A column in the Wall Street Journal in the summer of 2016 discussed gold as an investment. The columnist noted: “The future can always be different from the past. But if gold shoots far up from here, it won’t be following the precedents of the past. It will be violating them.”
a. Why were some investors in 2016 worried that there could be a dramatic increase in inflation in the coming years? Why did some of these investors see gold as a hedge against an expected increase in inflation?
b. What does the columnist mean by writing that “following the precedents of the past,” gold might not be expected to increase rapidly in price?