Hedging Inflation Risk

Spiking used car prices helped drive the increase in inflation. 

The Inflation Threat

The short term threat is the rise in inflation. With the 5.4% spike year-over-year in June, it's getting harder to deny that inflation is now a problem in America. Granted, this hasn't been news to anyone who has filled up their car recently, but as one Bloomberg TV anchor mused during an apparent adlib on Friday about the spike in used car prices, she lives in Manhattan and doesn't have a car. Given that Manhattan is the media capital of America, this sort of insulation is probably common.

Reliable And Unreliable Inflation Hedges

Despite the scary inflation news, goldbugs' favorite gold ETF, the Sprott Physical Gold Trust (PHYS) was flat on the week, as was the SPDR Gold Trust (GLD) and the Bitcoin was down. A point I make in the video below is that the best hedge against inflation risk driving down the market is a hedge against the market itself going down.

In that video, I use our iPhone app to find optimal puts on the SPDR S&P 500 Trust (SPY) to hedge a $1,000,000 portfolio, but the same process could be used to hedge a $10,000 or $10,000,000 portfolio too.

Disclaimer: The Portfolio Armor system is a potentially useful tool but like all tools, it is not designed to replace the services of a licensed financial advisor or your own independent ...

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Bindi Dhaduk 2 years ago Member's comment

Lol, “and the Bitcoin.” Do you still use “The Facebook?!” Otherwise, nice article :)

David Pinsen 2 years ago Author's comment

The Bitcoin and the Batman. Typo on my part.