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Two Ways To Play: Inflation Reaches Tech


Strengthen your portfolio in good times and bad.

According to the Financial Times, the world's largest notebook manufacturers are set to increase prices on notebook computers for the first time, due to the soaring prices of nickel and cobalt used in making rechargeable batters. In addition, labor costs are rising in China where many companies have their manufacturing headquarters.

Companies such as Quanta, Compal, and Wistron are all in talks with Hewlett-Packard (HPQ), Dell (DELL), and Acer on how to manage these prices. In the past, manufacturers have called for price increases but failed to get their customers to agree. Analysts believe this time is different, however, as practically the entire supply chain, nearly 95%, is clamoring for price increases.

Already several companies have agreed to share the burden, and many believe the costs will ultimately be passed onto consumers.

For context, see Professor Lance Lewis' column Gold's 400 Tonne Opportunity.

From the Bull Pen: Professor Lewis notes that we are now seeing inflation in even technology products. Bulls can play the upside in the gold stocks, using this sector as a hedge against inflation. Some plays to consider may be AngloGold Ashanti (AU), Newmont Mining (NEM) or even the gold miners ETF (GDX).

From the Bear Cave: Higher costs. Pressured margins. An already weak U.S. consumer. Bears are considering pressing the downside in these stocks: Dell and HPQ.
Position in GDX.

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