Investors have several ways to hedge themselves from inflation. Owning shares of great companies that can pay an increasing dividend over time is one way. But when inflation spikes suddenly, companies can also take a hit to their profits.
Owning a small position in gold can reduce the impact of sudden inflationary jolts. And it can ensure that investors protect their purchasing power over time. Inflation is down but not out.
Gold is in a similar situation today. After making new all-time highs earlier this year, it’s pulled back. And now the metal may be in a buy range.
Given the expense of buying and storing physical gold, investors may want to simply stick with the SPDR Gold Shares ETF (GLD).
The ETF tracks the price of gold without the high costs of buying the metal outright. And it can be bought or sold just like any stock.
With gold likely to continue trending higher over the long haul, it could be an astute buy now.
Action to take: Investors may want to consider a small position here, with the metal down about 5% from its all-time high. Gold does not pay a dividend, and neither does GLD.
For traders, the September $225 calls, last trading for about $3.10, could see mid-double-digit returns if gold prices start to trend higher again over the summer.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.