As the markets and exchange traded funds (ETFs) are in an uptrend, the U.S. Treasury continues to print money and unleash it on the financial system to keep the economy afloat, but what are the consequences?
The major consequence is inflation. The likelihood that the government will stop printing money is not high at the moment – no one wants to cut off economic aid prematurely. But printing could have an unwanted side effect: inflation, states Martin Denholm of Smart Profits Reports.
The following are ways to soften the blow of inflation:
- Take a look at the grandfather of inflation protection, gold. It can be accessed through the SPDR Gold Trust (GLD)
- Another hedge could be found in inflation adjusted treasuries, represented by the iShares Lehman TIPs Bond (TIP). These are Treasury bonds, essentially, that hedge against inflation.
- Energy equities such as the Vanguard Energy ETF (VDE). Energy is a factor in the cost of nearly anything you can think of, and oil and gas are priced in U.S. dollars. As the dollar weakens, energy becomes more appealing around the world.