Despite few signs that prices are rising and inflation is a looming concern, now might be the time to protect yourself from when prices do start rising – don’t wait until it happens. The way to do it is through the utilization of exchange traded funds (ETFs).
Some believe that inflation is a far cry with the Consumer Price Index running at negative -1.3% over the past 12 months, real estate prices continuing to drop and stable crude oil prices, states The Wall Street Journal. However, most prominent economists think that this trend will soon come to an end and inflation, if not hyperinflation, will emerge. The reason for this is the weakness of the U.S. dollar and the printing of money to fund our government’s spending habits.
So how one protects oneself against rising prices is actually fairly simple. A good way to combat inflation is through Treasury Inflation-Protected Securities (TIPS). Another way to hedge against inflation is through the utilization of commodities, more specifically gold. The last way to protect yourself is by using futures contracts.
The following ETFs will help enable you to take out an insurance policy on rising prices – this is just a sampling, as a number of funds out there could prove to be useful as an inflation hedge:
- SPDR Barclay Capital TIPS (IPE): up 5% year-to-date.
- iShares Barclays TIPS Bond (TIP): up 3.7% year-to-date.
- SPDR Gold Shares (GLD): up 6.8% year-to-date.
- PowerShares DB Agriculture (DBA): down 1.8% year-to-date.
For more stories on gold, visit our gold category.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.