Why Commodities Like Silver, Oil and Gold Are Soaring Amid Inflation

by Frank Holmes

If you were in charge of the Fourth of July spread last week, you probably noticed a hike in prices. According to the American Farm Bureau Federation, the cost of a typical Independence Day spread for 10 people jumped to $71.22 this year, up 5% from last year and a whopping 30% from five years ago.

That may not seem like much, but this inflation has a compounding effect on commodities. Research from Goldman Sachs shows that a 1 percentage point increase in U.S. inflation has historically led to a real return gain of 7 percentage points for commodities. Meanwhile, the same trigger caused stocks and bonds to decline by 3 and 4 percentage points, respectively.

This data supports the potential of commodities as an inflation hedge.

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