Not only has crude spiked higher, but gold has continued to hit record highs due to the so-called flight to quality. Since the uprising in Egypt began on Jan. 25, gold prices have rallied from $1,320 an ounce to a high of $1,440.10 on March 2.
But oil and gold aren't the only commodities on the rise. Silver, cotton and other commodities have surged on inflation fears. For instance, the iPath Dow Jones-UBS Cotton Subindex ETN (BAL) is up more than 45% this year.
"Thankfully for ETFs and ETNs, we were able to take advantage of food inflation," Mahn says of his firm's success. "What's at the core of a lot of the unrest right now was the fact that there is high unemployment and citizens are starving because food prices are so high. We invest in certain ETFs that would benefit from rising food prices."While the money managers are steadfast in their assertion that the market is not in freefall, Mahn notes that the threat of inflation is "very real" and investors should do their best to get ahead of the curve. "For those, including the Federal Reserve, who say that inflation isn't something to be concerned with as of yet, it is something very near and dear to most Americans and citizens around the world," Mahn says. "Investors need to stay ahead of that curve and shouldn't wait for the Fed to raise interest rates to deal with inflation for them." Mahn says his firm has put money in metal-based commodities, such as gold, copper, steel and silver, which he says fuel the development of the international world. The money is still flowing into gold, but Mahn argues that "silver may be something worthy of consideration since it has more industrialized uses." Pavlik, meanwhile, turns to agriculture and commodity stocks as a way to play concerns over inflation. "I'd position myself in the materials sector because of the higher costs that people are worried about," he says. Sygenta (SYT) and Bunge (BG) are Pavlik's top picks for the agriculture space as they have flown under the radar as Deere (DE) has gotten more attention from investors. "I'm looking for other opportunities," Pavlik says. "We've been early on with Bunge. They're not often discussed and are overlooked by the retail investor. There's nothing wrong with other agriculture names, but some have made a big move already."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV