Non PM investments that are effective inflation hedges

[theo]

As you all know I love PMs as an investment, however I'm also a big believer in diversification. I wanted to talk about non-PM securities that would offer some inflation protection. Here are some general ideas that I have:

1. Energy - Oil companies like ExxonMobil, Conocophillips might seem like good plays but I'm concerned about the impact of U.S. Government reguation. The moratorium on drilling in the Gulf is a good example. I'm looking for companies with substantial drilling rights in other parts of the world. I think natural gas is a pretty safe play. Chesapeake Energy and Dominion Resources are two good examples. Also most of the large oil companies seem to be involved in natural gas. The are several good coal mining companies that pay high dividends like Penn Virginia Resource Partners and Oxford Resource Partners, however the EPA seems determined to make sure that coal mining is not profitable.

2. Food. Agricultural commodities companies like ADM and Monsanto are obvious possibilities here. Has anybody had success with the agricultural ETFs? I also want to look into some stable foreign food producers. Also, I had a thought; since a lot of us buy extra canned goods and that trend is likely to spread, perhaps a company that sells mostly canned soups and meals like Campbells might be an interesting play. Am I the only one with several cans of Chunky soup and Spagettios in my basement?

3. Non-precious metals - Most of us believe that base metals like copper and nickel are effective inflation hedges. Companies like Southern Copper Corp and Rio Tinto are possibilities, however I believe that several gold mining companies like Freeport-McMoRan are also heavily into copper. Didn't someone just launch a copper ETF? Are there any companies that focus on mining nickel? Then there are the rare earth elements which China seems to control. A few months ago somebody on this site mentioned REE as an investment possibility. I picked up a few shares and have done very well (Thanks!). Avalon Rare Metals and Molycorp are also possiible plays here.

Other avenues to explore; Water and water purification, Alternative energy like solar panels, Gun and ammunition manufacturers, Basic apparel manufacturers (like Hanesbrands) due to the price of cotton.

Anyway, I'm interested to hear your opinions.


Please note: I am not an investment expert and nothing I say should be construed as investment advice.

[Lemon Thrower]

not a disagreement, more a matter of degree.

energy like oil, and non precious metals used in industry, generally are inferior inflation hedges to pms because demand for them declines as economic activity declines. so gold is better than copper, especially when people stop buying cars and homes.

the various types of companies is interesting. consider buying those companies in other countries.

[Sheikh_yer_Bu'Tay]

Are there any shale gas deposits where you live? Buy a gas well if you can. You can convert your car to run on nat. gas, run you furnance, stove, hot water heater, and an electric generator for the lights and power. After you first investment... it is all gravy after that.

[beauanderos]

REE is a good stock to play for quick gains. Take small profits and then wait for dips. You can trade an upward inclining channel on this one. Right now it's on sale again. I've been watching Stan's Energy (rare earths production in Kazahkstan) but didn't have any money as it climbed from about 67 cents to $1.81. Grrrhhh.

[frugalcanuck]

Right now im heavy on Karnalite Resources a potash company on the TSX and mostly other agri corporations including monsantos.

When I retire wealthy one day far into the future, Im going to buy water corporations and take the dividends to pay for self sustainable water wells and management in areas of the world that need them. Use the evil coprs profits to allow people access to water.

[.02FYI]

If only we could buy the 20 dollar gold peices at face. Where the copper 20 = 2000 coins at projhected 10-15 rate of .11 then 220 dollars for 20 dollars invested excl equip, time, fuel, freight, fees etc. so basically need to get 120 dollrs of copper and wait 10 years and we will frn what gold is currently . Assuming many things I know. But I agrre the yellow metal won't stain your fingers and is less a counter weight to the safe etc..