Hard asset
Hard Assets are investments with intrinsic value such as oil, natural gas, gold, silver, farmland, natural colored diamonds and commercial real estate. Typically hard assets are an excellent inflation hedge.[1][2] In general, commodities/hard assets are negatively correlated to both stocks and bonds. In other words, when stocks and bonds decline, commodities tend to appreciate.[3][4] In addition, during periods of high inflation/negative real interest rates equities and bonds do poorly (see 20% total return over 11 years from 1970 to 1981 for the S&P 500 [5] v. 1,100% increase in oil prices[6] and 550% increase in western Canada farmland prices during same period)[7][8] while commodity/hard assets appreciate in value.
See also
- Inflation
- Money supply
- Commodity
- Futures contract
- Austrian Economics
- Milton Friedman
- Monetarism
- Hyperinflation
- Inflation hedge
- Sustainable Agriculture
- Peak wheat
- Natural Colored Diamond
References
- ↑ Commodity Prices and Inflation, What's the Connection? - http://mises.org/story/3018
- ↑ Marotta Aset Management - http://www.emarotta.com/article.php?ID=234
- ↑ Hard Asset Investor - http://www.hardassetsinvestor.com/component/content/article/9/434.html
- ↑ Fields of Gold - http://www.thestar.com/News/Ideas/article/475036
- ↑ Yahoo Finance - http://finance.yahoo.com/q/hp?s=%5EGSPC
- ↑ WRTG - http://www.wtrg.com/prices.htm
- ↑ Stats Canada
- ↑ Alpha, Beta, and Commodities: Can a Commodities Investment be Both a High Risk-Adjusted Return Source and a Portfolio Hedge? http://www.hardassetsinvestor.com/component/content/article/34/50.html?Itemid=4
External links
Category
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