Tag Archive | TIPs

5 ETFs To Hedge Against Inflation

As the US government has resorted to excessive spending measures to keep the economy from completely crumbling, many investors suggest that inflation is inevitable and could even prevail in the coming months. 

Current economic data suggest that inflation is running lower than expected; however there are numerous reasons to think that inflation will eventually be inevitable.  Some of these reasons include the Federal Reserve’s implementation of QE2, which launched in early November, the increases in money supply in the earlier stages of the Great Recession to ignite a spark in the US economy and rising commodity prices are likely to take their toll on the consumer price index (CPI).  In fact, rising prices have already started to emerge, evident through the recent rise in energy prices (i.e. crude oil and gasoline), food prices (i.e. wheat, sugar, coffee and soybeans) and airline tickets.  Read More…

9 ETFs To Play Currency Debasement

As developing nations continue to implement loose monetary policies, keep interest rates low and boost money supply, a nation’s debt and currency debasement should me of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits. Read More…

ETFs For Currency Debasement

As the crisis in Europe continues to take its toll on the markets and bank borrowing costs rise, a nation’s debt and currency debasement should me of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal. Read More…

4 Reasons Bond Markets Could Be In Bubble

As many investors have shunned stocks and turned to long-term fixed income to park their investment dollars, the safety of long-term bonds may be in jeopardy. 

The first reason the long term bond market might be in trouble is because prices are being inflated.  With concerns in the overall health of the global economy, the burst of a housing bubble which led to a financial crisis and unemployment levels remaining at stubbornly high levels, numerous investors are shunning risk and turning to long-term bonds.  In fact, over the last year, net inflows into fixed income investment tools have outpaced net inflow into equities by nearly tenfold.  According to the Investment Company Institute, bond funds witnessed $375 billion of inflows in 2009 and the trend is continuing in 2010, with an estimated $380 billion to pour into bond funds.  This in turn, has pushed long-term bond prices up.

A second factor that could be detrimental to long-term bonds is the likely rise in interest rates in coming years.  Granted, economic slack, low inflation levels and stable inflation expectations will likely enable the Federal Reserve to maintain its target rate at record low levels through 2010 and even into 2011, the Fed will eventually have to tighten rates to reduce its balance sheet and normalize its engagement with financial markets.  This will make bond trading less attractive and will likely hinder bond values. Read More…

ETFs For Currency Debasement

By Kevin Grewal

As developing nations around the world have turned to government funded stimulus packages to ignite their economies, a nation’s debt and currency debasement should be of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits.

Some experts suggest that this trend in the developing world, in particularly the United States, is likely to continue as nations have become accustomed to borrowing extraordinary amounts of money and printing extra currency to stay afloat.  If this is the case, than inflation will be inevitable and currency values will diminish. 

Some possible ways to protect against currency debasement and increases in inflation include the following: Read More…

3 ETFs To Fight Inflation

By Kevin Grewal

Despite a slower than expected GDP reading, there are still signs that an accelerated economic recovery will emerge, having many investors betting that inflation will soon loom.

According to Merrill Lynch & Co.’s Treasury Master Index, Treasuries are expected to have their first down year in a decade, which is an indicator that investors are expecting prices to rise. This is the complete opposite of what was witnessed during the most recent financial meltdown when Treasuries gained an average of 14% and investors anticipated prices to decline. Read More…

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