"The current environment is one of the most challenging I've seen in 20 years of following the market," says Nate Pile, who added some ETF hedges to his Nate's Notes portfolio.

"I am also introducing two ETFs this month that can be thought of as 'indirect hedges.' Rather than being a 'short' fund, we are choosing funds that track commodity prices, which in turn, will provide a hedge  against any market declines that may result from investor concern about rising inflation.

"In addition, these two new ETFs is may appreciate in value even if the market does rally from here. I actually think there is a very good chance we will make money on these 'commodity ETFs' regardless of what the stock market does next. Anyhow, without further ado, I present to you the following two ETFs:

"The PowerShares Deutsche Bank Commodity Index Tracking Fund (ASE: DBC) is designed to reflect the performance of the Deutsche Bank Liquid Commodity Index, an index that tracks six important commodities (current index weightings approximated in parentheses): light crude (33%), heating oil (19%), wheat (14%), corn (12%), aluminum (12%), and gold (10%).

"As is the case with many ETFs that track commodities, this one attempts to mirror the index it tracks by purchasing futures contracts on the underlying commodities.

"The streetTRACKS Gold Shares Trust (NYSE: GLD) is designed to track the price of gold, and unlike some other ETFs that attempt to accomplish this task through the purchase of futures contracts, this one actually holds the commodity itself.

"In fact, at its initial pricing, each share of the ETF was designed to represent ownership in 1/10th oz. of gold (this relationship still holds very close to true). Due to the popularity of this ETF as an easy way to participate in the gold market.

"The trust’s inventory (a reflection of total assets) has grown large enough to put it among the top ten reserves in the world, well ahead of many large countries’ (current inventory is roughly 630 tonnes – that’s over 20 million ounces). GLD is a buy under $100."