Gold as an alternative payment and save haven against inflation

Abstract

Physical gold has a long history as a store of value. It dates back to ancient times and still has high importance today. Technological advancements in distributed ledger technology eliminate the downsides of physical gold we were exposed to in the past. In this article, we analyze the relationship between the gold price and inflation and ask whether gold is suitable as an alternative means of payment. Regarding the mentioned tokenization possibility, gold fulfils all the functions to become a means of payment. We tested the value storage capability of gold. This was tested by relating gold as a protection against inflation to HICP in regression analyses and mean comparisons. A total of six hypotheses were tested, of which three could be rejected. The existing literature mainly focuses on testing the correlation between gold and other assets to verify its safe haven property. A part of this paper tests the regression relationship in which the dependent variable is represented by gold, and the independent variable is represented by inflation. Under this methodology, we demonstrated that a stable, statistically significant positive relationship exists when using log gold prices and log HICP values.