Thursday, August 9, 2012
Bond King Says Inflation will Damage Treasuries, Need Real Assets Like Land and Gold
Investors looking to preserve their purchasing power will have to avoid Treasuries and put their money in “real assets" such as stocks and real estate, Bill Gross, Pimco co-founder, told CNBC recently. “In the Treasury market all interest rates are on a negative basis,” Gross said. “Risk averse investors looking to hide in Treasuries will see a haircut relative to future inflation. ”If you want to maintain purchasing power you have to make the leap into real asset territory to get a real return.” He bases this from the potential Federal Reserve and Global Central Banks printing money to re-inflate their economies. This inflation will cause investors to move primarily to gold and silver. But also real estate maintains its value in inflationary economies. Real Estate should maintain its value and increase during inflation. Land maybe a better hedge against inflation as there isn’t any maintenance, and other losses like fire, or hazards. Land is a good asset to hold and wait for the economy to change in a more positive direction with jobs, and growing GDP(Gross Domestic Production).