Gold looks way oversold.
Here are the criteria: it must be easy to purchase, something I can physically own, and easy to translate back into cash when needed.
I figure we hackers have probably already analyzed this problem and come up with multiple solutions. Anybody care to share? I'm leaning towards collectibles (guns maybe?) but interested in other options.
Gerson Bleichroder was a nineteen-century German Jew who had a life filled with immense financial triumph, persecution, and personal sadness. Otto Von Bismarck represented the Old Prussia – aristocratic, agrarian, hierarchic – and it was his ambition and vision that welded the First Reich into an empire. In 1859, when he was 37, Bleichroder became the banker and investment adviser for the rising Junker diplomat, and for 30 years the two leveraged their insights and power to achieve great wealth and prominence…
Bismarck, the Prince, worked hard at projecting a magnificent exterior and omnipotence….His primary obsession, other than ruling Germany, was with making money in the stock market so he could buy more and more timberland. He treated everyone around him abominably.
However, both men must have had that mystical “seeing eye,” which enabled them to perceive the future chain of events that would be triggered by an action in the present. This is what successful investing still is all about. While suspended in the midst of times that were full of mystery, uncertainty, and doubts, they had the capacity to maintain their pose and world view and never to impatiently or irritably reach for a fact or conclusion.
Bleichroder exploited the insights that Bismarck provided to make both his patron and himself very rich. But he also had what Bismarck once referred to as “a certain timidity in investing.” He told his clients he would attempt to get them over the long run a real return (after inflation) of 4% per annum, which would mean that the purchasing power of their wealth would double every 17 or 18 years. His timidity kept him from becoming engulfed in the new-issues market of the 1870s or in the mania for colonial investing that later wiped out so many men and German banking houses. Bismarck was perfectly satisfied with this return, but always withdrew his profits and invested them in land and trees.
Bismarck’s appetite for timberland was insatiable. His theory was that the price of land would gradually appreciate in line with population growth, or about two percentage points annually. His studies had convinced him that German forests would grow 2.75% a year, so that his real return for timberland would be around 4.75% per annum, because inflation at the time was virtually zero. If there was inflation, he was sure timberland and log prices would appreciate in line with the inflation. He thought that with very little risk, this was a spectacular compounding of wealth. As it turned out, Bismarck was absolutely right.
Over the next half century in Germany of war, inflation, surrender, and depression, timberland held value far better than anything else.
In terms of your requirements, the precious metals seem to be the best item. If you think gold is too high then silver might be a good choice too. It also depends on how much inflation you think needs hedging. If you are talking hyperinflation then John Williams over at Shadow Stats is recommending cases of whisky. You could stock pile some incandescent light bulbs since the average American does not know that they have been outlawed (effective in 2012?) and there is sure to be a run on those when people finally learn about that (but that's more speculation than inflation hedge). Oddly enough the best inflation hedge is to go into debt on the longest period possible. When inflation hits you pay it back in deflated dollars. Buy a new car on a 5yr 0% interest loan, sell the old one and put the money in gold (bullionvault.com) or buy inflation adjusted bonds (TIPS). Pretty low risk as long as you can make the payments. Even better is a house (30yr loan at 5-6% interest) will almost certainly be a bargain when high inflation hits.
See, e.g.: http://www.independent.co.uk/news/uk/politics/benefits-of-na... / http://www.sciencebasedmedicine.org/?p=3096
Pick two.
Blue-chip art. For example, photography by big-name artists with established markets. But art has huge transaction costs, so I wouldn't include it in the easy-to-buy-and-sell category.
Something a lot more liquid would be common types of ammunition.
Coins come to mind -- easy to own and store. Presumably easy to sell? Not sure of transaction costs
However the election of Obama caused a spike in the purchase of "black rifles" and hanguns (also the latter have been doing very well as more and more states got shall issue concealed carry license regimes, plus many people are buying them as they get old(er)) and the last time I checked the value of hunting guns weren't holding up well due to the Great Recession, but that's perhaps bottomed out.
Be careful of historical price patterns, with CNC machining and other general advances it's gotten less expensive to make them and the barriers to entry to new firms has dropped.