Joining the likes of Jim Rogers and George Soros, PIMCO has now thrown its hat into the hard asset ring. As the economic outlook for the U.S. has continually grown more and more bleak, we have seen a number of investors and experts hop on the commodities train as the best way to protect yourself from coming inflation. In PIMCO’s most recent economic outlook, the firm commented on the current state of the markets, the impact of QE3, and trends they see developing in the coming years, one of which was inflation [for more economic news and analysis subscribe to our free newsletter].
“While we are not expecting runaway inflation in the U.S. economy in the cyclical horizon, there are longer-term inflationary risks associated with the Fed’s extremely accommodative monetary policy” says PIMCO Chairman Josh Thimons. Thimons also goes on to note that the Fed is in uncharted waters, and he does not feel that they will be able to react quickly enough should inflation begin to rear its ugly head. Of course, anyone who has been to the supermarket in the last few months has personally seen inflation’s impact, and how it seems to be moving a bit quicker than the Fed’s 1.6% estimation.
Like many before them, Thimons and PIMCO boasted the use of hard commodities to help protect against coming inflation and what they feel will be a 1.5% drop in GDP growth in the U.S. over the next year. The firm explained that hard assets, along with some other choices, are likely to outperform financial assets in the coming weeks and months [see also Get Ready For the Gold Bull Run].
Taking PIMCO’s Advice
Below, we outline several securities to help you take advantage of PIMCO’s most recent recommendations.
- Physical Precious Metal Basket Shares (GLTR): Think of this fund as GLD, SLV, PPLT, and PALL all rolled into one, as it offers physical exposure to all four precious metals. Of course, at $205 million in assets, its popularity is nowhere near the likes of GLD or SLV. Either way, precious metals are among the most popular hard assets for investors to combat inflation.
- DB Agriculture Fund (DBA): Hands down the most popular agricultural ETF in the world, DBA invests in a wide range of ag futures contracts and is home to over $1.8 billion in assets. As far as hard assets are concerned, food commodities are among the first to respond and jump with inflation [see also 50 Ways To Invest In Agriculture].
- Market Vectors Hard Assets Producers ETF (HAP): What better way to play hard assets then to invest in a diversified basket of companies who produce various hard assets. Top holdings include Exxon Mobil, Monsanto, and BHP Billiton among others.
Disclosure: No positions at time of writing.