InflationData.com explains that gold is a good “crisis” hedge but not necessarily a good inflation hedge because people tend to buy more gold during times of turmoil. During some instances of inflation, gold lost purchasing power.
From the peak in1980 the inflation rate declined but cumulative inflation climbed steadily upward. But rather than keeping up with inflation the price of Gold fell from the peak of $850 per ounce down to under $300 in 2001.
But in inflation adjusted dollars the scene is even worse. The 1980 peak in 2007 inflation adjusted dollars was over $2100 and it fell to under $346 losing a whopping 84% of its value!
So even though inflation rose… gold fell… because the fear level was low (and possibly because governments worldwide manipulated the price).