The Best Inflation Protection

[MachineGhost]

[quote=http://www.etf.com/sections/index-inves ... ction.html]The table shows that of the five asset classes we examined, only short-term TIPS and commodities did a decent job of providing protection from inflation over the selected time period. We can draw this conclusion based on the relatively high, positive t-stat associated with short-term TIPS and commodities as a hedge against inflation.

We did not include longer-term TIPS because they don’t hedge inflation in the short term, due to duration risk. However, if you hold longer-term TIPS to maturity, they hedge very well over the term of the bond.

The other asset classes do not have a statistically significant relationship with inflation, and are therefore dubious ways to protect against it.[/quote]

[quote=http://www.multifactorworld.com/Lists/P ... spx?ID=145]We examined the returns of 10 different asset classes relative to CPI inflation from the period covering January 1981–December 2013, and the period covering September 2002–December 2013.* (Our definition of “hedge” is general, and it is not meant to imply that any asset class is a perfect hedge.) The only asset class that did a decent job of hedging monthly inflation over this period was commodities. The two asset classes that tended to perform the worst were two-year and 30-year Treasury notes with 30-year Treasury notes doing significantly worse than two-year Treasury notes.

The results over the shorter time period included Treasury Inflation-Protected Securities (TIPS), and we found that commodities and short-term TIPS both did a decent job of hedging monthly inflation risk. Also, there is some evidence that the relationship between inflation and the returns of certain asset classes tends to strengthen over longer horizons. Note that equities, REITs, gold and foreign currency did not have a consistent relationship with inflation and therefore have not been good hedges of inflation.

Overall, these results suggested that only two asset classes have consistently protected against inflation over relatively short horizons: short-term TIPS and commodities.

*Asset classes included are as follows: U.S. stocks (proxied by S&P 500 Index), international developed stocks (proxied by MSCI EAFE Index), short-term bonds (proxied by 2-Year Treasury notes), long-term bonds (proxied by 30-Year Treasury notes), short-term TIPS (proxied by TIPS 0-5 Year Maturity Index), TIPS (proxied by Full TIPS Index), commodities (proxied by S&P GSCI Index), real estate (proxied by Dow Jones U.S. Select REIT Index), gold (proxied by spot gold prices from the Federal Reserve) and foreign currency (proxied by USD$ Index). [/quote]

[mathjak107]

according to a study by s&p gold is not such a great inflation hedge .

copper has been far more reflective of inflation being a true industrial metal  and has reacted much better  than gold has

http://www.ibtimes.com/copper-beats-gol ... sp-1554885

[Cortopassi]

I don't have room for a few tons of copper...

[mathjak107]

empty the cash from the vault , it will fit  lol