Investing In An Inflationary Market With A Declining Dollar

Investing in stocks and commodities can be a wise idea to grow your portfolio over the course of time, however there can be tumultuous times that can have your portfolio decline dramatically as in the case of the financial collapse of 2008. Those times are over and the S&P is right near its old highs and the Nasdaq composite is at 11 year highs and the commodity markets have rallied tremendously in the last couple of years. The main rule here is to stick it out even through the rough times and remember this is long term investing and should be treated in that fashion.

One main concern with investors in America is the fact that the dollar continues its bearish trend and continues to decline over time due to government printing money and several stimulus packages which have not worked and has ballooned the debt to over $15 trillion dollars which is at an all-time high. Remember slow and steady wins the race over the long haul. This is why I recommend people to invest a small portion of their portfolio to be able to protect yourself against inflation or the general rise in price of gold, oil, and all other everyday commodities which affect everybody when they buy gas or groceries. If you believe that the economy in the next 1-2 years will improve and the unemployment rate will continue to drop than you would think that commodity prices would rise causing inflation at the pump and at the grocery store.

The Fed has printed so much money that eventually will cause price inflation plus the growing population which hit 7 billion late last year keeps supplies relatively low and economic conditions in China and India have improved and they are buying corn, beans, cotton, silver, and many other commodities they were not buying 15 years ago. If the value of your dollar continues to head lower and commodity prices continue to rise you will have to invest in a way that can over take the inflation rate and the lower dollar and the way to do that is buy a basket of commodities or specific ones such as gold, silver and crude oil. At the time I am writing this article crude oil has just hit $110 dollars a barrel and gold is heading towards $1,700 dollars an ounce with the dollar trading around 78.50 at a 3 month low versus the Euro currency. A good way to hedge against this type of scenario is to buy futures on commodities or buy silver or gold bullion and hold it over time hedging you against inflation. Futures and options are traded in Chicago at the CME which stands for Chicago Mercantile Exchange which is the largest commodities exchange in the world. Crude Oil futures and gold are traded in New York on different exchanges.

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