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4 Must-Own Global Inflation Buys

Reported U.S. inflation is low, but emerging markets are another story

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In addition, there are several new exchange-traded funds (ETFs) launched that allow inspections — like the ETFS Gold Trust (NYSE: SGOL) — as well as those that let you redeem your shares in gold, like the Sprott Physical Gold Trust (NYSE: PHYS). A caveat though, the Sprott product tends to trade at a premium to the physical metal. Right now that premium is about 5%, so it is manageable, but right after the introduction of the trust it went over 20%, which was too high. The other caveat is that if you want your shares redeemed in gold, you have to have a position that is over $500,000.

For most investors, GLD represents the easiest and most liquid way to get exposure to this story, and I think that we’ve still got room for this precious metal to run considering the continued global tensions.


Oil & Gas PumpjackOil stocks are flying with crude above $100, so the correction in China National Offshore Oil Corporation (NYSE: CEO) that we saw in the first two months of 2011 looks like a good buying opportunity here.

As you well know, China has had an insatiable demand for oil, and it has already become the world’s largest consumer of energy. CNOOC is a state-owned enterprise, but one that is run in an efficient manner and supported by the government internationally due to the strategic nature of its business.

The company has been buying up assets globally, with $150 billion earmarked in the next five years to increase production volumes; the goal is to have additional 50 million tons of oil and gas from overseas fields by 2020. The shares are not terribly expensive at 10.5 2011 earnings estimates, which may be too low considering the current price levels of oil. The shares also have a dividend yield of 2.1%, but because the payout ratio is only 48%, that may be increased.

In addition, CNOOC is my pick for InvestorPlace’s Top 10 Stocks for 2011. The stock represents a safe, long-term way to play inflation, higher oil prices and the Chinese Miracle, and despite the rough start for the year because of its outperformance late last year, I think that come December, the share price will be sitting nicely above current levels.

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