Inflation raises the costs of living across the board. Groceries, gas, rent—everything is more expensive, and cash buys less than it used to. Worst of all, your savings lose value if they are not invested, meaning you’d be better off spending your money than depositing it in your bank account.

As you struggle to save for retirement, inflation can erode your purchasing power and delay your expected retirement date.

The best way to fight inflation is to invest your savings into an asset with equal or higher returns tagged to the inflation index.

Gold has traditionally been the safe haven against inflation for centuries, trusted by central banks and individual savers. However, in recent years, Bitcoin has been dubbed “digital gold,” thanks to the predetermined supply of 21 million coins and independence from central government control.

But is Bitcoin really the digital equivalent of gold, and, if so, when it comes to Bitcoin vs. gold, which one works better to hedge against inflation?

This guide will discuss what assets are the best inflation hedges for your retirement portfolio and why gold and Bitcoin are both excellent choices.

How Inflation Impacts Savings

The U.S. dollar has lost over 90% of its purchasing power since 1913, when the Federal Reserve was created. Especially in this century, the impact of inflation is noticeable: prices today are roughly 65% higher than in 2005, so what cost $100 then now costs around $165.

More recently, Americans felt the sting in 2022, when inflation spiked to 9.1% — the highest in 40 years — before easing back to 2.7% by July 2025. While these numbers fluctuate year to year, the pattern is clear: over time, inflation chips away at the value of savings left idle.

That’s why investors look for assets that can at least keep pace with, or ideally outpace, inflation to preserve their future purchasing power.

Is Gold a Good Inflation Hedge?

Gold has earned its reputation as an investment safe haven for centuries. After the U.S. abandoned the gold standard in 1971, gold prices surged over the long run, outpacing inflation and preserving wealth even as the dollar weakened. More recently, central banks worldwide have continued to buy gold, underscoring its role as a store of value in uncertain times.

Still, gold isn’t a perfect hedge against inflation. Its short-term performance doesn’t always mirror inflation, since factors like interest rates, dollar strength, and global demand can sway monthly prices.

Holding physical gold comes with added expenses, such as storage, insurance, or premiums on bullion. Still, history shows that gold has consistently helped investors protect their purchasing power over long periods during rising prices.

Is Bitcoin a Good Inflation Hedge?

As mentioned above, Bitcoin’s appeal as “digital gold” comes from its fixed supply. There will only ever be 21 million coins, with new issuance halving every four years. In theory, that cap breeds scarcity, making Bitcoin an asset worth considering if your goal is to hedge against inflation.

That’s not exactly the case, however.

In practice, Bitcoin has behaved more like a high-risk investment than a stable hedge. During the 2022 inflation spike, when prices surged and gold rose, Bitcoin dropped more than 70% from its late-2021 peak.

Comparing Key Advantages of Gold and Bitcoin

Gold has centuries of history and deep institutional support. Central banks hold gold, and markets for bullion and ETFs are liquid and mature. It has outperformed inflation over time, though with bumps along the way.

On the other hand, Bitcoin has a compelling scarcity story and the advantage of digital accessibility, but it’s still young, volatile, and tightly linked to speculative demand. In other words, gold is tested, while Bitcoin is still being tested.

That doesn’t mean that Bitcoin won’t be a force against inflation, but you need to stay on top of trends and performance metrics as it becomes more standardized in investment portfolios.

Risks to Consider with Gold and Bitcoin

Regarding hedging inflation, neither gold nor Bitcoin is a perfect solution. Each comes with its own set of risks that investors should carefully weigh before deciding how much to allocate.

Risks of Holding Gold

• Storage and insurance costs. Physical gold must be securely stored. Though individual investors can hold it in their homes, any gold held in a self-directed IRA, 401(k) or similar account must be held in an approved storage facility. Costs over time.
• Liquidity and premiums. While gold is globally recognized, investors who buy coins or bars often pay premiums above spot prices and may receive less than spot when they sell. This bid–ask spread can erode returns if you buy and sell frequently.
• Tax treatment. In the U.S., gold is considered a collectible. That means long-term capital gains can be taxed at rates up to 28%, which is higher than the typical 15–20% rate on stocks.
• Short-term price swings. Gold is less volatile than Bitcoin, but it isn’t stable. Its price can still decline significantly during rising interest rates or a strong U.S. dollar.

Risk of Holding Bitcoin

• Extreme volatility. Booms and busts mark Bitcoin’s price history. From late 2021 to late 2022, Bitcoin lost more than 70% of its value. That kind of drawdown is rare in gold but common in crypto.
• Custody and security Issues. Investors who choose self-custody need to manage private keys securely. If keys are lost or stolen, access to coins is permanently gone. On the other hand, storing Bitcoin on an exchange exposes investors to hacks, insolvency risks, and fraud.
• Regulatory uncertainty. Governments around the world are still shaping cryptocurrency regulations. Sudden policy shifts, such as restrictions on trading, taxation changes, or bans on specific platforms, can sharply impact price and liquidity.
• Market sentiment over real value. Unlike gold, which central banks hold as reserves, Bitcoin’s value is primarily driven by market sentiment, speculation, and, recently, institutional products like ETFs. This makes its role as an inflation hedge less reliable.

Additional Inflation Hedges

While gold and Bitcoin get much of the attention from investors, they’re not the only ways to protect your money from rising prices. Here are a few other inflation-hedging options to consider.

• Real Estate. Property values and rents often increase over time, making real estate a potential inflation buffer. Investors can also access this through Real Estate Investment Trusts (REITs)
• Treasury Inflation-Protected Securities (TIPS). Government bonds that automatically adjust their value with inflation, helping your investment keep pace with rising prices.
• Bonds. U.S. savings bonds that combine a fixed rate with a variable inflation rate, making them a low-risk, accessible option for protecting savings.
• Commodities. Assets like oil, wheat, or copper often rise in price when inflation is high, though they can also be volatile.

The Importance of Diversification

At the end of the day, there’s no one-size-fits-all solution to inflation. Gold brings centuries of history as a safe haven, Bitcoin offers digital innovation and scarcity, and government bonds provide stability and predictability. Each has strengths and weaknesses.

That’s why the most effective strategy isn’t picking just one but building a diversified mix of assets. Spreading your investments across options with different qualities gives you the best chance of protecting your purchasing power through inflation, deflation, and whatever comes next.

How to Invest in Gold and Bitcoin in a Retirement Plan

A recent executive order from the Trump administration has opened up the potential for more plan providers to grant access to these alternative investments in an employer-sponsored 401(k). However, for now, the only way to invest directly into these assets –as opposed to ETFs that manage these investments or gold mining stocks–is with a self-directed IRA or self-directed 401(k).

These plans require special IRS-approved custodians and extra rules, but can be structured as Traditional or Roth plans, giving you plenty of tax advantages to hedge your retirement on these high-earning assets.

FAQs

How has gold performed during past inflationary periods?

Gold has generally outpaced inflation over the long run, with a history of showing higher returns during periods of inflation.

How has Bitcoin performed during inflationary periods?

Despite its fixed supply, Bitcoin has not consistently offset inflation. During the 2022 inflation surge, its price collapsed by more than 70%, underscoring its volatility and correlation with risk assets.

How can I get started investing in Bitcoin or gold for inflation protection?

Gold can be purchased as physical bullion, through ETFs, or indirectly via mining stocks. Bitcoin is accessible through crypto exchanges, ETFs approved in 2024, or self-custody wallets, though investors should weigh regulatory warnings and custody risks.

If you wish to add gold or Bitcoin to your retirement investment portfolio, you must open a self-directed IRA, 401(k), or similar account. Both gold and Bitcoin are considered alternative assets not permitted in standard retirement accounts.