This Can Protect You Against Inflation

Feb 22, 2021 | Investing

Copper prices are at a 10-year high. Interest rates are rising. Lumber prices are skyrocketing. Oil prices are back above $60. Karl was on the Trey Ware Show discussing with all of this happening how individuals can protect themselves against some of this.

Trey Ware: It’s 6:53. Trey Ware KTSA. Let me go to Karl Eggerss, He joins me on the Stephens Roofing Newsmaker Hotline on Mondays to talk about money and markets. What are we talking about today, Karl? What’s on your mind?

Karl Eggerss: The last year, Trey, good morning. The last year we’ve been hearing about the K economy, which is not only businesses that are thriving during this and then you have the other businesses that are really suffering, restaurants and a lot of hospitality, but we also have the K economy with individuals. We have those that have jobs are doing very well. They’re spending, they’re saving in their 401(k)s. We see it in the numbers. And then those that don’t have jobs are really struggling. And my concern is that it’s getting worse because we know that a lot of people are going to be hit with very high electric bills coming up. And on top of that, you have oil prices going up rapidly right now, which higher gasoline prices. You have copper prices that are at a 10 year high and you have a lumber prices that are rising extremely fast.

And so for those listening saying, “Well, how does that affect me?” All those things we use that trickle down into your costs, your inflation. And so that’s my concern is for those that can invest, owning some of those things to protect yourself, to hedge against those rising costs is the key to keep up with inflation over time. But that’s my concern right now. And again, it’s not getting any narrower, it’s continuing to get wider.

Trey Ware: That’s a really good point because there’s inflation and I don’t care what the Fed says, the Fed can say it all day long, “There’s no inflation. There’s no inflation and inflation is under check.” No, no, no, no. There’s plenty of inflation going around. And you just said, if anybody doesn’t believe it, go buy a carton of eggs today and compare that to what eggs cost last week or milk or anything else you want to try to buy. There’s plenty of inflation out there. I wanted to ask you about something else too. On Saturday, Elon Musk ended up buying a bunch more Bitcoin, what’s he up to? What’s going on? I got it at about three billion somewhere in that neighborhood of Bitcoin he has bought. Why? What’s up?

Karl Eggerss: Well, keep in mind too, that this was not a small amount of Tesla’s balance sheet. In other words, the cash they have sitting there, this was a huge chunk of their balance sheet. And we’ve heard other companies now come out. I think Uber came out that they had contemplated doing the same thing. The fear and he may be leading the way as he does on a lot of things. The fear for a lot of these people and we should have the same fear, is that the value of your cash, your US dollars sitting there continues to deteriorate. We just talked about inflation. That’s what that means. Your dollar purchases less stuff. What they’re doing is saying, “We’re going to take some of our cash and put it in something that we think can outpace the dollar and keep up with inflation.”

Now I’m not recommending people do that with their cash. A lot of people may own some cryptocurrencies, Bitcoin kind of being the Big Mac of the bunch, but it could a trend where people say, “You know what? If Elon Musk does it, why wouldn’t we do that with some of our cash on the balance sheet?” And it continues to trickle. And that’s what you see. You saw Bitcoin go up to 57,000 over the weekend. It’s down to this morning about 4,000. But again, keep in mind, Trey, this is all about the perceived value of something. This has nothing to do with ones and zeros and what they’re worth. These are digital.

Trey Ware: Oh no, for sure.

Karl Eggerss: It’s perceived value just like gold and just like other things.

Trey Ware: Right. Yeah, for sure. But if Elon is doing it and if Bezos is doing it, people do, you’re right. They look at them and go, “Hey, maybe I should try it too.” Thank you, Karl. Appreciate it. Ware and Rima coming up next.


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