An Inflation Play as Good as -- or Better Than -- Gold

TIPS are not as good as gold when it comes to fighting inflation. In many respects, they are even better.

Treasury Inflation Protected Securities, or TIPS, are designed to protect investors from the erosion of purchasing power that rising inflation can cause. In an inflationary environment, TIPS, which pay a semiannual coupon, tend to outperform most traditional fixed-income investments, because their par value is adjusted to account for changes in the consumer price index.

For instance, if the CPI rises by 0.2%, the value of the TIPS bond would also climb by 0.2%. If the CPI were to decline, the bond's value would fall very little, because the government guarantees the original investment. ...