Sunday, April 13, 2008

Food Shortages

I'm not going to go doomsday on you but here is a post from a chat room that got me thinking more about gold, and in turn, stocks. I was not able to verify the fact this person put forth so I will leave his/her name off it for now. As follows:

"""""Potash Corp. announced today that it is raising its prices for all potash grades in the U.S. market by $150 to $175 per ton, for all shipments made beginning June 1 through August 31. The previous price increase of $80 per ton was implemented in March.

This is an unconfirmed report but if true then Potash will now be $110 per ton higher than last March. Food inflation follows. Keep your eyes on food riots as food basics exceed the ability to pay in poor countries causing further instability in the world."""""

As soon as I read the word "instability" you know which yellow haven starts to look nice. And if poverty leads to war as it usually does, and I am not talking about WWIII, somehow oil is going to get involved.

Bull market in stocks? Seems like a long shot.


Anonymous said...

An honest question, as I know you receive many rants and raves w/o a point. What happens to gold when the Fed switches its focus from maintaining financial stability to combating the building inflation that both you and "Logic over Emotion Investing " have highlighted in recent weeks?

Anonymous said...

I can answer that objectively.
No one knows.
Logical thinking will conclude, interest rate will go up and Dollar will follow, therefore gold in relative fashion will come down.
However market is not quite a logical, orderly machine where other things like emotion flies fast.
So answer is "Unclear".

adh1 said...

That's is the answer I expected, as I have read your responses to other blogs. I liked the observation you made that, "markets can stay irrational longer than you or I can remain solvent"! As such, do the sentiment indicators become the key to anticipating future movements once the interest rate/dollar process begins? If so, do you have a preferred measure of sentiment in the gold market?

Quick Takes Pro said...

Unfortunately, I would have to ask my pals over at Schaeffer's to give me a put/call reading on gold for sentiment. Or, Jake Bernstein puts out a survey for futures that might have it but I have not seen that one in years.

My real answer is that gold can rally on weak dollar. Take out the greenback's effect and gold is still in a bull market, no matter what currency you price it in.

adh1 said...

Thanks, I always appreciate your analyses. Your current cycle article is insightful.