buying Commodity ETFs to protect against inflation

[pjuegos]

Hi all,

I was reading about different ways to protect your investment portfolio against inflation and buying commodities came up as an option for that.

Do you guys have any recommendations about any good ETFs to buy commodities? precious metals...

Thanks

 

[Gordon Gekko]

Hi all,

I was reading about different ways to protect your investment portfolio against inflation and buying commodities came up as an option for that.

Do you guys have any recommendations about any good ETFs to buy commodities? precious metals...

Thanks

A better way to protect yourself against inflation is to buy good quality risk assets, e.g. by having a well diversified equity portfolio.

 

[Marc]

I gave a presentation to the CFA institute in Dublin a few years ago

Is there a role for gold in a portfolio? Gold Presentation for CFA Institute Ireland

This is a presentation I gave for the CFA institute in Dublin in the summer of 2011. My conclusions are that adding almost anything negatively correlated with equities to a portfolio should improve efficiency. BUT for gold to work you need two things 1) Luck - you need to buy when prices are...

viewer.joomag.com

The problem is that commodities, whilst an input into production costs, are not a good hedge against inflation

The correlation isn't particularly strong

The rate of inflation tends to be quite stable from month to month, whereas the spot price of commodities, gold in this example, is all over the shop

We see a very similar picture with the Goldman Commodity index

Historically at least the most reliable hedge has actually been short term fixed interest

Described by Nobel Laureate Gene Fama as "an inflation hedge fund"

To pick up the term premium use short term (1 to 5 year) fixed interest

Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie