Thursday, 22 March 2012

Do You Need to Hedge Against Inflation with Your Investments? Consider "Hard Asset" Investments

There are two schools of thought on this question of inflation. Some believe that because economies are still weak, that there is no risk of inflation in the immediate future. The other view point is that because central banks have created so much new money through QE (Quantitative Easing) that some kind of inflation hedge is necessary in case inflation suddenly accelerates.

We ate Green World do not claim to be experts on broader macro-economics, but whatever your viewpoint on the risk of inflation one must admit that it is at least a distinct possibility. If you agree, then one good option is to invest in so-called "hard assets" or "real assets". These are assets that are not financial instruments like stocks and bonds, but assets that cannot be printed or created by central banks. Whilst many people look to Gold for this, Gold pays no income and has no inherent economic value. We prefer hard assets that pay regular income and also have an inherent economic value such as farmland investments or timber investments. On farmland investment, we believe that we are currently in an agricultural "supercycle" of a growing population and dwindling arable farmland which will make ag commodity prices continue to rise.

For farmland, it is well worth it to consider Australian farmland investments. Australian farmland is some of the cheapest in the developed world, it pays high current income and there is a ready made customer for its production in China. For those partial to forestry, bamboo investments pay very high current income and the market for bamboo markets is expected to double in size by 2015.

Either one of these options will give you both high current income as well as an excellent inflation hedge. Feel free to contact us at for more information.

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