Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Dow Stock Market Dow Trend Forecast Current State - 22nd Apr 21
Gold Rebounds Amid Positive Economic Reports - 22nd Apr 21
China's record first quarter fuels strong expansion in 2021 - 22nd Apr 21
Gold Price Next Key Level - 22nd Apr 21
Here's What to Look For When Hiring a Real Estate Agent - 22nd Apr 21
Ethereum EIP 1559 and Raven Coin - 21st Apr 21
Gold, USDX: The Board is Set, the Pieces are Moving - 21st Apr 21
World Economies Need to Find a Lot More COPPER! - 21st Apr 21
DogeCoin CRASH! Time to Start Mining BOODGIE Coin! Crypto Mania 2021 - 21st Apr 21
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Forget Gold... This is the World's Most Powerful Inflation Protection

Companies / Investing 2013 Nov 24, 2013 - 06:56 PM GMT

By: DailyWealth

Companies

Dr. David Eifrig writes: What I'm about to say might anger you...

But if you're holding gold as your only hedge against inflation... you're likely making a big mistake.

Many folks believe this common "myth" about gold: As the price of everyday goods we buy rises, the price of gold will increase in lockstep.


It makes some intuitive sense. But in reality, it doesn't work that way... And there's a MUCH BETTER inflation hedge out there...

Take a look at the chart below. The black line is the price of gold... The gray line shows increases in the Consumer Price Index (CPI). It's the government's measure of inflation. And no, it's not perfect. But it does show that prices increased from 1987 to 2004.

You can see that during 17 years of inflation, as consumer prices were increasing, gold prices went nowhere.

Over my investing lifetime, the only great time to own gold has been when real returns on fixed-income securities turned negative...

For example, when inflation has been more than interest rates on U.S. Treasurys, gold has been a great asset to own.

But that situation is uncommon. It has only happened about 16% of the time. Most of the time, when the five-year Treasury note has paid more than inflation, gold has done nothing.

So a much better way to secure your retirement against inflation is to regularly invest in "productive assets." These include everything from farms to businesses.

These assets have the power to protect against inflation because they can grow your investment faster than inflation erodes it.

Look for businesses (stocks) that hold pricing power and have brand loyalty. If inflation kicks in, the ability to raise prices right along with input costs helps maintain your wealth. And businesses with loyal customers can usually pass along those price hikes without much loss in volume. That means steady profit margins and more wealth.

Take a company like McDonald's (MCD). The demand for fast food will continue, and Mickey D's will surely still be slinging burgers in another five or 10 years.

The company regularly responds to consumer demand. For example, it placated health-conscious parents by offering apples and milk in its Happy Meals. And it sells lattes to compete with local coffeehouses. Some retired friends of mine just confessed to a daily trip to "their coffee shop" – the one under the Golden Arches.

If prices go up along with inflation, you can be sure McDonald's will retain its loyal patrons and its profits like it has for the last 50 years. Companies like McDonald's are perfect inflation defenses.

This chart of McDonald's, gold, and the S&P 500 shows how a great, blue-chip company protects you as well as – or better than – gold can during tough times.

Here's another way to look at it... A while ago, a Fortune magazine article compared three $100 investments placed in six-month U.S. Treasury bills (short-term interest-bearing securities), gold, and the S&P 500 in 1965. Today, those investments would be worth $1,336, $4,455, and $6,072, respectively.

Stocks beat gold by 36%. This shows the power of long-term investing in good stocks.

As my regular readers know, I like gold and silver as "chaos hedges." During times of great economic and political stress, gold outperforms many asset classes. But I don't recommend putting more than 15% of your portfolio here (and I prefer an allocation closer to 5%).

If you're truly interested in an "all weather" asset to place a large chunk of your portfolio into, go with the world's best dividend-paying companies... like Coca-Cola, McDonald's, and Johnson & Johnson.

If inflation ever gets to be a problem, you can depend on these companies to grow your nest egg, while paying cash dividends along the way. If inflation isn't a problem (like right now), these companies still grow your wealth and pay ever-rising cash dividends.

No one can make those claims for gold.

Crux note: Doc spent the last 18 months developing several strategies to "time" his investments in blue-chip stocks and other great income-producing assets. What he developed is extraordinary... A legitimate way to make up to 10-20 times more money than others, on the exact same income investments. Even better, Doc has created an easy way to help you use these strategies, starting this month. You can get all the details by clicking here. Please note, this opportunity closes TONIGHT at midnight.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2013 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules