Gold Investment Directory

All signs tell us that inflation is around the corner. Today March 21, 2009, nobody knows exactly how steep price increases are going to be. Should we expect a rise between 5% and 15% per year during the next thirty six months? To which extent should we fear a much higher inflation?

Whatever the answer to this question, I am already adopting for my own investment portfolio a defensive strategy against inflation. Since I am too much of a dividend lover and I know little about precious metals, I am not going to purchase gold.

In my view, there are two alternatives that should lead to results that are roughly similar to purchasing gold:

* Investing in oil companies, since sooner or later, inflation will propel oil prices to a higher plateau.

* Buying shares of companies that operate in countries with short-term prospects of economic growth.

At this moment, I am considering the following five companies for possible purchases for my own investment portfolio:

1.- MARATHON OIL (NYSE:MRO). The current low price of oil has driven down these shares more than 40% during the last year. Their price/earning ratio today is about 5 and they are yielding around 3.5%. The profits of this company should rise if oil prices go back to the level of a few months ago.

2.- CHEVRON (NYSE: CVX). The low price of oil these days has pushed these shares more than 20% downwards during the last year. The current price/earning ratio is about 5.5 and the yield around 3.8%. This is another company that should benefit from a rebound of oil prices.

3.- CHINA MOBILE (NYSE: CHL). Their number of cell phone subscribers continues to increase and their profits should go up or, at least, remain stable. If the Chinese currency gains value, this will result in extra profits for international investors holding these shares. The current yield lies around 3.5% and the price/earnings ratio is about 10.

4.- TELKOM INDONESIA (NYSE:TLK). With a current yield about 8% and a price/earning ratio of 11, these shares allow an easy way to invest in the Indonesian economy. The company provides fixed line and cellular communications and serves more than 63 million customers.

5.- AMERICA MOVIL (NYSE:AMX). The price/earnings ratio is about 11 and the yield is around 1.5%. This company operates cellular phone networks in Mexico, Argentina, Chile, and other South American countries. They provide services to around 150 million customers.

These five large companies should offer no great operational surprises. I am risk-shy and this is the kind of investments I favour in my own portfolio. Can anyone guarantee a rise in the shares of oil companies and international telephone providers? No, nobody can offer such guarantee.

For my own investments, I try to rely on reasonable assumptions and these five companies seem reasonably well positioned to maintain their value in case of high inflation.

See John Vespasian’s blog

http://johnvespasian.blogspot.com/