What Should Investors Know About Gold and Bonds During Inflation?
Should those interested in owning gold or bonds direct their focus to crypto instead? In this clip from "The 5" on Motley Fool Live, recorded on Jan. 18, Motley Fool contributors Trevor Jennewine, Jamie Louko, and Taylor Carmichael share their thoughts on owning gold and bonds and discuss why Bitcoin (CRYPTO: BTC) might just be a hedge against the dollar and against inflation.
Trevor Jennewine: Gold prices fell today, at least earlier in the day as U.S. treasury yields rose. Generally speaking, investors use gold as a hedge against inflation. That being said, precious metals are very sensitive to changes in interest rates. The falling price of gold alongside the rising treasury yields basically tells us that investors are anticipating rate hikes in 2022. Of course, we already knew that, but it's worth pointing out that there are those options for people looking to hedge against inflation. For reference, earlier today, the 10-year treasury note, the yield was at 1.8%, a level that has not been at since before the start of the pandemic. As that number continues to rise, the downside risk for richly valued stocks will continue to rise as well just because investors have that risk-free rate of return open to them and, as that number goes up, more investors are going to be incentivized to pull their money out of the stock market and put it into something in some safer assets. On the topic of inflation, do either of you guys currently own gold or have you ever considered investing in gold as a hedge against inflation? Then, on top of that, what are your thoughts on owning bonds right now with yields rising? Are you guys tempted to add bonds to your portfolio? Jamie, let's start with you.
Source Fool.com
