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re: Gold: It's basically f'd

Posted on 2/25/11 at 9:48 pm to
Posted by saint308
LA
Member since Oct 2010
496 posts
Posted on 2/25/11 at 9:48 pm to
quote:

Also, why is gold superior to TIPS?


Serious question here. With TIPS the increase in value so to speak is based upon the CPI. However, the CPI does not include energy or food. I know my gas cost has risen a bunch. I have a 28 month old girl and milk has gone from 3.59 to 4.29 in the last 2 years. So to me TIPS are getting screwed. Why wouldn't you be better off buying rising rate funds and shorting the Lehman bond index?
Posted by kfizzle85
Member since Dec 2005
22022 posts
Posted on 2/25/11 at 10:21 pm to
Core CPI strips out food and energy link, CPI does not.
Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 2/25/11 at 11:07 pm to
quote:

saint308


TIPS have significant flaws, to be honest. I was just throwing out an easy one. The other two are much more suitable, though.
Posted by tirebiter
7K R&G chile land aka SF
Member since Oct 2006
9383 posts
Posted on 2/26/11 at 10:55 am to
quote:

However, the CPI does not include energy or food. I know my gas cost has risen a bunch.


If you truly believe this I suggest going to TreasuryDirect and researching how the inflation factor applied to TIPS is really calculated. This is coming from the guy that bought 30-year TIPS on 2/17/2011 at auction.
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