- With the CPI at a 40-year high, inflationary hedges are in high demand. Buying commodities is a good idea.
- While both gold and oil equally share in price appreciation driven by inflation, oil generally depreciates in a recessionary environment, while Gold doesn't.
- Thus, long gold and short oil could be a highly interesting pair trade opportunity.
- To express the pair trade most effectively, I think a long position in Newmont Gold and a short position in Exxon is adequate.
- I calculate 30% upside for Newmont and 10% downside for Exxon.
For further details see:
Recession And Inflation Hedged Pair Trade: Long Newmont And Short Exxon