Hedge Against Inflation

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Hedge Against Inflation

To take steps to limit the reduction of the value of an investment due to inflation. Inflation decreases the value of money such that an investment's return is not worth as much as it might have been when the investment was made originally. Hedging against inflation helps reduce this pressure. Examples of hedging against inflation include buying commodities such as gold or purchasing an inflation-protected security, in which the return is linked to the inflation rate. See also: Real Rate of Return.
References in periodicals archive ?
Hence, stumpage prices alone should not be viewed as consistent or persistent hedges against inflation unless they are held for a long period.
Historically, timberland returns have shown a moderate to high correlation with the consumer price index (CPI) so timberland assets have been viewed as good hedges against inflation (Washburn and Binkley 1993, Lundgren 2005).
Regardless of actual or unexpected inflation, there were times when the magnitude of the hedging parameter was significantly negative, meaning inferior hedges against inflation.
Many investors aren't aware that gold coins can be used as investment hedges against inflation and stock market losses in their IRA transfers and 401k rollover retirement accounts.