Gold, the Dollar, and Inflation: Separating Facts From Sales Pitches

Lots of gold ads open with a scary-sounding fact about the dollar. The fact is roughly true. What it measures is narrower than the ad lets on, gold's link to the dollar is looser than the pitch suggests, and the sales lines built on top of it stretch both.

The three-sentence pitch

You've likely seen some version of it: "Since the Federal Reserve was created in 1913, the dollar has lost about 97% of its value. Gold has held its value for thousands of years. Protect your savings before it is too late."

Sentence one is roughly accurate, sentence two is partly true, and sentence three is a sales line. We'll take them in order.

Has the dollar really lost 97% of its value?

In what it buys, yes. The U.S. Bureau of Labor Statistics tracks prices with the Consumer Price Index (CPI), which averaged about 9.9 in 1913 and stood at about 324 in December 2025. So it took roughly $33 at the end of 2025 to buy what $1 bought in 1913. Flip it around and a 1913 dollar now buys about 3 cents' worth of goods.

Don't take our word for it. The BLS CPI Inflation Calculator lets you run the numbers yourself.

The figure isn't made up, so the trouble lies in what it implies.

Why "lost 97%" misleads

That 97% describes a dollar bill that sat in a drawer for more than a century and never earned a thing. Hardly anyone saves like that. Real savings live in bank accounts, bonds, retirement plans, and other investments that pay interest or grow.

The fair test is inflation against what your money actually earned. Say a relative had tucked away a hundred dollars at the start of 1972. The table below shows what that money would've become, using annual returns compiled by Prof. Aswath Damodaran of NYU Stern against BLS consumer prices, before taxes and fees.

Sources: annual returns compiled by Professor Aswath Damodaran of NYU Stern; CPI-U from the federal Bureau of Labor Statistics. Past results don't predict future results.

Only the drawer lost money, and the story holds if you go back further still: $100 put in Treasury bills at the start of 1928 and rolled over every year would've grown to about $2,580 by the end of 2025. Prices rose about 18.7 times over that span, so you'd have needed about $1,870 just to break even, which leaves the plainest, dullest investment the government sells ahead of inflation over that span as a whole. Not by much, though, and taxes would have taken a bite.

So yes, inflation is a real cost, and it bites hardest on money that earns little or nothing. That doesn't mean a typical retiree's savings lost 97% of their value. Social Security benefits get a cost-of-living adjustment each year based on a consumer price index, too.

How are gold and the dollar actually connected?

Two separate ideas get mashed together here, so let's pull them apart.

1. The dollar's buying power at home

That's inflation. Over many decades gold's price has climbed faster than U.S. prices: since 1972, gold averaged about 8.9% a year while consumer prices rose about 3.9% a year. Over shorter periods the link's been loose. In 2021 and 2022, consumer prices rose about 14% and gold ended slightly lower.

2. The dollar's value against other currencies

Gold trades worldwide and is mostly priced in dollars. If the dollar weakens against the euro or the yen, gold's dollar price can rise even while its price in those currencies sits still. That's one reason gold and the dollar's exchange value tend to move in opposite directions. Plenty of other things push gold around, though, like interest rates and investor demand, so the pattern breaks in some years.

What does "currency devaluation" mean?

Devaluation has a narrow meaning: a government deliberately cutting its currency's official value. That only happens when the currency is pegged to something, such as gold or another currency, and the government changes the rate.

The U.S. has done it with gold. According to the Federal Reserve's history of the period, the Gold Reserve Act of January 1934 raised the official gold price to $35 an ounce, up from $20.67. Overnight, each dollar was worth less gold. Then in August 1971, the U.S. stopped exchanging dollars for gold with foreign governments, and the system of fixed exchange rates soon fell apart. The Federal Reserve's history essay tells the full story.

The dollar hasn't had an official gold price since, which leaves nothing to formally devalue against, and that's why the word gets used so loosely in ads. When people say "devaluation" today, they usually mean one of two things: ongoing inflation, or a drop in the dollar's exchange rate.

How different assets respond

Nothing responds the same way every time.

• Cash and fixed-rate bonds pay a set number of dollars, so their buying power shrinks when inflation runs above their interest rate.
• Stocks are businesses that can raise prices over time. They've beaten inflation over long periods, though they lost buying power during the high inflation of the 1970s.
• Gold has no fixed dollar value. Its price can rise when the dollar weakens, though it can also fall for years for reasons unrelated to the dollar.
• Inflation-linked bonds, such as TIPS and I Bonds from the U.S. Treasury, adjust with the CPI by design.
• Foreign investments can gain in dollar terms when the dollar weakens, and lose when it strengthens.

Since none of them wins every time, holding several is one way to avoid betting on a single outcome. You can see how gold, stocks, and a mixed portfolio have done from different starting years in our gold vs. stocks tool.

Red-flag phrases in gold ads

The Commodity Futures Trading Commission warns that precious metals frauds often play on fears about the U.S. financial system and go after older savers. If we heard three of these in five minutes on a phone call, we'd hang up.

• "The dollar is about to collapse." Nobody can reliably predict this. The seller has every reason to want you to believe it.
• "Act now before it's too late." Urgency is a pressure tactic. A sound decision can wait a week while you compare costs.
• "Gold always rises with inflation." Over stretches of several years, the record says it frequently hasn't.
• "Gold has never gone to zero." True, and beside the point. Gold fell about 54% between 1980 and 2000 on year-end prices.
• "Protect your retirement from a crash." Gold has risen in some stock market drops and fallen in others.
• "No fees" or "free silver." The costs are usually built into the price you pay. Ask for the markup over the current spot price in writing.
• "Move your whole 401(k) into gold." Putting most of your savings into any one asset adds risk, and anyone urging it deserves extra suspicion.

Before you buy, learn what gold IRA fees look like and run our cost calculator to see how fees and markups pile up over time.

Where we land

The dollar has lost most of its buying power over a century. That's a fact about cash, and a good reason not to park long-term savings in it. It isn't, on its own, a reason to buy gold, because ordinary savings and investments have historically kept up with or beaten inflation over long periods, each with its own risks.

Gold can earn a spot as a diversifier. For sizing, see how much gold some retirees hold, and for the cases where it doesn't belong at all, when a gold IRA is not a fit.

Common questions

Has the dollar really lost about 97% of its value since 1913?

In buying power, roughly yes. BLS data show it took about $33 at the end of 2025 to buy what $1 bought in 1913. That applies to cash that earned nothing, not to savings that earned interest or grew.

Does gold go up when the dollar goes down?

It has a habit of doing so, especially when the dollar weakens against other currencies, because gold is priced in dollars. It's not reliable year to year, since interest rates, investor demand, and other factors move gold too.

Is the dollar going to collapse?

Nobody can reliably predict that, and we don't make predictions. The dollar is still the most widely held reserve currency in the world. Be wary of anyone who uses this claim to rush you.

What's the best way to keep up with inflation?

It depends on your timeline. TIPS and I Bonds are built to track inflation. Stocks have beaten it over long periods, with big swings along the way, while gold's short-term record is mixed. Plenty of retirees end up with a blend.

Where can I check inflation figures myself?

The Bureau of Labor Statistics publishes the CPI each month at bls.gov, and its online CPI Inflation Calculator compares the buying power of dollars across years.

We base our guides on primary sources such as the IRS, the Department of Labor, and federal regulators. Read our editorial policy. Spot an error? Tell us.