Gold and Commodities
Gold is the most well-known inflation hedge. When central banks expand money supply, gold demand tends to rise. However, gold generates no income and may underperform during periods of high real interest rates.
Oil, copper, and agricultural commodities also tend to appreciate under inflationary pressure since they directly compose the CPI basket — as inflation rises, so do commodity prices.
Inflation-Linked Bonds (TIPS)
In the US, Treasury Inflation-Protected Securities (TIPS) automatically adjust both principal and coupon payments in line with CPI. Turkey offers similar CPI-linked government bonds.
These bonds are the most reliable hedge when inflation surprises to the upside. Their initial yields appear lower than nominal bonds, but deliver superior real returns in inflationary scenarios.
Equities and Real Estate
Companies with strong pricing power (energy, consumer staples, healthcare) can pass cost increases to customers, preserving real margins and shareholder value.
Real estate offers inflation protection through rent growth and property appreciation, though it is illiquid and capital-intensive. REITs (Real Estate Investment Trusts) offer a more liquid alternative.