Hard asset

Hard asset

Hard Assets are investments with intrinsic value such as oil, natural gas, gold, farmland, and commercial real estate. Typically hard assets are an excellent inflation hedge. [Commodity Prices and Inflation, What's the Connection? - http://mises.org/story/3018] [Marotta Aset Management - http://www.emarotta.com/article.php?ID=234] [Agcapita Farmland Investment Partnership - Farmland and Inflation http://www.farmlandinvestmentpartnership.com/pdfs/FIP%20Financial%20Characteristics.pdf] 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. [Hard Asset Investor - http://www.hardassetsinvestor.com/component/content/article/9/434.html] [Fields of Gold - http://www.thestar.com/News/Ideas/article/475036] 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 [Yahoo Finance - http://finance.yahoo.com/q/hp?s=%5EGSPC] v. 1,100% increase in oil prices [WRTG - http://www.wtrg.com/prices.htm] and 550% increase in western Canada farmland prices during same period) [Stats Canada] [Agcapita Farmland Investment Partnership - S&P versus Farmland and Oil in the 1970s http://www.farmlandinvestmentpartnership.com/pdfs/Agcapita_Newsletter_-_July_18_2008.pdf ] [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] while commodity/hard assets appreciate in value.

See also

* Inflation
* Money Supply
* Commodity
* Futures
* Austrian Economics
* Milton Friedman
* Monetarism
* Hyperinflation
* Inflation Hedge
* Sustainable Agriculture
* Peak wheat

References

Category


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