From Kitck (also on blogroll at right), July 15:
The rise of inflation is happening, as reflected by recent consumer price index (CPI) data, but this is a symptom of a broader problem that begins with currency devaluation, said Mark Mobius, co-founder of Mobius Capital Partners.
"The so-called inflation, or the rise in prices of goods and services, is based on currency devaluation. All currencies, throughout history, have never kept their value," Mobius told Michelle Makori, editor-in-chief of Kitco News.
Mobius is one of the pioneers of emerging markets investing. The Mobius Emerging Markets Fund invests in mid-sized companies in emerging and frontier markets and has returned 70% this year. Mobius is the author of several books, including the latest, "The Inflation Myth and the Wonderful World of Deflation."
Mobius' comments come as the headline CPI expanded by 0.9% in June and rose 5.4% annually, the fastest pace of growth since 2008.
However, the inflation data captured by the CPI has deficiencies in the data collection methodology, Mobius noted.
"The CPI, normally used to measure inflation, is very, very inaccurate. It doesn't take into account a lot of expenditures by people that don't want to reveal what they're spending. Also, it's based on a basket of products and services that are changing," he said. "You're comparing apples and oranges."
To hedge against inflation, Mobius said that investors should look at commodities or services that "keep pace with the devaluation of the currency."
"This is why [we] advise people to put money into equities, into stocks, because companies adjust their prices in line with the devaluation of the currency, and they will then continue to hold the value of the money that you put into their shares," he said.
On gold, Mobius said that it is a "good haven to save assets" and will likely appreciate alongside inflation.
"The problem with gold is that it doesn't pay dividends like stocks. Companies that have a high return of capital invested, companies that have low debt. These are the companies that will really keep pace with the devaluation of the currency," he said. "That's where people should be parking a significant amount of money."....
....MUCH MORE, including video.
And July 19:
Mark Mobius: These emerging markets sectors are set for explosive growth (Pt. 2/2)
