And with that current return comes an
inflation hedge, a good prospect of higher value, some modest tax shelter, and a potential estate-planning tool that may provide a step-up in asset value to heirs.
And since the introduction of index-linked government bonds, any merits it might have as an
inflation hedge have become less relevant.
Gold is subject to the buying and selling of market traders, like any investment, but over time gold has proven itself to be an
inflation hedge, a deflation hedge and a currency hedge," Fuljenz said.
Akin to buying homeowners insurance before a house fire starts, the value of owning an
inflation hedge is greatest before the price of the hedge goes up--that is, before an increase in the inflation rate.
Reeves said, With many bond yields at near all-time lows, and many equity markets at near multi year highs, and with an increase in volatility likely in the coming months against a backdrop of potential rising interest rates and increasingly expensive real estate, there has seldom been a more relevant time in recent history to provide investors with a genuine potential alternative
inflation hedge in an increasingly uncertain and volatile world.
REITs provide either no
inflation hedge or a perverse
inflation hedge in the short run.
Traditionally, investors turn to gold in times of turmoil as an alternative store of wealth to equities and the dollar and as an
inflation hedge.
Unlike gold, which is regarded as an
inflation hedge and a safe haven in an uncertain economic environment, silver is extensively used in industrial production, which accounts for 46 percent of total demand for the metal.
Imports of gold, used by small investors as an
inflation hedge, are another driver of the deficit and remain high despite a recent hike to import tariffs for the yellow metal.
An
inflation hedge is simply defined as any investment designed to hedge against inflation (a rise in the general level of prices) and the subsequent loss of purchasing power associated with it.
The author of "The Little Book of Bull Moves in a Bear Market" says he has been buying Gold since Y 2000 when it was at $200 oz, and still beleives an investor or someone who wants to protect him or herself from inflation should purchase Gold because of its
inflation hedge qualities.
In deciding upon an
inflation hedge for your portfolio, you have to weigh the risk-return trade-off.
