealth insurance—it hedges currency credit risk and extreme macro risks.
And the biggest advantage of great companies is that they can continuously create new cash flow and profits as productivity advances.
So I increasingly feel that:
Gold is insurance for wealth, not a driver of wealth growth.
What it’s best at is helping you preserve purchasing power.
And what truly enables wealth to grow over the long run is assets that can continuously generate cash flow, improve production efficiency, and compound steadily.
So don’t mix up these two concepts:
Defeating inflation ≠ creating wealth.
Gold can help you safeguard your wealth.
But a truly great asset should not only help you preserve purchasing power, but also continuously help you create new purchasing power.
That’s also why I won’t reach the conclusion that “in the future, gold will definitely continue to outperform all assets” just because gold has done very well over the past decade or so.
The most dangerous thing you can do in investing is to take a beautiful piece of history and use it to predict a definite future.