I believe this is largely due to the fact that yields have increased supply. Dad tells me that years ago people were amazed when they first got over 100 bushels per acre around here in NW Ohio. Now we are nearing 200 bushels per acre for a good crop.
I don't know how much the yield of an acre of trees has increased through the years, nor if it will continue.
Also, TP is a processed product. The price of products we buy in the store seems to increase faster than the raw products used to produce them. This would apply to toilet papers also, I would think.
So you may very well be right about TP being a good inflation hedge. I just wanted to point out that as a general rule, farm commodities decrease in real value over time, and this might apply to the wood pulp used to make TP as well.
Those yields were low enough to entice me into putting 1/3rd of my investable nest egg into gold and silver. I owned them from 2004 to 2006 and did extremely well (50%+ return).
There is a difference between now and then though. I bought gold in the 400s and silver under $7. They were relatively cheap. Few wanted them. There were no commercials on TV talking about them.
I'm not even remotely interested in owning gold and silver now though, much to the dismay of my gold and silver hoarding online friends (who may ultimately end up being right for all I know).
I just cannot get interested in buying something nearly 3x more expensive just because real yields are 1% lower than I think they should be. That's a LOT of risk to be taking on for what basically amounts to a 1% difference in return per year.
Here's my thinking on just how much risk there is. If one were to construct a precious metals to toilet paper price ratio, then one might conclude that gold and silver are now very expensive and/or toilet paper is currently very cheap.
I'm still willing to hoard toilet paper. Let's just put it that way. No joke. I've got nearly 1,000 rolls of the stuff. I figure, what's the harm?
Further, this very same leverage mindset made people want to buy houses. Interest rates on loans fell to the point houses became irresistible at nearly any price. We know how that worked out in hindsight.
Gold and silver have been in a bull market for a decade. Ultimately, they are just shiny rocks to me though. They are only worth what someone else will pay you for them.
Here's why I think toilet paper is better than gold or silver.
1. I'll never need to find a greater fool to sell it to. I'll be consuming it myself over the years. I'll never need to rely on what someone else thinks it is worth. I know exactly what it is worth to me. It's the same thinking I have when buying TIPS and holding until maturity.
2. Zero capital gains tax. Unless the government wishes to come into my house to find out how much I have, they will have a heck of a time taxing any inflationary gains the toilet paper might experience.
3. The government is extremely unlikely to ever confiscate it. Wouldn't that just be so pathetic? Breaking in my door to remove my toilet paper? Hahaha!
4. Lastly, and most importantly, it is still cheap.