Agricultural Shortages Greg’s Note: The 80’s hair metal band Cinderella once exclaimed that you “don’t know what you got (‘till it’s gone).” I’m sure this power ballad wasn’t meant to inform investors about the world’s agricultural markets, but the parable is certainly apt in today’s markets. Many of our most important resources are running out and at the very least, they are reaching historic price levels. And the worst part is, it seems like no one saw this coming. Kevin Kerr writes here about the real agricultural situation in this country and what we can expect in the near future. Cinderella told us that “heartbreak comes and goes,” but this crisis might last us for a long time. Send your comments about the current agricultural situation to greg@whiskeyandgunpowder.com. Whiskey & Gunpowder
June 23, 2008
By Kevin Kerr
New York, New York, U.S.A.
Don’t Know What You Got
Most of us Americans are so accustomed to a world of plenty; we have a hard time imagining a world of scarcity — much less making investments based upon this idea. But the energy markets provide a very powerful example of what happens when resources become less plentiful. Five years ago, almost no one believed that oil prices would soar past $30 per barrel. $50 seemed utterly unthinkable. As oil prices continued climbing, so did disbelief. The skeptics never abandoned their misguided notion that oil was “overpriced.” So when crude retreated from $75 to $50 early last year, the prospect of $100 oil seemed like a ridiculous prediction. ~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~ Oil Will Never Be Cheap Again As the oil price climbs higher every day, it’s time we all realized that the days of cheap oil are long behind us. We’ve been through an oil crisis before and come out on top. But don’t expect that to happen again. The truth is simple. We’ve been lied to. Repeatedly. It’s time for all the lying to stop. Find out the truth behind the great “oil hoax” right here… ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Due to Peak Oil, the prices of agricultural commodities are going much higher… Most of the agricultural markets have had a big move already, but these markets could easily suffer a big correction from current levels. The long-term investor will want to buy these markets on weakness, not sell them. A hundred years ago, the average American spent about 45% of annual income on food. Today, that figure is down to about 15%. So we’ve been taking cheap food for granted and have spent our “extra” cash on plasma TVs and leased BMWs. We don’t worry about food costs or whether it will be readily available tomorrow. But the agricultural markets may have some major surprises in store for complacent Americans…and unprepared investors: 
While shortages of key industrial and energy commodities are frightening, no sector will threaten global stability more than agriculture… In 2007, we saw stark glimpses of just how bad this situation will get. The “Tortilla Crisis” in Mexico, the “Pasta Protest” in Italy, the riots and crushing of one supermarket shopper in China over cooking oil… We have seen dairy, meat, and bread prices skyrocket. It’s ironic that as global population is reaching an all-time high, we are turning a huge percentage of our crops into ethanol or biofuel… This questionable, if not idiotic, alternative produces little, if any, short-term benefit and considerable long-term harm — both to the quality of farmland and to the integrity and stability of the global agriculture markets. In other words, using food as fuel can make a big mess out of the global food supply…and the prices that we all pay for that supply. ~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~ The Secret to Making Options Pay Many investors have been making money in options for years. They’ve used the investment tools as a smart hedge against a recession and have even turned normal modest gains into huge triple-digit winners. Amazingly, most people still aren’t utilizing this powerful tool. But now you can open all the secrets to options you’ve always wanted. Click here to begin now… ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ From sea to shining sea, the U.S. has croplands as far as the eye can see. For years, its bounty has been a supermarket for the world. Now it’s a fuel station, too. China, which has hundreds of millions more hungry mouths than we have, has far less arable farmland. And worse, China has far fewer controls in place to regulate farming methods. Trends like these strongly suggest that the agricultural markets will imitate the price action of the energy markets. As investors, we must look at this situation as an opportunity… We should be looking to buy stocks of some of the key agricultural companies that help support the industry: those dealing with equipment makers, fertilizer, irrigation, and transport. In my own portfolios, I have exposure to soybeans, wheat, and corn. I also think the soft commodities are much undervalued: coffee, cocoa, sugar, and cotton. These markets are also poised to move much higher… The planet is not running out of food, but it might be running out of cheap food. So stock up your pantry and start shopping for the kinds of investments that will prosper during the coming agriculture boom. Regards,
Kevin Kerr P.S.: So now you know what to expect. Food prices will be higher, and there’s not much that you can do about it. So how are you planning to pay for all this expensive food? If you’ve been trying to make your money by just playing the stock market, chances are you haven’t had too much success. But luckily, there’s another market that is paying much more than just regular stocks. And many investors are finding it easier than ever to put food on their tables and still have money left over. Click here for your way in… | 
