Raging inflation may do extra than simply erode the buying energy of the greenback.
According to Peter Schiff, CEO of fairness fund Euro Pacific Capital, who’s well-known for publicly predicting the 2008 housing disaster, spiking worth ranges will help “push the economy into recession.”
“A strong economy doesn’t produce inflation,” Fox Business reported earlier this month. “It actually produces the reverse, because a strong economy means that your economy is productive, you’re producing more goods and services, and you’re growing the supply.”
The excellent news? Schiff additionally is aware of a factor or two about hedging towards inflation. In reality, we will clearly see that theme in Euro Pacific’s newest 13F submitting with the Securities Exchange Commission.
So right here’s a have a look at three ways Schiff’s funding agency is getting ready for a downturn — certainly one of them is likely to be value buying with a few of your extra nickels and dimes.
Schiff has lengthy been a fan of the yellow metallic.
“The problem with the dollar is it has no intrinsic value,” he as soon as mentioned. “Gold will retailer its worth, and you may all the time give you the chance to purchase extra meals along with your gold.”
As always, he’s putting his money where his mouth is.
As of Sept. 30, Euro Pacific held 519,095 shares of Newmont and 1.528 million shares of Barrick Gold.
In fact, the two gold mining giants were the firm’s top two holdings, representing 7.4% and 7.3% of its portfolio, respectively.
In Q3, Newmont produced 1.45 million ounces of gold at all-in sustaining costs of $1,120 per ounce — the current price of gold sits above $1,800. Meanwhile, Barrick Gold produced 1.09 million ounces of gold at all-in sustaining costs of $1,034 per ounce.
Gold can’t be printed out of thin air like fiat money, and its status as a safe haven means demand typically increases during times of uncertainty.
If gold prices go up, miners like Newmont and Barrick will likely enjoy bigger profits.
These days, you can build your own recession-proof portfolio just by using your own digital nickels and dimes.
Recession-proof revenue shares
Dividend stocks offer investors a great way to earn a passive income stream, but some can also be used as a hedge against inflation — and even recessions.
Case in point: The third-largest holding at Euro Pacific is cigarette giant British American Tobacco, accounting for 4.5% of the portfolio.
The maker of Kent and Dunhill cigarettes pays quarterly dividends of 75 cents per share, giving the stock an attractive annual yield of 8.6%.
Schiff’s fund also owns over 160,000 shares of Philip Morris International, another tobacco king with a dividend yield of 5.4%. The Marlboro cigarette producer is Euro Pacific’s fourth-largest holding with a portfolio weighting of 4%.
The demand for cigarettes is highly inelastic, meaning large price changes only induce small changes in demand — and that demand is largely immune to economic shocks.
If you’re comfortable with investing in so-called sin stocks, British American and Philip Morris might be worth researching further.
When it comes to playing defence, there’s one recession-proof sector that shouldn’t be overlooked: agriculture.
It’s simple. Whatever happens, people still need to eat.
Schiff doesn’t talk about agriculture as much as precious metals, but the fifth-largest holding of Euro Pacific is fertilizer producer Nutrien.
As one of the world’s largest providers of crop inputs and services, Nutrien is positioned solidly even if the economy enters a major downturn. Its shares are already up about 39% in 2021.
Another way to play the agricultural boom is to invest in U.S. farmland.
Farmland could be an effective hedge because it’s intrinsically valuable and has little correlation with the ups and downs of the stock market.
The NCREIF Farmland Total Return Index has increased more than five times over the past 15 years, 10 times over the past 20 years, and 20 times over the past 30 years.
The best part? You don’t need to get your hands dirty to get a piece of the action.
New platforms permit you to spend money on U.S. farmland by taking a stake in the farm of your selection.
You’ll earn money revenue from the leasing charges and crop gross sales. And after all, you’ll profit from any long-term appreciation on prime of that.
This article offers info solely and shouldn’t be construed as recommendation. It is offered with out guarantee of any form.