• Is it better to A). Invest in Gold or B). Inflation-protected Securities?

  Since the govt is printing so much currency, inflation is supposedly a threat in the future. Which is a better hedge against inflation:
  A). Gold and other commodities
  or
  B). Inflation protected securities

  ?

   

  • 

    edgetrader 3:47 pm on December 23, 2009
    

    A:

    Gold, gold, gold!

    What better investment vehicle against the
    ravages of inflation, caused precisely by the
    devaluing of fiat paper currency, issued so
    indiscriminately by the Federal Reserve?

    Gold has an intrinsic value that has been
    recognized for centuries. It is traded all
    over the world, so you always have a ready
    and willing market of buyers and sellers.

    Inlfation-protected securities?

    What does that mean?

    Securities?

    Have you noticed the "value" of
    securities disappearing since last Fall?
    Securities are just another form of a
    paper-denominated asset, and try
    finding a willing buyer for some paper-
    denominated asset that has declined
    in value.

    By "securities," you could mean in the
    form of stocks. When you deal with
    stocks, you also have to contend with
    non-hedge considerations like how
    the company is being run, the caliber
    of people managing it and making
    decisions, in the best interest of the
    stock holders, not for fighting inflation.

    Poor management decisions, too much
    acquired debt, misuse of assets, etc, all
    a part of owning stock, and none of which
    have anything to do with hedging against
    inflation as a primary goal.

    Gold too high?

    That is a myopic perspective, based on
    someone’s view of what they think is the
    current value of gold, based on past history.

    Is $1,000/oz too high for gold, [currently
    around $960]?

    The impact of the trillions of dollars being
    printed and pumped into the world economy
    has net yet taken affect. There is no limit
    as to high how the price of gold can reach.

    If history is any value at all, we know for
    certain that indiscriminate printing of fiat
    currency, [backed by nothing and having
    no intrinsic value] ALWAYS leads to
    inflation, and when this current, unprecedented
    bout of inflation hits the fan, you want to be
    holding onto gold, not some paper investment.

    Another example of paper-denominated
    assets: In terms of 1997 dollars, the purchasing
    value of $10,000 is worth about $3,000 today.
    A 70% loss ov value!

    Gold and silver quadrupled in value over the
    same period.

    It is not a Q of "which is better," it is a Q of what
    is a better readily available alternative?

    Stay smart, and better off, financially.

    Cheers!

  • 

    Bob 3:47 pm on December 23, 2009
    

    Inflation protected securities are better overall unless you think the US gov’t will implode. Gold is high now and historically has just remained flat after inflation, TIPS will provide a small return on top of inflation.

  • 

    numbaONE!!! 3:47 pm on December 23, 2009
    

    if you want to truly hedge against inflation, do research. find companies with above-average returns on equity, conservatively financed financial statements, excellent management, and either a consumer monopoly or a "tollbridge"-like-business, high profit margins, emphasis on retained earnings, a stock buyback program, and above all: little or no long-term debt.
    companies like this include Proctor & Gamble (PG), Coca-Cola (KO)

    gold is a commodity, prices fluctuate regardless of inflation. you will not be hedging against inflation by buying gold any more than you would hedge against inflation by buying a barrel of oil, and as you know, oil prices can fluctuate greatly.

    Inflation protected securities, or TIPS, go up in yield when the Consumer Price Index (CPI) rises, and you will only retain your buying power on the dollar, without rising your actual net worth.

    So basically, become a value investor. read every book ever written on or by Warren Buffett, and then check out a couple books by Benjamin Graham & Phillip Fisher. You will realize just how stupid it really is to buy into TIPS in a time like this, and that it sounds outright retarded to buy into gold with such a great opportunity with bargain prices in the market right now. i wish you luck, and if you have ANY questions at all on value investing, please feel free to contact me. i have a passion on this subject and i want to help people.

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3:47 pm on December 23, 2009