Tag Archives: inflation hedges

Every time someone tells me they are buying gold because of inflation fears, I cringe. First, I don't see a risk to higher inflation and, second, even if we have high inflation, don't count on gold as a hedge. Here's why:

Since the Financial Crisis erupted in 2007, the US Federal Reserve has engaged in dozens of interventions/ bailouts to try and prop up the financial system...and the amount of money printed is absolutely staggering. As a result of this, inflation hedges, particularly Gold, have been soaring...[but] for gold, for example, to hit a new all time high adjusted for inflation, it would have to clear at least $2,193 per ounce. If you go by 1970 dollars (when gold started its last bull market) it would have to hit $4,666 per ounce. Words: 581

Many investors are worried about inflation and, as a result, are considering buying inflation indexed bonds and other inflation protected investment vehicles. They may be setting themselves up for significant losses, however, because of the way the government is now calculating the CPI, and the further changes being proposed. In the opinion of this writer, the CPI calculation appears to be inaccurate and, as a result, such investments may not be appropriate inflation hedges. [Let me explain.] Words: 1533