Sunday, May 27, 2012
Farmland as an Investment to Hedge Against Inflation
In looking for a reason that farmland as an investment makes good sense, consider the graph below. As is clearly seen, the balance sheets of central banks have trended steadily upwards that last few years. It seems inevitable that at some point all of this newly created money will enter the real economy. Farmland investments provide an excellent way to hedge against inflation, as farmland is a real, tangible asset, and no more of it can be be printed into existence by central banks. As we discussed in our post introducing farmland as an investment, we pointed out that in addition to acting as an excellent inflation hedge, farmland also provides regular income and is an excellent way to play the continued high prices of agricultural commodities. Whilst investments in farmland have previously been limited to institutional investors, as we pointed out in a previous post on this blog, it is now possible for retail investors to invest in farmland too!