Gold as a Hedge against Inflation: The Vietnamese Case

We investigate the inflation-hedging properties of gold in Vietnam, reaching formidable records in 1980s-1990s. Consistent with conventional belief, we find that gold provides a complete hedge against both the ex post and ex ante inflation. In addition, its return is positively related to unexpected inflation, although the statistical evidence does not strongly support this. However, in general, we cannot reject that gold does provide a complete hedge against inflation. Furthermore, our findings support the Fisher hypothesis that nominal gold returns move in a one-for-one correspondence with expected inflation. The study has implications for both investors and government.