How do we combat inflation?

[greenskeeper]

As far as Gold goes, just look at it's history of return @ Gold Price History. Why would you buy something that is at it's all time high? Now is the time to sell Gold, that is it. Buy low, sell high. Simple logic.

Gold isn't at it's all time high adjusted for inflation.

The govt can't print gold or silver.

The best precious metal right now is silver. Way undervalued for the traditional ratio of gold to silver price. Silver is also consumed by industry and we are coming up on a real physical shortage. Those holding paper silver will be standing on the sidelines.

[GrimJack]

Now that the fed has admitted that they are seeking to inflate our currency how do we protect our savings from losing value? It really is unbelievable how we didn't see this coming. So now what can we do about it? Gold, Stocks, Bonds, Real Estate??

I am not sure I accept the premise. We were in deflation for most of 09 and currently running about 1-2% for this year. It may be that I do not understand your phrase 'inflate our currency' - here is where I got my info - where do you get yours?

[ea1776]

You could buy OIL companies (I own ICENX). If you look at the P/E for these companies, they are hovering around 10-12ish, which is lower than most other high yield domestic stocks. For this reason, I believe this sector (and therefore this fund) are UNDERvalued and a good buy right now. But, I don't buy the whole "green energy" hype out there (which I believe is putting temporary downward pressure on this sector). Oil and natty gas aren't going anywhere anytime soon IMHO (i.e. how did you get to work today?). And of course, this fund has the added benefit of providing some protection against inflation (since the companies are in the business of acquiring/selling commodities), nice juicy dividend yield too.

PRNEX - T Rowe Price New Era fund (there are others) is a good fund dedicated to providing protection against inflation. Here's the fund's stated objective:

The investment seeks to provide long-term capital growth. The fund normally invests a minimum of two-thirds of fund assets in the common stocks of natural resource companies whose earnings and tangible assets could benefit from accelerating inflation. It also invests in other growth companies that have strong potential for earnings growth but do not own or develop natural resources. The fund invests at least half of the fund assets in U.S. securities, but invests up to 50% of assets in foreign securities. It may also buy other types of securities, including futures and options.

There are ETF's out there whose sole purpose is to protect against inflation. Many ways to defend yourself. I prefer a long term view, so I own lots of international growth stock funds (especially Asia).

WARNING - I am not promoting these funds (although I do own them). Just using them as an example. As always with investing, do your own due diligence, read the prospectus, and educate yourself FIRST.

[nick__45]

Keep your money out of stock. Don't throw good money after bad. Why do you want to 'invest' their hard earn cash for some fat cats to spend and enjoy. Stock is a scam. GM is offering them now after all these years.

[nick__45]

Gold isn't at it's all time high adjusted for inflation.

The govt can't print gold or silver.

The best precious metal right now is silver. Way undervalued for the traditional ratio of gold to silver price. Silver is also consumed by industry and we are coming up on a real physical shortage. Those holding paper silver will be standing on the sidelines.

Yes, the government can print more gold because most gold owners hold nothing more than a certificate. It's not safe to keep gold at home anyway.

[nick__45]

Another thing to think about when wanting to invest in gold. I remember Warren Buffett stating that it's a poor investment because it yields no cash. No interest nor dividends. It's dead money until you can find a buyer. The only gains to be made our on selling for more than you bought it for. Gold is a highly inflated bubble right now. Don't be the last person in the room.

+1. Gold investment is only good for gold dealers. Another way to look at it is by going into fishing supply store. The bait and lure catch your fishermen than fishes.

[ea1776]

Keep your money out of stock. Don't throw good money after bad. Why do you want to 'invest' their hard earn cash for some fat cats to spend and enjoy. Stock is a scam. GM is offering them now after all these years.

Ummmm, the facts disagree with you....

S&P 500 Historical Charts

[cjscully]

Reaction to currency inflation is entirely dependent on which side of the debt isle you're on. If you're a creditor or you're not in debt it's something to worry about. If you're in debt it's something to celebrate.

Why do you think they want to inflate the currency? Take a look at the national debt. Inflation is also a way of increasing tax revenue without raising the tax rates at all. Workers get "cost of living" pay increases. This makes their incomes go up. This means that even if their tax rate is exactly the same, they pay more in taxes. This makes the national debt "easier" to manage.

[KTP]

Everyone is so scared of inflation..and are like "oh noes, what shall we do what shall we do?"

70% in large cap US stocks with dividend payout, low PE, and global operations, or a Vanguard fund with that mix, 20% in international stocks or a Vanguard international fund, 10% in a commodity fund. Done, stop worrying. Go play golf. Worst case is the world ends, but it can only do that once.