Inflation: Real Estate or Gold?

[Account Closed]

How would you answer this question?

In 2002, 10% of global GDP was estimated to be held in Central Bank Assets. Today is at least 25%. Increasingly the answer to fiscal problems across the world has been to : PRINT MONEY.

I argued to a friend that with inflation inevitable, I think its prudent to hold hard assets like real estate, commodities etc.

He argues that a inflation fearing investor should hold gold instead of real estate, as real estate in the US is a dollar based asset that will not hold up on the global stage if the dollar is devalued massively.

Thoughts?

[J Scott]

Originally posted by Joe A:

Why would you want to own debt locked in for 30 years in rising interest rate environment?

Simple arbitrage. Get debt at today's higher dollar valuation, pay it off using cheaper dollars in the future and your equity is the spread in dollar valuation.

In addition, the underlying assets should be throwing off cash each month, so you have the cashflow as well.