ETF Daily News'  Instablog

The markets seem certain in forecasting a recovery in the economy, which could cause inflation in the immediate future.  Inflation refers to the increase in the money supply, and in economics inflation is a rise in the general level of prices of goods and services in an economy over a period of time.  With a recovery in the global markets now in sight many things will be much higher in price including oil and many other material goods. We are already seeing the impact in commodities as oil has risen dramatically since the March lows. 

There are several analysts that are predicting a large drop in the dollar’s value as the economy recovers that will even give the materials market a boost even further.  If there is any sustained economic recovery globally and the dollar begins falling, we could see a surge in prices not imaginable but, it would be in dollars and not in other currencies.  “See This Story As Another Hedge Against Inflation”

To profit and protect yourself from the surge in material prices, we would suggest looking at the Ultra Basic Materials Proshares ETF (UYM) and the Materials Select Sector SPDR ETF (XLB).   These ETF’s follow the Dow Jones U.S. Basic Materials index and offer a well diversified basket of materials stocks.  These index sectors include companies from industries in chemicals, construction materials, containers and packaging, materials and mining and paper and forest products.   These ETF’s have certainly enjoyed nice returns since the lows but, could still potentially offer tremendous upside in an inflationary environment. 

Here is a look at some of the companies listed within these ETF’s:

AIR PRODUCTS CHEMICAL (APD)
ALCOA INC (AA) 
DU PONT  (DD)
FREEPORT MCMORAN  (FCX)
NEWMONT MINING (NEM)
NUCOR  (NUE)
P P G INDUSTRIES (PPG)
MONSANTO COMPANY (MON)
PEABODY ENERGY CORP (BTU)
PRAXAIR INC (PX)
DOW CHEMICAL (DOW)

'Disclosure: No Positions'