Inflation hedge is an investment with intrinsic value such as oil, natural gas, gold, farmland, and to a lesser degree commercial real estate. Typically most hard assets are an excellent inflation hedge. In general, commodities/hard assets are negatively correlated to both stocks and bonds. In other words, when stocks and bonds decline, commodities tend to appreciate. In addition, during periods of high inflation/negative real interest rates equities and bonds do poorly (see 20% total return over 11 years from 1970 to 1981 for the S&P 500 v. 1,100% increase in oil prices and 550% increase in western Canada farmland prices during same period) while commodities and other hard assets appreciate in value.

Farmland values in southern South America dropped slightly in USD terms and remained stable in EUR and other major currency terms during the mid 2008 to mid 2009 global financial crisis

See also

• Inflation
  Inflation
  In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
  
  
• Money Supply
  Money supply
  In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
  
  
• Commodity
  Commodity
  In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
  
  
• Futures contract
  Futures contract
  In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
  
  
• Austrian Economics
• Milton Friedman
  Milton Friedman
  Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
  
  
• Monetarism
  Monetarism
  Monetarism is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over...
  
  
• Hyperinflation
  Hyperinflation
  In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
  
  
• Sustainable Agriculture
  Sustainable agriculture
  Sustainable agriculture is the practice of farming using principles of ecology, the study of relationships between organisms and their environment...
  
  
• Peak wheat
  Peak wheat
  Peak wheat is the concept that agricultural production, due to its high use of water and energy inputs, is subject to the same profile as oil and gas production. The central tenet being that a point is reached, the "peak", beyond which agricultural production plateaus and does not grow any further...
  
  
• Agricultural Land Banking
  Land banking
  Land banking is the practice of purchasing raw land with the intent to hold on to it until such a time as it is profitable to sell it on to others for more than was initially paid...