Last week, the price of gold continued to consolidate between its 50-day and 200-day moving averages. The metal closed the week at $1,882.80 per ounce. In “The Art of War,” Chinese military strategist Sun Tzu says, “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” Modern military strategists would call this “shaping the battlefield.” As the Federal Reserve finally begins to raise interest rates—now at 0.75% after last week’s 0.50% increase—it is clear that they have entered the battlefield too late. The Fed has broken with its long-standing tradition of preempting inflation and, as a result, it is now left facing a 7%–8% battlefield gap. Just to get even with current inflation would require the Fed to implement 14–16 consecutive half-point interest-rate hikes, which would take over three years. To win the battle against inflation, the Fed would have to not just match it, but exceed it. The Fed has chosen to not restrict the economy until after the fall elections and thus has ceded the high ground to inflation. The Fed is hoping inflation will recede over time—but hope is not a winning strategy. Historically, gold has been a hedge against inflation. Investors may want to consider adding it to their investment “arsenal.” Rick Andrews is president of Avant Capital Management.