Last spring, most of the global economy hit the “pause” button…
Entire sectors like retail and hospitality were forced to lay off workers en masse…
We saw global supply chain shortages that had a massive impact on the supply of semiconductors and other important components we use every day… Cruise liners and planes sat dormant across the world.
It’s hard to believe it’s been over a year.
In response, the federal government embarked on a stimulus program of epic proportions. From what we are seeing, it’s likely the U.S. will print $10 trillion in less than three years.
And this rampant spending has one word on readers’ minds: inflation.
Here’s a note I received from a reader recently.
Jeff, I’m a Brownstone Unlimited member. I wish I had come on board sooner because your services have proven [to be] worth every penny.
My question, though, is more fundamental. Given current monetary policy, if inflation starts to rise, in general, how will it affect our Brownstone portfolio?
– Ken J.
I deeply share Ken’s concerns. The reality is that the U.S. is going to find itself in big trouble.
The real question is when and what to do about it…
An Inflationary Wave
I’m not the only one thinking of inflation.
In a recent interview, billionaire investor Bill Ackman had this to say on the topic:
I think it’s not temporary… Look at every commodity price, right? Copper, lumber, energy even before the colonial pipeline issue. Look at housing prices, look at Bitcoin, right? Everything is inflating.
Even Warren Buffett chimed in during the recent Berkshire Hathaway shareholders meeting:
We are seeing very substantial inflation…
It’s very interesting. We are raising prices. People are raising prices to us and it’s being accepted.
The data backs it up.
The Department of Labor reported that the Consumer Price Index climbed 4.2% from April 2020 to April 2021.
This is the index that tracks the average change in prices over time for consumer goods and services.
4.2% may not seem like a lot on the surface. But it’s the biggest jump in any 12-month period since 2008. And it represents price increases across all aspects of our daily lives.
Perhaps you’ve noticed that food costs seem to be rising. The cost of new homes is certainly rising as the price of lumber has soared.
But now the real question investors should be asking themselves… If we are at the beginning of an inflationary wave, what should we do next?
Why I Don’t Recommend Gold
Traditional wisdom is simple. Just buy gold. Gold has long been viewed as the ultimate inflation hedge.
I believed that once too.
The Obama administration printed $10 trillion over eight years. The sum was nearly impossible to imagine. It was a larger amount than every single presidential administration combined… in history.
At the time, I was heavily invested in gold. I was invested in gold miners, gold indices, and even several successful short-term gold trades.
I also bought physical precious metals. I remember carrying a monster box of 500 ounces of silver bullion through airport security in Japan.
The Japanese security was very confused. What was I doing with all these coins? I told them I was a collector, and they let me go on my way.
But what happened to gold during this time? Did it go to $10,000 an ounce?
Not even close. Gold didn’t even break $2,000 an ounce.
It was around that time that I sold all my gold holdings. I held on to my silver monster boxes, but I don’t own a single ounce of gold today.
It’s entirely a personal decision if an investor wants to own gold. But I won’t be recommending it in the pages of my research products.
Instead, we’ll beat inflation another way.
2021’s Best Inflation Hedge
The key is for us to be invested in sectors and companies that are growing far faster than the rate of inflation. That way, we can still significantly outperform the markets and generate substantial real returns.
But that begs an obvious question. Where do we look?
Right now, I’m very interested in one type of investment vehicle to deliver market-beating returns in the years ahead.
It’s an investment some people may find controversial…
In fact, thanks to some recent action from the federal government, these investment vehicles have some investors nervous.
But I view this moment as an opportunity. Perhaps we’ve heard the expression “be greedy when others are fearful.” That’s the opportunity we have today with this group of investments.
That’s why I’ve put together a special Emergency Meeting.
But you must act fast… Space is very limited, and the window to join in on this special event is rapidly closing.
The chance to learn about this trend and capitalize on it won’t last for long. Only early investors will be able to reap the largest rewards from the companies I’ve discovered.
I look forward to seeing you there.
Editor, The Bleeding Edge
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