Commodities offer protection against inflation. In times where money loses its value commodities rise in price. The inflation is discounted in the price of the commodities. In this way they act as an inflation hedge.
A special case of protection are the precious metals. These metals can be seen as a form of currency when the trust in the dollar is low. Precious metals also tend to rise when there is a general sense of fear. Gold is so rare that it will always keep its value. Even if there are wars or disasters.
No comments:
Post a Comment