Connect With Us
Register
Login
Inflation hedge definition
An inflation hedge is an asset expected to hold or grow its real value when prices rise, protecting purchasing power as inflation erodes money. Gold, certain commodities, and inflation-linked bonds are often used for this purpose.
An asset hedges inflation when its price tends to climb alongside the general price level. Gold is a common choice because its supply grows slowly and it is priced globally, so when a currency loses value it often takes more of that currency to buy the same ounce of gold.
The opposite is a nominal asset such as cash or a fixed-rate deposit, whose face value stays the same while inflation quietly reduces what it can buy. Holding cash feels safe but loses real value in an inflationary period, the very risk a hedge is meant to offset.
Inflation hedge Example
You keep USD 2,350 in cash while inflation runs at 8 percent for a year.
The real value of that cash falls: USD 2,350 ÷ 1.08 ≈ USD 2,176 in today's buying power
Had you held an inflation hedge that rose with prices, it would better protect what your money can buy. These figures are illustrative.
Get Started!
Sign up and access the Global Markets in less than 3 minutes
The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
TMGM is authorized and regulated in various jurisdictions.
Trademax Australia Limited, trading as TMGM, is regulated by the Australian Securities and Investments Commission (ASIC), AFSL no. 436416 and is located at Level 28, One International Tower, 100 Barangaroo Avenue, 2000 Sydney, NSW Australia.
Email: support@tmgm.com.au
Trademax Global Limited, trading as TMGM, is authorized and regulated by the Vanuatu Financial Services Commission (VFSC), registration number 40356 and registered at 1276, Kumul Highway, Port Vila, Vanuatu, Republic of Vanuatu.
Email: support@tmgm.com
Trademax Global Markets (SE) Limited, trading as TMGM, is authorized and regulated by the Financial Services Authority (FSA) of Seychelles, with license number SD224. The company is registered at Office No 13, Providence Estate ABIS Centre, Mahe, Seychelles.
Email: support@tmgm.com
Trademax Global Markets (International) Pty Ltd, trading as TMGM, is authorized and regulated by the Financial Services Commission, Mauritius (FSC) with license no. GB22201012, and registered at 33, Edith Cavell Street C/o IQ EQ Fund Services (Mauritius) Ltd Port Louis, 11324 Mauritius.
Email: support@tmgm.com
Copyright © TMGM. All rights reserved