How to Love Inflation

Posted By: Dr. Frugal in Saving on 09/22/2007 at 13:13:09

One asset class loves inflation: real property, which means precious metals and real estate. In times of economic instability, which define high inflation, investors seek out value in gold and real estate.

inflation doesn't make real estate easier to buy but it does tend to push up prices. During the past five years there was a period of high inflation and the real estate prices skyrocketed. These booms don't last forever (see: right now) so those investors who bought found they could not sell for profit once the economy cooled.

As a side note, fears of inflation can drive up gold prices even if inflation isn't high right then. In 2006, the price of gold shot up when investors feared that inflation was about to slip out of control.

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