Gold isn't the only inflation hedge
Look at antiques, art, stocks and oil as a weapon against rising prices.
Bloomberg's Matthew Lyn says there are plenty of alternatives to gold that could be just as effective, perhaps even more so, as an inflationary hedge. And at the rate central banks are printing money, he writes, inflation is on the way.
In reality, gold has a mixed record. Nor should you be surprised about that. A few industrial uses, and jewelry, aside, gold is valuable only insofar as other investors think it is valuable. By itself it isn’t necessarily worth anything. Nor does it generate interest or dividends. If the price doesn’t rise, you don’t get anything.
OK, so what else should investors be eyeing? Lyn lists five possibilities:
Real estate: Property values don't always trend in line with inflation, Lyn writes.
Oil: The price of oil has surpassed $70 a barrel, even in these recessionary times. "Oil is already, in effect, an alternative to gold," Lyn writes.
Stocks: Major blue-chip companies can benefit from inflation, because they can increase their prices along with the general swell in prices. And they can cut labor costs a bit at the same time by making any wage increase just a bit less than inflation, Lyn writes.
Luxury goods: Art, antiques, vintage cars and wine "should start to soar in price as the mega-rich realize they are among the few ways to protect wealth," Lyn writes.
Private-equity funds: Leveraged buyout firms buy companies and pile on the debt. Inflation wipes out the debt, and the equity at those companies will be worth much more, Lyn writes.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.