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Time to take a deep breath and exhale slowly.

We are heading into unknown economic waters…

The US economy has come under inflation stress not seen since 2008/2009, but economic indicators are showing positive signs the economy is in decent shape.

Needless to say, capital markets are currently in shambles, and investors are taking a beating across the board — right from junior stocks through to blue-chip holdings.

As an investor myself, these are times to be adaptive in this highly dynamic stock market landscape. New strategies are needed to not only help protect assets, but to also provide some gains to offset rising inflation.

In this article I will go over current market forces that are unwinding in different directions on a daily basis and illustrate how the elite investor is looking to capitalize and protect assets in these uncertain times.

Read on to learn more…

Red and Green Signals

The US economy is flashing red and green at the same time, and it has economists scratching their heads as to what direction we will be heading in over the next 12 months.

On one hand, you have a red flag as the inflation rate spiked up to 8.5% in March 2022, a near 40-year high.[1]

This can be directly attributed to two things.

First is the quantitative easing that has been going on since March 2020 when the Federal Reserve wisely stepped in to save the economy from the COVID pandemic. Billions of free money was thrown into the monetary system with seemingly little impact on inflation. For the most part, there has been close to zero inflation for most of the past two years.

Inflation started to raise its head back in October 2021, and we have seen a steady increase from that point forward.

The second reason for rising inflation is the severe supply shock the world is experiencing as a direct result of the Ukraine-Russia conflict. That conflict, now in its third month, is negatively affecting the supply of many essential commodities including oil, wheat, cooking oils, palladium and nickel to name a few, sending their prices skyrocketing.

Those skyrocketing prices in turn get passed down the line to consumers in the form of higher food and energy costs.

Energy costs (fuel oil, gasoline, electricity and natural gas) made up 32% of consumer price increases over the past year.

Check out this 6-month chart for the wheat spot price. This will give you an idea of the huge increases in basic food prices, which is already translating to higher prices at grocery stores.




Below you can see the Consumer Price Index (CPI) chart to get an idea of where inflation is at since its last peak in the early 1980s.



On the other hand, the US economy looks healthy and is showing green trending signals.

In the past 12 months, employers added nearly 6.5 million jobs. Weekly jobless claims fell 5,000 to 180,000. Unemployment is now at a ridiculous low rate of 3.6%.[3]

For the first quarter this year, consumer spending was recently reported as rising a healthy 2.7% after inflation. This is the highest it has been in three quarters.

Business investment also surged 7.3%, the biggest increase in over a year.[4]

These stats show the economy is currently in good health despite such high inflationary numbers. I’m not so sure considering the war in Ukraine rages on, supply chain bottlenecks still persist, and consumer demand remains high. All these factors will likely weigh on the Consumer Price Index (CPI), or weighted average of a selection of consumer goods and services, for the coming months ahead.

Tamping Down Inflationary Fires

The rising inflation rate is obviously alarming to many investors, and the Federal Reserve has kicked into high gear, working to mitigate further rising inflation and attempting to cool things down.

Their only tool to fight inflation is increasing interest rates. This is a double-edged sword because while that may bring the inflation rate down, rising rates could also have the negative effect of slowing the economy down too much, resulting in a possible recession.

I am hoping the FED finds that fine line balance in increasing rates to bring down inflation, but at the same time keep the capital markets moving forward. This is easier said than done.

US Federal Reserve Board Chairman Jerome Powell’s recent language was strongly worded and echoes this sentiment:

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures.”

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship.”

“On the other hand,” he said, "Russia’s war in Ukraine is not only adding to inflation by raising the prices of crucial commodities like oil and wheat, it is increasing the uncertainty in the economic outlook.”

Mr. Powell maintained that the US economy remained strong and that this was a good time to prevent the “entrenchment” of runaway inflation.[5]

The Federal Reserve has announced a series of rate hikes over the coming year with whispers of pulling back on the quantitative easing that has been going on since the beginning of the COVID pandemic.

Obviously, markets are jittery. Where will we be in the coming 12 months?

Walking a tight rope would be putting the current situation mildly.

One thing is for sure, the war in Ukraine has to come to a peaceful solution sooner rather than later or we are all going to be feeling the pain in a big way.

External Forces at Work

As Mr. Powell pointed out, the Ukraine-Russia conflict is only making matters worse.

Aside from supply chain shocks due to rising commodity prices, Europe is in a high-risk position of losing their critical access to Russian oil and gas. As they send arms to Ukraine to confront the Russian invaders, they risk enraging Putin who will look for ways to retaliate.

If the Russians decide to cut off oil and gas supplies to the West, Europe would be devastated economically with reverberations that will be felt globally.

Is Russia, and specifically Putin, going to do that? I do not believe so. The Russian economy is extremely dependent on that oil and gas income, and they know they cannot live without it.

But I was wrong about the Ukraine invasion. I thought it was all a bluff to get concessions from Europe and the US.

At this point, I would have to say anything is possible with Putin. He has not acted rationally in a long time…

Add to the mix the recent resurgence of COVID in China with citywide lockdowns currently going on in several parts of the country. This could again adversely affect the supply chain channels in many industries, specifically in semiconductors and consumer electronic goods coming from Chinese factories.

Adaptive Strategies Used by Elite Investors

Investor sentiment right now is low, to say the least. Many investors are feeling pessimistic about the near-term future of the overall capital markets.

The NASDAQ Composite has fallen -18.7% from its high back on November 2021. A number of economists believe the risk of a recession is rising and could land in the next year or so.

While the specter of a recession sounds like a bad thing, such economic events are part of the natural ebb and flow of any developed economy whether within the US Capital Markets or internationally.

Investors should view recessions as an opportune time to buy shares of high-quality, well-run companies. I recently wrote an article about what prior stock market crashes can teach us.

In that article, my research strongly showed that historically market crashes have always turned positive. Seasoned elite investors have seen the value of their investments come back and continue to grow, given enough time and patience.

Warren Buffett

Whenever I am in a slump and feeling like everything is grey, I turn to the Oracle of Omaha, the OG of elite investors…

In a letter to Berkshire Hathaway investors back in 1986, I found this pearl of wisdom from Warren Buffet that helped me feel a bit of calm, even during this latest storm:[6]

“What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community.

“The timing of these epidemics will be unpredictable.

“And the market aberrations produced by them will be equally unpredictable, both as to duration and degree.

“Therefore, we never try to anticipate the arrival or departure of either disease.

“Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Repeat after me: Be fearful when others are greedy and greedy when others are fearful.

The Best Inflation Investments for 2022

Certain equities offer a reliable haven during inflationary times and historically produce returns that exceed inflation.

There are a number of sectors that tend to be more protected from inflation and recessions. Below are some of the sectors that I believe are good choices for safe haven status. I have also included a few companies in each sector that will help jump start your research.

These potential recession-resistant stocks can help put your portfolio in a defensive posture if a bear market does indeed come into play.

Basic Materials: Lithium Mining

Lithium is critical in battery technology and renewable energy storage. It is a key component in moving our economy away from fossil fuels.

Lithium mining will continue to be a strong investment choice moving into the next couple of years as the green energy revolution continues to gain traction.

  • Lithium Americas Corp. (NYSE: LAC)
  • Albemarle Corporation (NYSE: ALB)
  • American Lithium Corp. (OTC: LIACF)… My Junior Pick!


Technology and Semiconductors:

Technology will continue its long-term growth well into the next couple of years and beyond. Our world will continue to see technology advance and this underlying need for semiconductors have an increasing role in playing a part in our daily lives moving forward.

Science fiction is happening now and investing in any of these three companies will most likely provide investors with a positive performance on their investments.

  • Apple Inc. (NASDAQ: AAPL)
  • QUALCOMM Incorporated (NASDAQ: QCOM)
  • Synopsys, Inc. (NASDAQ: SNPS)


Infrastructure: 5G Broadband

No matter what happens to the economy, 5G broadband will continue to be rolled out by worldwide governments with help from large communications companies.

In fact, the US government has already allocated $65 billion in broadband spending.

Companies such as AT&T and Verizon use subcontractors to manage the work of installing new towers, transmitters and cabling.

These cell tower installation companies stand to gain big during the next 5 years. The 5G revolution will gain further traction as consumers begin to see the potential of this exciting advance in technology that will change all of our lives in fundamental ways.

FNN contributor Blake Desaulniers wrote an excellent report on 5G and the incredible opportunities for early investors. This is a must read.

  • American Tower Corporation (NYSE: AMT)
  • SBA Communications Corporation (NASDAQ: SBAC)



Healthcare is another industry that is protected from inflationary or recessionary pressures. People will always need healthcare, and the aging population of baby boomers will only increase the growth potential for the healthcare industry.

Below are two companies that stood out in my research that look well-positioned to weather any economic storm.

  • Stryker Corporation (NYSE: SYK)
  • Abbott Laboratories (NYSE: ABT)


Consumer Cyclical: Home Improvement

If and when the sh*t hits the economic fan, I believe these two companies are safe bets for investors. I went ahead and put in two consumer cyclical stocks as I see the DIY crowd utilizing the home improvement stores during times of economic stress.

If the water boiler goes out, do you call a repairman and spend an extra $550 for installation, or do you go on YouTube, learn how to do it and install the new boiler yourself? I’m going to lean towards do it yourself…

  • Lowe's Companies, Inc. (NYSE: LOW)
  • The Home Depot, Inc. (NYSE: HD)


Consumer Defensive:

No matter what happens in the next 12 months, consumers will still need to go out and buy essentials.

This sector will be virtually untouched by any economic headwinds that may lie ahead and could even see a bump as consumers take a pass on going out to eat at restaurants and spend more time at home.

  • Walmart Inc. (NYSE: WMT)


Elite Traders Know How to Adapt

If there is anything that we have learned over the course of many years in the markets, it is one thing: the markets always recover.

But we have to also be aware that certain sectors will be harder hit than others in any downturn. The elite investor knows that defensive positioning is critical in preserving asset gains.

The threat of inflation or a subsequent idea of a recession should be seen as an opportunity to fine-tune your holdings and pick up solid companies at value prices.

Warren Buffett has learned and practiced this one thing and look where he is today. I believe he is an excellent mentor to follow.  

Repeat after me: Be fearful when others are greedy and greedy when others are fearful.

MF Williams, Contributor
for Investors News Service

P.S. To discover more opportunities in the hottest sectors in North America, sign up now to the Financial News Now newsletter to get the latest updates and investment ideas directly in your inbox!

DISCLAIMER: Investing in any securities is highly speculative. Please be sure to always do your own due diligence before making any investment decisions. Read our full disclaimer here.

Published May 2022








Turn on any financial news channel and before long, two so-called investment gurus will appear to debate the future direction of the economy.

Oftentimes the discussion is centered on geopolitics like Ukraine or Taiwan or whether we will have inflation or even worse, stagflation like in the 1970s when the stock market ended the decade as it began — unchanged.

Each guru will make the case with economics jargon and use data to back up their opinion but in the end… it’s just a guess.

You need more than this — you need a blueprint and ideas to adapt to the fast-changing economic and political environment.

Here are just a few recent developments:

  • The U.S. national debt has increased $10 trillion in just five years to exceed $30 trillion
  • The Social Security Trust Fund will go cash flow negative in 2023
  • According to the Bureau of Labor Statistics, inflation has reached a 7.9% annual rate [1]

Consumer-price inflation in America is already at a 40-year high but the surge in commodity prices over the past month, in the wake of Russia’s invasion of Ukraine, gives rise to a key question: is the global economy now seeing a 1970s-style price shock on top of a supply chain crunch?

And what about the rising US-Russia-China rivalry leading to conflict beyond Ukraine deeper into Europe or erupting in Asia such as Taiwan or the South China Sea?

Despite these uncertainties and risks, many investors will continue to put their portfolios on automatic pilot without any hedging or rebalancing.

This would be a mistake since where prices go will have an impact on your pocketbook and your stock portfolio. You need to protect both. There is a compelling reason for gold, commodities and other strategies to protect your portfolio.

More on this in a moment… but first let’s first look deeper at the inflation issue.

What’s Next — Inflation, Deflation or Stagflation?

My college textbook defines inflation as “a persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.”

Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices.[2]

Inflation is the expansion of money and credit. Deflation is the contraction of money and credit. The boundary between inflation and deflation is price stability and the most common situation is a low level of inflation in the 1% to 3% range.

There you have it. The jaws of high inflation can squeeze your purchasing power and nest egg while the claws of deflation pull both an economy’s growth rate and stock markets down to earth.

As an aside, while many economists believe that the Federal Reserve has the tools to control inflation today by raising interest rates, we need to face the fact that the amount of America’s debt will make fighting inflation harder than in the past.

Why? Federal debt held by the public is now more than 100% of GDP, and a large share of that debt is short term (30% has a maturity of a year and over 60% a maturity of four years). Therefore, any ramp up of interest rates sufficient to fight inflation would quickly lead to a large increase in interest payments for all of us.

What is driving huge federal budget deficits and monster growth in America’s national debt? George Mason University’s Mercatus Center has confirmed that it is spending growth in three budgetary areas: 47% from Medicare, 22% from Medicaid and the 2010 Affordable Care Act (ACA), and 15% from Social Security.

Now let’s turn to the issue of just what is too much inflation.

Why Some Inflation Is Good for Your Portfolio

In a healthy economy, there will always be a modest inflation since it serves as a lubricant to the wheels of commerce and keeps economic momentum moving forward.

Price stability leads to all actors in an economy being able to make sound economic decisions and fosters a virtuous cycle of growth and progress.

But very high inflation discourages investment and savings, i.e., the fuel for growth and productivity.

Let’s just look at the probabilities of each occurring, how they will affect your financial health and, most importantly, what you can do to hedge your bets and protect your investment portfolio.

It is important to note that price levels reflect, to a large degree, psychological leanings. For example, if most people expect prices to rise sharply, producers will raise prices to protect themselves, workers will negotiate higher pay increases and the cycle continues and accelerates.

The same is true with deflation. If consumers believe that overall prices will fall, they will delay large purchases, companies will reduce costs to maintain margins, and economic growth will suffer.

I’ll soon offer you some investment ideas and strategies to cope with either scenario but let’s see how inflation can affect your money and result in a scenario even worse than high inflation.

How the Fear of Inflation & Deflation Impacts Your Pocketbook & Portfolio

Before getting into your investments, let’s briefly look at how rising and falling price levels impact your pocketbook and your investment portfolio.

Normally, rising inflation is coupled with a rising cost of money better known as interest rates. These higher interest rates and the decline in your real spending power are like a one-two punch to your standard of living.

The 2021 US economy closed on an absolute tear… with the unemployment rate at the end of 2021 at just 3.9%.[3]

The Fed right now is attempting to slow down this incredible growth in 2022 to combat inflation. This is due to some obvious reasons including the ongoing global supply chain issues and a tight labor market.

The ongoing war between Russia & Ukraine is adding extra supply chain stress to the delivery of vital items across the globe such as oil & gas, wheat, metals. and especially fertilizer.

“The markets are now adjusting to the next worsening of the crisis,” said Paul Horsnell, head of commodities research at Standard Chartered Plc. “Things that were unthinkable a week ago are not unthinkable now.”[4]

During high inflationary periods, the American economy is not as productive since borrowing, capital spending and productivity all decline. In an economy where inflation is rising quickly, interest rates rarely keep up, causing savers' hard-earned dollars to lose some buying power.

Retirees are especially hard hit since a high inflation rate often means wage increases, but that won't benefit those who are retired.

Homeowners with variable mortgage rates and people with credit card balances see their borrowing costs climb periodically along with the broader inflation in the economy, leading to larger payments. Many people are not prepared for higher interest rates and the potential reduction in cash flows to come.

The real estate and construction business is particularly hard hit since high inflation leads to sharply rising home prices, high interest rates for mortgages and a relentless slide in the value of any money people have put away for a down payments.

The Stagflation Hybrid: Worst Case Scenario

Stagflation is the awful combination of lack of growth (stagnation) and persistent, substantial increase in prices (inflation). Remember the 1970s? Or are you either too young or still trying to forget?

In the 1970s (during the Nixon, Ford, and Carter administrations), the Fed would stumble between stimulating the economy, trying to head off a recession — and then restraining the economy, trying to keep inflation from spinning out of control.

In the end, Nixon tried to spend his way out of it and expanded entitlements (not an option now) before Carter & Volcker finally crushed inflation by sharply increasing interest rates to cause a recession — thereby wringing inflationary expectations out of the economy like a wet rag.

Provided that you get in early, a great place to be during a deflationary environment is in long-term bonds.

Avoid most financial companies, especially mortgage-oriented lenders that see collateral coverage plummet as housing prices fall and borrowers drop a notch or two in credit quality. Cash is king and stocks get killed during deflationary times though there can be periodic and powerful rallies such as those that occurred during the 1930s.

Inflation & Debt

The strongest case for a coming period of high inflation is not the Fed pumping enormous amounts of liquidity into our economy, but rather that inflation is perhaps the only way out of America’s incredible debt problem.

We now face $+1 trillion annual budget deficits as far as the eye can see. And high inflation is the government’s best strategy to reduce the impact of high debt.

Michael Lewis writes in The Atlantic how in 1979, for example, the government ran a deficit of more than $40 billion — equivalent to about $118 billion in today’s money.

The national debt stood at about $830 billion as of 1980.

Now, the US national debt held by the public is over $23 trillion ($700,000 for each American) with $1–$2 trillion budget deficits forecast for the next five years.

In short, this is why you should be concerned about inflation and ultimately your investments.

Investment Strategies for a High Inflationary Environment

What should be your investment strategy if you expect inflation not just to go up a notch but get entirely out of control?

Just the word "inflation" strikes fear into the hearts of many Americans worried about a stagnating economy, rising prices, a falling dollar and an income that many people just can't keep up with the cost of living.

But while a high inflation rate hurts many Americans financially, it also presents opportunities for smart investors.

Stock market investors get some protection from inflation because the same factors that raise the price of goods also raise the values of companies. But coping with the fear of high inflation is not easy because of uncertainty — the goal posts and the rules both keep moving.

While some companies can react to inflation by raising their prices, others who compete within a global market may find it difficult to stay competitive with foreign producers who don’t have to raise prices due to inflation. More importantly, inflation robs investors by raising prices with no corresponding increase in value.

Adding some gold and commodities to your portfolio and nest egg is a great way to hedge this risk and protect your purchasing power.[4]

Reasons to Invest in Gold & Commodities

Inflation and the US Dollar

There is also a high probability that higher inflation will lead to a decline in the value of the US Dollar.

This would impact your purchasing power and raise the real cost of everything America imports. This ranges from food to apparel to electronics and in short, a weaker dollar means a decline in our overall standard of living.

Increasing global uncertainty and risk

Investors may wish to avoid it but there are a rising number of risks and unexpected shocks known as “black swans” that could turn your portfolio and finances upside down.[5]

Here are just a few of them:

  • North Korean nuclear ambitions and lack of progress on negotiations with America
  • Uncertainty about the Chinese economy related to debt and a slowdown in growth as well as increasing tensions related to Taiwan and the South China Sea
  • A more complex and unstable world order with China, Russia and Iran confronting the West on a broad range of geopolitical issues
  • The continued uncertainty and the unraveling of Europe’s leadership and unity
  • The global scramble to capture the commanding heights of our high-tech driven economy and the resources that support it such as rare metals and rare earths

For all these reasons, gold is an excellent hedge on uncertainty and where investors worldwide go for some stability and safety.

How to Invest in Gold & Commodities

Now let’s get to the many ways to invest in gold.

Gold coins and gold bullion are perhaps the most obvious hard asset to own. This strategy avoids mining and market risk and is also both liquid and fully tradable.

The SPDR Gold Shares (NYSE: GLD) exchange-traded fund is also a good play on the price of gold and seeks to replicate the performance of the price of gold bullion on a one-to-ten ratio. The shares trade on the NYSE and may be bought and sold like any other securities.

If you feel more venturesome, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) offers a more indirect exposure to gold through ownership in a portfolio of small and medium sized gold miner equities that generate at least 50% of their revenues from gold and/or silver mining. Keep in mind that these smaller mining companies can be volatile.

You could also invest directly into a few high-quality gold stocks.

Barrick Gold (NYSE: GOLD) has recently merged with Randgold Resources and is working with Newmont Corporation (NYSE: NEM) in Nevada through a joint venture. Barrick Gold earlier made a takeover bid for Newmont so these two giants will both compete and cooperate on a grand scale.

Finally, if you wish for a broader play on real assets that includes gold, take a look at the below ideas.


Energy Exploration & Resources

The energy sector is perhaps the best inflation-resistant sector of the stock market, and for good reason. Inflation itself often reflects rising energy prices, which in turn have knock-on effects on other goods and services, since the price of all economic activities has energy as an input cost.

EOG Resources (NYSE: EOG) is a Houston-based oil and gas explorer and producer, and prices of both commodities have jumped in 2022.

EOG has been a top performer this year as a strong balance sheet and a 2.7% dividend makes EOG a solid pick.

Energy Select Sector SPDR Fund (NYSE: XLE) was recently selected by Alexander Green in the April issue of The Oxford Communiqué. There, he points out that "the world will require a substantial carbon-based energy sector for decades to come," even as we move toward a greener future.


Food, Chemicals, Metals

Sociedad Química y Minera de Chile S.A. (NYSE: SQM) of Chile, one of the world’s largest lithium produces, is benefiting from the lithium battery-based electric vehicle (EV) boom. But SQM also produces crop inputs such as potash and potassium nitrate, with the company’s now important fertilizer business comprising 33% of total gross profits.

SQM is better positioned than most pure-play fertilizer companies since it is diversified. But with fertilizer prices surging and supplies for the three main crop nutrients expected to be harder to obtain in the coming months due to Russian sanctions, this stock could continue its trajectory uptrend.[6]

Nitrogen fertilizer is made through a combination of natural gas and air, while phosphate and potash are typically mined from the earth.

The Mosaic Company (NYSE: MOS) is a producer of key inputs for the agricultural market like potash and phosphate. This Florida-based company essentially is in the chemical commodity business. It's been a great business thus far in 2022, with markets rewarding shareholders to the tune of 12% returns while the broader stock market has been down.

The stock is still a good value priced at less than 10 times earnings. In addition, potash fertilizer prices are soaring largely because a key component, natural gas, is also becoming more expensive in the inflationary environment and the fallout from the Ukraine situation.

The Van Eck Market Vectors Hard Assets ETF (NYSE: HAP), which weights each sector based on its share of world consumption, includes energy at 41%, agriculture at 31%, base metals at 13%, precious metals at 7%, forest products at 4%, and alternative energy at 4%. A whopping 87% of the companies in this basket are large cap.

Conclusion: Expect the Unexpected & Hedge Your Bets

I hope this discussion of inflation and deflation, debt, currency, and geopolitical competition has been helpful and should underscore any level of uncertainty in today’s capital markets.

One thing should be clear — no one knows precisely how future events will unfold and leaning against the winds of conventional wisdom is oftentimes a smart strategy.

Now is the time to consider adding some gold, commodities and other real assets to your investment strategy since it serves as an effective hedge and shock absorber in times of uncertainty.

Carl Delfeld, Contributor
for Investors News Service

P.S. To discover more opportunities in the hottest sectors in North America, sign up now to the Financial News Now newsletter to get the latest updates and investment ideas directly in your inbox!

DISCLAIMER: Investing in any securities is highly speculative. Please be sure to always do your own due diligence before making any investment decisions. Read our full disclaimer here.

Published April 2022



[2] Inflation & Deflation, Their Causes and Effects by Kimberly Amadeo, The Balance, November 9, 2018,

[3] Guide to Investing in Gold & Silver, by Michael Maloney


[5] The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

[6] The Economist - The inflationary consequences of Russia’s war will spread,

POLICY SPOTLIGHT: Why Federal Deficits Are Skyrocketing and How to Fix Them, Mercatus Center, March 25, 2022,

U.S. Bureau of Labor Statistics,,month%20advance%20since%20July%201981.