Today a 42-year market veteran spoke with King World News about Ukraine, China, and an event that is going to shock people around the world. John Hathaway, who is one of the most respected institutional minds in the world today when it comes to gold, and whose fund was awarded a coveted 5-star rating, also warned investors that the U.S. dollar is in a great deal of trouble.
Energy & Commodities
The Underappreciated Significance of Food Security and Fertilizers
Though many disinflationary forces still predominate around the globe, more and more is being said about food inflation. We still believe in the primacy of food security as forces as disparate as the weather and urbanization coalesce to push the price of food upwards.
Some recent headlines reinforce this assertion:
Food Prices Surge as Drought Exacts a High Toll on Crops – WSJ 3/18/14 (subscription req’d)
Brazil Drought Jolts Commodities’ Prices – WSJ 3/4/14 (subscription req’d)
Rising Food Prices Bite into Household Budgets – USA Today 3/19/14
It’s also not just the “staples” like wheat or meat that have seen prices trending upwards. Even shrimp are experiencing price “hyperinflation”, to borrow a phrase from Business Insider:
The dramatic increase in shrimp prices is reportedly one of the reasons Darden Restaurants (DRI:NYSE) is trying to spin off its Red Lobster seafood chain. Clearly, the restaurant can’t pass along a price increase to a consumer without the means to pay for it.
Not surprisingly, as food price increases have started to garner headlines, central banks and governments are pledging to step in and ease the pain:
Brazil central bank pledges to limit food inflation jump – Reuters 3/18/14
Government involvement can, of course, take many forms including trade agreements. China and the Netherlands recently committed to signing a trade agreement where the Chinese will “import” Dutch dairy expertise to increase both the quantity and quality of Chinese dairy products:
China, Netherlands to sign trade pacts, including deal on dairy cooperation – Foxnews.com 3/23/14
And perhaps most worryingly, as food prices increase, wages have not kept pace. While consumer prices in the US have risen by 6.4% since 2011, the price of chicken is up 18.4%, ground beef is up 16.8% and bacon (a personal favorite) is up 22.8%. Median income has reportedly only gained 1% over the same timeframe.
The charts below, though slightly dated, show the trend in price inflation of select food items.
Counteracting This Trend
There are several ways to protect against rising food prices. Self-education regarding technologies and geopolitical developments is a good start. With Russian President Vladimir Putin’s strategy in annexing Crimea, several of Moscow’s allies, including Belarus, are rethinking their relationship with Moscow. You’ll remember that Belarus is one of the most important potash producers on the globe.
If Belarus goes “in play” as the Ukraine has, profound implications for global fertilizer markets will result. If you have a subscription, please see the excellent article in the most recent edition of Foreign Affairs titled, “Belarus Wants Out: One of Russia’s Closest European Allies Begins to Play the Field”.
Improving agricultural output can also help mitigate rising food prices and this is why we have been close followers of the fertilizer space. Brian Ostroff of Windemere Capital, has penned a wonderful article discussing the fertilizer markets and the implications for Arianne Phosphate (DAN:TSX, DRRSF:OTCBB). You can view his prescient thoughts here.
We will be returning to the fertilizer markets in the Notes shortly as it appears that there has been movement and consolidation in the space which brings with it more discovery opportunities.
Thanks,
Chris Berry, MBA for Morning Notes
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The content in this note is not intended to be a comprehensive review of all matters and developments, and we assume no responsibility as to its completeness or accuracy. Furthermore, the information in no way should be construed or interpreted as – or as part of – an offering or solicitation of securities. No securities commission or other regulatory authority has in any way passed upon this information and no representation or warranty is made by us to that effect. For a more detailed disclaimer, please go to http://house-mountain.com/disclaimer/.
“There are several indicators that monitor the internal “health” of the market that are likely to give us “early warning” signs that a more serious illness is developing. These include changes in momentum, sentiment, breadth and money flows. This week, we will review five measures in particular: Net New Highs, Advancing vs Declining Issues, Bullish Sentiment, Number Of Stocks Above Their 200-Day Moving Average (DMA), and Number Of Stocks On Bullish Buy Signals. I will also review our long term buy / sell indicator which is critical to identifying changes in the current market trend.
We will start with the number of NET new highs. This is the number of stocks hitting new highs less the one hitting new lows. In an “exuberant” bull market, you would expect to see the number of net new highs at very high levels. This is the 50-week moving average of net new highs. One thing to notice is that the current peak in the long term moving average of net new highs is at the highest levels in history.
….continue reading this 15 page report HERE
Gold Fibonacci Line Pullback Charts Analysis
Silver Time Box Charts Analysis
US Dollar Pirate Walks the Plank Charts Analysis
GDX Pullback Charts Analysis
GDXJ Pullback Charts Analysis
“Our main format is now video analysis…”
Above are today’s videos:
Thanks,
Morris
Ed Note: One of the reasons this analysis is so clear comes from the full page Big Charts you see when you click on each link above. Below is an example of a chart in a smaller form. Morriis walks you through the analysis in a very clear and thorough manner – Editor Money Talks
Agressive investors are well aware that the big money is made in companies that are setup with a combination of a great business proposition that as yet has not become well known, and a stock price that has suffered from a Bear Market. This is not for money set aside for a rainy day but each one of these 10 companies is currently trading anywhere less than 1/2 and in some cases 1/8 of were they where one to three years ago. Moreover they all have a great business on the brink of becoming disovered by the investing public…”, thus all have the potentional to move dramatically upward. For example if International Tower Hill Mines Ltd just moves up to where it was trading in August 2011 it will have to rise from its current $1.14 to $8.45. Its potential should be significantly higher than that if its mine is developed and particlualrily if Gold were to soar! As Warren Buffet said in an article two days ago, if he could he would “invest in great small-cap stocks.” “It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”
All these companies are cheap to buy. Selling between .14 cents and $3.70, most are trading below $2:00. All but one have suffered a decline from a bear market in junior mining stocks & all have valid and very exciting projects.
These companies were all searched out by Jeb Handwerger who studied engineering and mathematics at University of Buffalo and earned a Master’s degree at Nova Southeastern University.
Each company has a comment from Jeb, and because it is often difficult to search out critical information on a company to do your due diligence prior to buying, I have listed out and linked each companies Website, Financial Statements, and comments from experts other than Jeb. All the links lead to additional research for those inclined to get really thorough – Editor Money Talks (P.S. This was the most popular article this week)
Expert Comments on Comstock Mining Inc. (click on the link)
“LODE may be the gem of the entire mining industry.” – Jeb
Expert Comments on International Tower Hill Mines Ltd. (click on the link)
“ITH’s Livengood project has huge leverage to the price of gold.” – Jeb
“For investors who are looking for leverage and for advanced assets, LAM is a good candidate.” – Jeb
“NUG has a top-notch management team that has found major discoveries in Nevada.’ – Jeb
“PLG hit a heavy volume when the company released results from drilling at Kinsley Mountain; this is very encouraging.” – Jeb
“Potential is huge for PRB’s Borden Lake project.” – Jeb
“RNX’s Dumont Nickel project is one of the best advanced nickel projects under the control of a junior.” – Jeb
“URZ already has offtake agreements at higher uranium prices.” – Jeb
“ZC is one of the forces behind some high-quality, early-stage junior mining companies.” – Jeb
Enterprise Group Inc.
Financial Snapshot & Balance Sheet
Expert Comments on Enterprise Group Inc.
“E had a major run in 2013, and it may just be the beginning.” – Jeb
For Jeb’s latest article go to: Jeb Handwerger: China Isn’t Slowing Down, It’s Buying Up
(Resources, that Is)
Hathaway: “We’ve had a great run in gold and the mining stocks. My guess is that near term we need a pause. I am not as focused on Ukraine or the Crimea because to me they are just part of the bigger system risk….
Continue reading the John Hathaway interview below… (P.S. This was one of the most popular article this week)
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Michael offers easy reading, honest, common sense information that anyone can use in a practical manner.
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A sane voice in a scrambled investment world.
~ Ed R.
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