Whether at the gas pump or at the checkout counter, prices for a variety of goods are way up, and by most accounts, are expected to go even higher.
What's a person to do? According to Jack Ablin, the chief investment officer of Chicago-based Harris Private Bank, you can either buy it or try to beat it. And he's not just saying it to say it.
As a firm, Harris, which provides wealth advisory, investment management, trust and other services and is part of Canada's BMO Financial Group, loves the commodity story and has had the asset class at "maximum overweight" in its portfolios for the past 15 months.
One specific trade Ablin likes right now is the Guggenheim Canadian Energy Income (ENY) fund. He says the cheap natural gas being used to extract $100+ crude from the country's oil sands ensures fat margins and profits.
And he also warns about owning gold at current levels as protection against all of this inflation, suggesting that gold is projecting 11% inflation for the year 2013, vs. maybe 3% today. (Gold prices were recently at $1,429 an ounce.)
He says a basket of commodities, like the CRB Index, will offer much better protection and upside. In the past few months that upside has certainly been there, with the advance outpacing the broad equity market's climb. Going back into November, the CRB Futures Index measuring commodity prices is up 21%, while the S&P 500 has risen 13%.
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- S&P 500
- CRB Index
- Canada s BMO Financial Group
- natural gas