NEW YORK (TheStreet) -- Earlier this year, the U.S. government introduced two-year notes with adjustable rates. That is bearish news for the American economy, because it hints that inflation and higher interest rates are on the way. The short term and the floating feature suggest that investors will not lock in for the long term at the prevailing low interest rates for debt instruments issued by the U.S. government.
Still, there are a few ways investors can profit from this dominant negative sentiment: they can buy into certain stocks, currencies and commodities.
For one, higher interest rates and more inflation mean that natural resource stocks should rise.
Gold, silver and other hard assets are traditional hedges against rising inflation. Goldcorp (GG), the world's largest gold company, is up 23.77% for 2014. The world's largest natural resource entity with massive holdings in oil, coal, copper, and gold, among others, BHP Billiton (BHP), is off 3.64% for the year due to the economic slowdown in China, which consumes more industrial commodities than any other country.
According to John Ryan, CEO of Premium Exploration, the Chinese are buying big time in the North American energy sector. The Wall Street Journal reported over $44 billion in acquisitions since 2008. The future should be bullish for China, which means it is bright for BHP Billiton, Rio Tinto (RIO), and others in the natural resources group. With dividend yields of 3.64% and 4.16% respectively, BHP Billiton and Rio Tinto pay enough for investors to wait for the rebound in Chinese demand.