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Mark Mobius on crypto, tech stocks, and the real way to beat inflation

Kitco News

(Kitco News) - The rise of inflation is happening, as reflected by recent consumer price index (CPI) data, but this is a symptom of a broader problem that begins with currency devaluation, said Mark Mobius, co-founder of Mobius Capital Partners.

"The so-called inflation, or the rise in prices of goods and services, is based on currency devaluation. All currencies, throughout history, have never kept their value," Mobius told Michelle Makori, editor-in-chief of Kitco News.

Mobius is one of the pioneers of emerging markets investing. The Mobius Emerging Markets Fund invests in mid-sized companies in emerging and frontier markets and has returned 70% this year. Mobius is the author of several books, including the latest, "The Inflation Myth and the Wonderful World of Deflation."

Mobius' comments come as the headline CPI expanded by 0.9% in June and rose 5.4% annually, the fastest pace of growth since 2008.

However, the inflation data captured by the CPI has deficiencies in the data collection methodology, Mobius noted.

"The CPI, normally used to measure inflation, is very, very inaccurate. It doesn't take into account a lot of expenditures by people that don't want to reveal what they're spending. Also, it's based on a basket of products and services that are changing," he said. "You're comparing apples and oranges."

To hedge against inflation, Mobius said that investors should look at commodities or services that "keep pace with the devaluation of the currency."

"This is why [we] advise people to put money into equities, into stocks, because companies adjust their prices in line with the devaluation of the currency, and they will then continue to hold the value of the money that you put into their shares," he said.

On gold, Mobius said that it is a "good haven to save assets" and will likely appreciate alongside inflation.

"The problem with gold is that it doesn't pay dividends like stocks. Companies that have a high return of capital invested, companies that have low debt. These are the companies that will really keep pace with the devaluation of the currency," he said. "That's where people should be parking a significant amount of money."

The salaried worker should, however, still prioritize buying a home in order to preserve capital before investing in stocks, Mobius added.

Mobius also said that deflation, not inflation at 2%, should be targeted by central banks.

"Deflation is good, because goods and services are going down in price, and that's good for the consumer, it's good for the people who are consuming in a big country. It's good for the society," he said.

For Mobius' views on cryptocurrencies and technology stocks, watch the video above. Follow Michelle Makori on Twitter: @MichelleMakori.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.