[Cynus]

TIPS (Treasury Inflation-Protectes Securities) are securities that pay more as the rate of inflation rises. Since peak-oil is alleged to cause rapid inflation (signs of which are alreasy appearing in the Fed's recent interest rate raises) I am thinking of buying some TIPS (unfortunately I don't have enough cash on hand to buy too many). Does anyone have any experience with them or think that are a bad investment?

Here is what the US treasury has to say about them (http://www.treasurydirect.gov/indiv/pro ... glance.htm ):

Treasury Inflation-Protected Securities, or TIPS, guard your savings from inflation. TIPS pay a fixed rate of interest. The value of the principal of a TIPS is adjusted semiannually, based on changes in the Consumer Price Index. The interest rate is applied to the inflation-adjusted principal, not the original face value. So, if inflation occurs throughout the life of your security, every interest payment will be greater than the one before it. The converse is true however, in the event of deflation. Upon maturity, Treasury will pay the greater of either the inflation-adjusted principal or the original face value.

[Jack]

TIPS are OK for a portion of your money; but keep in mind that the stated inflation rate applicable to TIPS and the inflation rate that you and I perceive in the marketplace may be quite different.

Also, a dollar decline might reduce your purchasing power considerably while at the same time not causing a substantial increase in the inflation numbers.

[Cynus]

Speaking of the imminent dollar decline. Everyone is recommending buying Euros as a response. Now, I'm a financial noob. How would you go about buying Euros? I did recently buy a European mutual fund through Schwab (with holdings in BP, Shell, Rotal Dutch petroleum, Scottish Power, etc.). Is there anything else to it?

[Kris]

If TIPS are related to the CPI, then they are next to worthless since the CPI is grossly understated.

http://www.prudentbear.com/archive_comm ... _idx=36238

Buy gold and silver instead if you are interested in preserving some of your wealth. Also the dollar will decline, shifting your money to euros is also a safe long term bet.

[Jack]

$this->bbcode_second_pass_quote('Cynus', 'S')peaking of the imminent dollar decline. Everyone is recommending buying Euros as a response. Now, I'm a financial noob. How would you go about buying Euros? I did recently buy a European mutual fund through Schwab (with holdings in BP, Shell, Rotal Dutch petroleum, Scottish Power, etc.). Is there anything else to it?

[Cynus]

Thanks for the link but I was priced-out of this market at this: "buy and sell foreign bonds for as little as $20,000 for bonds denominated in common currencies, and $50,000 for exotics and emerging markets."

Is this still the way to go if the dollar is devalued? Buying foreign bonds?

[JackBob]

$this->bbcode_second_pass_quote('Cynus', 'S')peaking of the imminent dollar decline. Everyone is recommending buying Euros as a response. Now, I'm a financial noob. How would you go about buying Euros? I did recently buy a European mutual fund through Schwab (with holdings in BP, Shell, Rotal Dutch petroleum, Scottish Power, etc.). Is there anything else to it?

[Cynus]

So let me get this traight, you can't buy the dollar, you can't buy the Euro, you can't go into the stockmarket, you can't buy TIPS, you can't go into deby buying a house. I guess there's nothing that can be done!

But seriously, how about natural resource mutual funds?

[frankthetank]

I'm also iffy about the euro. Euro countries are in for some future pain do to an aging population (negative pop growth) and very good welfare programs (read very EXPENSIVE programs).

[lowem]

$this->bbcode_second_pass_quote('Cynus', 'S')o let me get this traight, you can't buy the dollar, you can't buy the Euro, you can't go into the stockmarket, you can't buy TIPS, you can't go into deby buying a house. I guess there's nothing that can be done!

But seriously, how about natural resource mutual funds?

[Kris]

Canadian mining companies and oil sands producers seem like 'no-brainer' investment opportunities to me. Also consider that if you are an American you profit twice, once from rising share prices, once from rising Canadian dollar.

[AdvocatusDiaboli]

$this->bbcode_second_pass_quote('Kris', 'C')anadian mining companies and oil sands producers seem like 'no-brainer' investment opportunities to me. Also consider that if you are an American you profit twice, once from rising share prices, once from rising Canadian dollar.

[Kris]

The technology exists to produce oil from tar sands without using natural gas. There is nothing stopping them from using the oil from the sands to power the operation. When the cost of natural gas exceeds the oil cost the switch will be made.

[PhilBiker]

$this->bbcode_second_pass_quote('', 'T')he technology exists to produce oil from tar sands without using natural gas. There is nothing stopping them from using the oil from the sands to power the operation. When the cost of natural gas exceeds the oil cost the switch will be made.

[JBinKC]

Yes it will be a very difficult environment to make money.

In time the dollar will lose a a bunch of value due to our balooning national debt and trade deficit. The fed now is taking steps to curb the decline in the dollar by reducing money supply but it hasn['t curbed prices.

Stocks that are commodity related ie oil, coal, gold, other metals, food probably will outperform. Keep 10% of you portfolio in gold/platnum as opposed to silver as its industrial uses have been hurt big time with digital photography.

Perhaps companies with energy saving technology/ alternative energy will have its strong period too.

My favorite stock is Tatneft NYSE:TNT This is by far the cheapest stock in oil universe in terms of value vs reserves 60cents/bbl vs $10 plus/bbl for Exxon-Mobil. It will only be time before Russia will be included in the World Trade Organization so Russians will eventually be forced to pay world prices.

If you are afraid of investing in Russia consider companies investing in Kazakhstan like Nelson Resources PetroKazakhstan Chaparral Resources or Transmeridian with Chaparral having the most value in the group.

[Sololeum]

If you don't think the entire system is going to crash in the great never ending depression then buying oil futures is for you.

Buy five year oil futures now for around US$35 and make a killing when they hit $200 in five years time - if you're squeamish you can even buy an option.

The minimum is 1000 barrels and to buy the futures will cost you around US$4,000---

May be if all Peak Oilers bought into oil futures it would push the price up and make it easier for renewables to get up!

In Vi Et Silva

[fossil_fuel]

know of any good on line brokers for trading commodity options? preferably with as small a minimum investment as possible

[Yavicleus]

I've held TIPS in my IRA account for about two years now and have beaten the market with them the entire time. I highly recommend them.

That being said, I do balance them as part of my portfolio for reasons arlready mentioned in this thread.

For my savings, I'm splitting it as follows: money market account, TIPS, gold & silver bullion. That is in order of how long I intend to hold the asset.