Inflation-Proof Assets Shine in Face of Rising US Inflation

Inflation has been a major concern for investors in recent times, and it's likely to continue being a headwind for stocks. The US inflation rate stands at 3.4% as of August, well above the Fed's target of 2%. To rein in inflation, the Fed will need to raise its benchmark rates again, which will make it tougher for companies to expand their businesses and drive more investors toward lower-risk investments.

However, some assets are better equipped to handle rising inflation. Gold and silver have traditionally been considered hedges against inflation due to their scarcity and ability to be easily traded for fiat currencies. Over the past 20 years, gold has risen by 588% while the domestic purchasing power of the US dollar declined by 35-40%. The most popular gold ETF is the SPDR Gold Trust (GLD), which holds physical gold bars in its London vaults and has a gross expense ratio of 0.40%.

Silver, another inflation-proof investment, is valued not only for its scarcity but also for its utility in various industries such as solar panels, electric vehicles, and consumer electronics. Its price surged by 460% over the past 20 years, with a significant portion of that rally occurring in the last year due to increased demand from cloud infrastructure and AI markets.

Bitcoin, the world's largest cryptocurrency, is also often compared to gold and silver due to its scarcity. It has an early mover advantage and scale, making it popular among corporate and institutional investors. While Bitcoin can be more volatile than gold or silver, it could also have greater upside potential.