📈 Are Inflation Hedge Trades Working?

Analyzing how inflation trades are faring.

Inflation Trade

With the hot CPI last week signaling that rate cuts are further and further away and that inflation may be more persistent than previously expected, is it time to take on inflation hedge positions?

When I say this, I am talking about trades like gold, silver, Bitcoin, energy names.

Let’s take a look.

Inflation-Resistant Names

Whether you subscribe to the notion of it or not, many view Bitcoin as an inflation hedge. Therefore with the economic data we have seen over the past week, we would expect Bitcoin to rise with inflation looming longer than expected.

However we are seeing Bitcoin sell off.

Let’s look at some other inflation-resistant names, like gold ($GLD).

This made a blow off top move on Friday, closing at the low of the day. What we’re seeing here is that investors are panicking and selling all positions, not just interest rate-sensitive names. Even the inflation trade stocks are being dumped.

Let’s look at energy. This sector ripped over the past few weeks throughout all of the economic uncertainty.

Once again we are seeing that this sector dumped on Friday and closed at the low of the day.

The takeaway from this is that you’re not getting ahead of the game by purchasing inflation hedge stocks anymore. That trade looks like it has ran its course and you do not have an edge.

For now investors are liquidating positions until we see strength come in from a different sector.

Watch this video to see where I am focusing my trading this week: