FOOD, FEAR AND GOLD – What do they have to do with the economy?

April 16, 2010

(To enhance your reading pleasure, you may have to increase the font size of this essay – to do so, hold down the Ctrl button and press +)

If you want to know the health of the general economy – there is no need to pour through tomes of economic indicators and data – if you really want to know the truth and nothing but the truth – that’s just an expedient way of securing a high paying job – being able to rattle off acronyms, formulas and crack brained theories no one has ever heard of (because this is what I regularly do) is actually one of the most reliable ways to get ahead in the corporate world and appear really intelligent.

Only don’t get me wrong, I am a firm believer in primary data as I firmly believe sometimes taking short cuts can back fire – I even study numbers carefully in the way a scientist puts a specimen in an electron microscope mulling over producer price index, consumer price index, jobless claims, consumer price index, new factory orders, durable goods reports, inventory levels yada yada yada yada.

But I am not about to get complicated here because my point is to prove to you – if you really want to know how a nation’s economy is doing – you could just as well derive a prettty reliable summary using the same brain power it takes you to tie your shoelaces – for example: if you really want to know how the economy is really fairing – look at one indicator: FOOD.

My point is you don’t have to be a genius to figure out that FOOD is the clearest manifestation of economics in motion; what happens in your alimentary canal is directly proportional to the day to day well being of a nation. I mean if gangsters with sawn off shot guns walk into Long John Silver and don’t even bother with the cash register and instead start demanding for a double serving of salmon with chips – then you don’t need to a member of Mensa to figure out the economy is probably in the shit hole.

Conversely when people start to spend money on food – then by the same token things might be improving. I mean if you really want to get really complicated, you could even use it to extrapolate stuff like how food consumption reflects the producer price index (PPI) and the consumer price index (CPI) – these twin heads are really two heavily watched indicators that gauge the economy’s inflation and general health. The PPI measures the change in the costs of producing a good while the CPI measures the change in cost of buying that good. Rising PPI or CPI numbers suggest that inflation is rising; if it goes the other way that means inflation is in control.

Why am I talking about inflation? Because these days politicians and economist are really clever at glossing over the truth; instead of calling a spade a spade; by telling us all our currency has collapsed – what they do is use technical jargon like “hyperinflation.” The same applies with mind boggling words like “stagnation,” all that means is zero growth and they are going around in circles – and the same applies to fuzzy terms like “tighter fiscal policies,” which is just another way of saying higher taxes. And the list of gooble d guk just goes on and on.

So my point is to demystify all these really double talk and to keep things really simple Simon.

And here comes the kicker – what has food and fear got to do with gold? What’s the connection?

Simple: what most people don’t seem to realize is when they hear politicians talking about “the good times are back!” –  is somewhere against this narrative what is usually seldom discussed is why has the price of gold rocketed from about $250 an ounce 10 years ago to about $1,150 today!

The only reason is FEAR, to be more precise the FEAR that most ordinary folk rather keep useless gold bars underneath their bed because they have absolutely no faith in their paper currency – so how can the economy be really recovering given those conditions?

It cannot!

So the way I see it is simple; for the economy to really recover; three thing need to happen like tic tack toe – firstly that FEAR (real or imagined) needs to diminish – the price of gold needs to go down (people need to have faith in their currency). Secondly, it’s only when people begin to spend their money on real food instead of mud pies, that’s when you really say for certain – the economy is getting right back on track – simple analysis – nothing complicated there, even a $3,000 per month ISD officer who is trawling the internet for terrorist can understand how FOOD, FEAR and GOLD are all linked together like the holy trinity.

And this brings me to three long term stock recommendations that I believe is directly linked to the frontline of the US economic recovery – along with the dynamics that links food, fear and gold to deliver a real economic recovery. 

However, if you look at ALL of them, they all have one thing in common; they’re are unknowns. And why is that important, because the last thing you want to get yourself involved with these days when politicians are trying to hard sell, “the good times are well and truly back!” is a highly politicized counter like Goldman, Citigroup, UBS, Ford, GM or Pfizer – my feel is politicians will showcase those counters as their success stories and that can only mean those counters will simply be super magnets for stupid money – you need to be clear here; there is nothing wrong about following in the wake of stupid money ONLY you need to know when to get out! Let me give you a real life example of the get away strategy – yesterday I wrote this: Why when Bernanke’s talks about the road to recovery – I am out of the market!Last night Citigroup plummeted 7%! How did that happen? You go figure that part out! My take is simple: no one believes him! Not the clever people at least! Because if you really sit down and think about it; Any proclaimations Bernanke makes cannot be so different from what Count Dracula has to say if he was the CEO of the National Blood Bank!

So the name of the game is to ALWAYS keep ahead of the stupid money – and NEVER ever believe everything your read or hear –  that simply means following where the clever money goes.

But I am digressing, let’s get back to FOOD  – firstly, food just doesn’t grow – it needs fertilizers, combine harvesters, silo’s etc – I have choosen these two stocks precisely because they will never be picked up by the Bernanke and Geinther Mafia spin doctors – so they are as boring as grass (no politician is going to say fertilizer stocks are going up, the economy is recovering, unless he wants to commit political hara kiri.)

Following the clever money is never easy; firstly, the people who manage clever money usually keep ultra silent and they never ever follow the crowd. Never!

This brings me to some of my buy (hopefully, they turn out to be the clever ones) recommendations:

The first is Potash Corp./Saskatchewan (USA) NYSE: POT – this stock is currently getting hammered, but the way I see it; it’s only a matter of time before the demand for premium grade fertilizer will pick up – the timing is just perfect as the tilling season is right on the mark; POT is not cheap, but considering how much ground it has given way since early March – I consider it to be a bargain.

The other is a relative unknown based in China, Yongye International, Inc. (Public, NASDAQ:YONG) – again it’s the same story over there.

And finally to put entire food supply chain together to fit into the market you need the people who have core competencies in this area – and here we are talking about nut and bolt firms that can guarantee delivery reliability at the upstream of the supply chain i.e heavy lift stuff – this is where Manitowoc Company, Inc. (Public, NYSE:MTW)

My gut feel tells me, if you have only have one bullet for one shot; then go for MTW, you cannot go wrong there – it’s a head shot!

However, please note: these are long term hold stocks – that means we are looking at a 6 to 8 month horizon.

P.S: BTW please stick with Banco Santander as well, I know the ride is rough, but hold on! It’s good to go!

Happy Hunting

Darkness 2010




N.B MESSAGE BY MISSY DOTTY (owner of this blogsite):  DO BOOKMARK THIS SITE, IF SOME OF YOU CLAIM, YOU ARE MISSING OUT, BOOKMARK IT, THAT WAY WHEN WE DECIDE TO TAKE OFF SOMEWHERE ELSE, AT LEAST YOU CAN FOLLOW US ON THE YELLOW BRICK ROAD TO CONT READING SOME OF OUR STUFF . BOOKMARK, IT AS WHEN THEY TAKE OFF, AS THEY DO, AT LEAST, YOU WILL HAVE A LINK, DO IT NOW!– ANOTHER GOOD REASON TO BOOKMARK THIS SITE IS THIS HAS HAPPENED  RECENTLY – , THE BP HAS BARRED ALL FUTURE ESSAYS TO BE POSTED BY THE SINGAPORE DAILY. I DID ASK BABY DARKNESS ABOUT THIS AND THIS IS WHAT HE HAD TO SAY, ” There are two ways to read, one is you let someone spoon feed you like a baby. The second is you choose what and how you want to eat.  Remember, if your body is a temple. Your mind has to be the altar piece; it’s the linchpin that makes possible the grand idea of La Convivencia with you and your community, spirit, mind and perhaps 7 million other things- without this one thing, the power to choose, you are simply a cactus on a window sill! 

So understand this little rich girl, there is reading and there is reading, there is a world of difference, if you dont even bother to argue with the belief, you are what you eat. Then you would have absolutely no problem understanding – why, you are most definitely without a shadow of doubt what you read and dont read.

You can certainly categorize what I write, but you have no right to judge ……that was what Singaporedaily did – a broad line has to be drawn, otherwise, dont be surprise, if someone decides its card blanche to give you and me the mushroom treatment, “feed you shit and keep you in the dark.” So this has nothing to do with Anime 3 and her rubberband brigade. I value her readership and support, but this is a bigger sphere we are dealing with here – so this is where I will draw the line…it will hurt…like that other fake site, Temasek review that kept faking doss attacks; but how could they let the real wolf out without first planting the idea in peoples mind, “if it can happen to me, it will also happen to you,” Think about it – they cried wolf – we helped, but this time, I am not going to stick my neck out for no one…its everyman for himself….I dont even care, if the whole house catches fire…call it tough love, but if you aren’t a hard man, then you shouldn’t be in the ring and that’s the only way to deal with people who cry wolf, its all here, the explanation – dont worry dotty, the readers will eventually pick up the scent…they always do, you just wait and see, dont ever sweat the small stuff, life is too short – Darkness 2010……”Missy Dotty

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: