Someday, in the possibly near future, you will suddenly be paying $10 for a gallon of milk and wondering how the heck it happened so fast.
That is the strange and terrible way of inflation, said State Street Global senior portfolio manager Chris Goolgasian in a panel talk on Thursday at Morningstar ETF Invest 2012. Inflation has a way of appearing to be a distant threat before it sneaks up suddenly and starts driving prices through the roof.
Quoting from Ernest Hemingway's novel "The Sun Also Rises," Goolgasian took note of a passage where a man is asked how he went bankrupt. "Two ways," the man answered. "Gradually, then suddenly."
"The danger is in the future, and it's important to manage portfolios for the future," Goolgasian concluded. "Real assets can give you some assurance against that chance."
Also appearing on "The Inflation Boogeyman—How Do I Protect My Portfolio?" panel was currency guru Axel Merk, who recently spoke with AdvisorOne about his Merk Hard Currency Fund and how the currency sector can be used as an inflation hedge.
On Thursday at Morningstar ETF Invest, Merk also put forward a case in favor of investing in gold, while acknowledging its volatility.
"It's the purest indicator of the monetary madness that's out there," Merk (left) said. "The rise of gold correlates perfectly with central bank easing around the globe. Gold by all means should do well, but we realize that it's volatile."
Like Merk, Northern Trust is overweight gold, said panel speaker Mark Carlson, a fixed income investment strategist for FlexShares exchange traded funds at Northern Trust Global Investments.
