By Andrey Dashkov, analyst, Casey Research

Andrey Dashkov

Inflation has taken over headlines.

And it’s not looking good.

In February, prices started rising quicker than during the pandemic.

In April, the trend accelerated.

In October, annual inflation hit a 30-year high.

This holiday season, I wouldn’t be surprised to see inflation hit a 40-year high.

But it gets even scarier… In a moment, I’ll explain what exactly is going on and how you can protect yourself…

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  2. To show you how to profit from them.

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Double the 1980s Record?

The late 1970s and early 1980s were notoriously inflationary.

In 1974, inflation was 11.1%… and in 1980, it hit 13.5%.

What does it mean?

It means that a $100 banknote that someone had in 1970 was worth less than half of that in just 10 years.

And something tells me that we could be looking at a period of high inflation that’s longer – and more brutal – than many anticipate.

It might not last a decade… but it could deliver sudden shocks to your income that will take a lot of recovery time.

Take Dollar Tree, for example.

It’s a chain of stores where everything costs exactly one dollar…

Well, not anymore.

Just a couple of days ago, Dollar Tree increased prices on its goods to $1.25.

That doesn’t sound like much.

But remember that Dollar Tree sells a whole lot of goods… from canned food to clothes.

So a basket of goods worth $100 will now cost $125.

And if you spent $500 at a store like this last year… well, starting today, you’ll have to pay $625 for the same products.

The Price Hike Is Here to Stay

Dollar Tree won’t bring back the old $1 prices. The company said this “is permanent and is not a reaction to short-term or transitory market conditions.”

In other words, here’s a real private company that has just admitted inflation is here to stay.

And a 25% increase is almost twice as high as the annual inflation in 1980.

It gets worse, though…

Dollar Tree is one of the chains that people go to when a crisis hits because they want to save as much money as possible.

They won’t be able to do that anymore.

What to do?

The company’s share price gives a hint…

Look at Inflation From the Other Side

The day Dollar Tree made the announcement about its hike, its share price soared by more than 9%.

It makes sense. If Dollar Tree charges more for its products, it makes more money. Which is good for the share price.

So what should you do to beat this devastating trend?

Invest in assets whose growth could potentially match – if not exceed – the rate of inflation.

The question is: what assets?

To have an idea, look at inflation… not as a consumer facing it, but as a producer that can raise the prices of the products it sells.

For example, when the price of sugar goes up by 5%, Coca-Cola could add 5% to the price of its drinks.

The best part is, this 5% is what Coca-Cola’s consumers pay, not the company itself.

If Coca-Cola makes 5% more over a year, it will trickle down from its revenue to its net income and raise the value of its shares.

That’s a simplified example, but the broad point is valid.

Think of companies that have the power to raise their prices without losing customers… firms that sell products people need both in good times and during a downturn.

They are called consumer staples, and there are ETFs tracking indexes that include them. One of these ETFs is the Consumer Staples Select Sector SPDR Fund (XLP). It tracks a portfolio of companies in the food, beverage, tobacco, and other industries. Coca-Cola, for example, is responsible for 9.5% of its total holdings.

So even though the hike in prices is bad news for you as a consumer… as an investor, you can take advantage and increase your gains.

Good investing,

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Andrey Dashkov
Analyst, Casey Research

P.S. If you want an asset class that’s under the radar… but is known for consistently huge gains… you might want to check out investing in warrants.

They’re as easy to buy and sell as a stock or ETF… but are usually priced far lower… and can see gains as high as 4,942% in under two years.