The Best Inflation Hedge - Farmland Or Gold?
The common consensus among the Bank of England and economists is that the UK is heading for a period of extended inflation up to 2012/2013, and savvy investors are looking for alternative assets that are proved to grow in price quicker than inflation rises, effectively hedging inflation as part of their overall investment strategy. These inflation investments ought to be designed to produce income and preserve capital at a time when short term market visibility is at an all time low, and quantative easing programmes combined with low interest rates start to squeeze the worth out of cash as inflation rises.
Historically investors trying for an inflation hedge have turned to Gold, seeing the valuable metal as a secure investment that will hold its price, even in unsure economic times. The value of gold could be a market led by supply and demand, there's only a finite quantity of gold available, ands as demand rises, therefore too will the price per ounce.
The problem with gold as an investment is that it's essentially a useless commodity and is used principally for the purposes of storing money as an asset, and a lot of and more investors are now investing in farmland as this asset exhibits the same characteristics as precious metals, nonetheless will continually remain in demand from a growing population demanding a lot of food, ensuring that farmland investment is supported by rock solid fundamentals and landowners have in their possession an asset that will always command a worth regardless of the happenings at intervals monetary markets.
Farmland is an almost excellent inflation hedge investment, as agricultural land values have continued to rise for the last 10 years. There has of course not been a single seven year amount that farmland values in the UK have fallen since record began, and because the demand for food is rising at the fastest pace in history, the following seven years is extraordinarily unlikely to be the first time that happens.
As agricultural land additionally provides a stable consistent income in the form of a rental yield when leasing the land to a commercial farmer, this asset category conjointly goes some approach to replacing the income lost due to low interest rates.
In brief, agricultural land offer investors with a close to perfect inflation hedge, stable income, and remain terribly liquid as solely 0.one% of farmland changes hands within the UK each year, making smart quality land exhausting to find, additional limiting provide and supporting future values. Typically speaking, sensible quality farmland can sell within 90 days depending on location and grade etc.
Historically investors trying for an inflation hedge have turned to Gold, seeing the valuable metal as a secure investment that will hold its price, even in unsure economic times. The value of gold could be a market led by supply and demand, there's only a finite quantity of gold available, ands as demand rises, therefore too will the price per ounce.
The problem with gold as an investment is that it's essentially a useless commodity and is used principally for the purposes of storing money as an asset, and a lot of and more investors are now investing in farmland as this asset exhibits the same characteristics as precious metals, nonetheless will continually remain in demand from a growing population demanding a lot of food, ensuring that farmland investment is supported by rock solid fundamentals and landowners have in their possession an asset that will always command a worth regardless of the happenings at intervals monetary markets.
Farmland is an almost excellent inflation hedge investment, as agricultural land values have continued to rise for the last 10 years. There has of course not been a single seven year amount that farmland values in the UK have fallen since record began, and because the demand for food is rising at the fastest pace in history, the following seven years is extraordinarily unlikely to be the first time that happens.
As agricultural land additionally provides a stable consistent income in the form of a rental yield when leasing the land to a commercial farmer, this asset category conjointly goes some approach to replacing the income lost due to low interest rates.
In brief, agricultural land offer investors with a close to perfect inflation hedge, stable income, and remain terribly liquid as solely 0.one% of farmland changes hands within the UK each year, making smart quality land exhausting to find, additional limiting provide and supporting future values. Typically speaking, sensible quality farmland can sell within 90 days depending on location and grade etc.