GDX: The Best Hedge Against A Rise To The Federal Reserve's Inflation Target

Summary

• The Federal Reserve's recent dovish shift has triggered a substantial rally in gold as real interest rates begin to tumble.
• Gold is a strong hedge against today's risks since it benefits from sustained inflation and a likely decrease in real interest rates.
• Gold is likely to be the primary benefactor if the Federal Reserve increases its inflation target to allow for necessary banking stimulus.
• The sharp reversal in the US dollar's strength compared to other currencies may also promote gold.
• GDX is a "dovish pivot" hedge since it allows investors to allocate a smaller portfolio due to its high beta to gold.

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Over recent weeks, I've focused more heavily on alternative assets that may allow investors strong hedges against the developing solvency risks in banks and the broader economic slowdown. Concerns regarding a more significant banking contagion have declined over the past week following

Analyst’s Disclosure:I/we have a beneficial long position in the shares of GDX, SLV either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.