The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.
With the United States Consumer Price Index number reported on June 10, 2021, surging 5% in May from one year ago, it’s safe to say that inflation is a hot topic in the market at this time. For those unfamiliar with the Consumer Price Index, it is a measure that looks at the weighted average of prices of a basket of consumer goods and services, including things like transportation, food and medical care.
The report marked the fastest rise in consumer prices at the annual rate since 2008 and was higher than economists were anticipating. While the Federal Reserve continues to insist that these increases are only transitory, traders are starting to take inflation seriously by putting their trust in securities and assets that can help to reduce their risk.
See a stock of your choice forecasted by signing up for a free demonstration.
Traditionally, precious metals are considered to be a nice hedge against inflation, as they are thought to retain their value when currencies are devalued. While it is an option to consider purchasing the actual physical metals, some experienced traders use several securities to get the same exposure.
Whether it’s gold, silver or copper, there are numerous stocks and ETFs to choose from for those who are interested in hedging against inflation. ETFs like SPDR Gold Shares GLD and iShares Silver Trust SLV are solid options for direct exposure to the prices of those metals, and what’s nice about them is that they are highly liquid. Metals and mining stocks can be a great way to go — they tend to outperform when precious metals prices are rising.
See ETF trend reversals in advance by signing up for a free demonstration.
One great option to consider is Freeport-McMoran Inc FCX, a major natural resource company with interests in copper, gold and molybdenum. The stock has rallied over 48% year-to-date, and the company adds roughly $300 million in free cash flow for each $0.10 per pound increase in copper prices.
Some traders are putting their trust in cryptocurrencies such as Bitcoin to protect their portfolios against inflation. The idea here is that since cryptos are digital tokens with prices that aren’t tied to any other asset, they might naturally rise in value along with consumer prices. It may be valuable to keep in mind that cryptocurrencies are notoriously volatile and haven’t been proven to hedge against inflation over time.
Learn how to forecast Cryptocurrency prices 1 – 3 days ahead of the market here.
Finally, it appears that quite a few traders are putting their trust in real estate, which is evident in the housing market prices and massive inflows into real estate investment trusts (REITs). REITs can be a good inflation hedge because property prices and rental income tend to rise when inflation rises.
Investors might want to take a look at REITs like the iShares U.S. Real Estate ETF IYR, which has rallied over 22.6% year-to-date and continues to power higher. The fact that this REIT offers a 2.05% dividend yield is also a nice plus, as it will deliver some extra income to an account as inflation rises.
The bottom line here is that inflation fears likely won’t be going away anytime soon, which is why it’s so important to learn about some of the best inflation hedges. Investors who want to stay on top of all of the rotations and market moves occurring every week might consider using a strong AI-driven forecasting software like VantagePoint combined with some of the basic inflation hedge concepts above.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.