Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Agri-Foods Benefit from the Feds Decision to Destroy the Dollar

Commodities / Agricultural Commodities Mar 24, 2009 - 12:36 PM GMT

By: Ned_W_Schmidt

Commodities Best Financial Markets Analysis ArticleTrends may persist, but never exist eternally. Both parts of that little piece of wisdom provide useful guidance for investors. Trends, clearly, are an investor's friends when the investor lives in harmony with that trend. However, always remember that the trend will end regardless of how solidly good the fundamentals might be, or how miserably bad the fundamentals might appear. On this latter point, have not received one email on the positive fundamentals for oil since it fell below $140.


Some trends are destined to be short-term in nature from the very beginning. Others may last for years. Seeking out short-term trends, for the majority of investors, is a waste of time. Those persisting in the pursuit of short-term trends need to remember what breakfast means to the pig. On the other hand, structural trends of a longer term nature are more similar to the relationship of the chicken with breakfast. Agri-Food is one of those longer term, structural trends that will allow investors to participate in more than one breakfast.

Our first chart this week is a comparison of the performance of the Agri-Food Price Index, a basket of major Agri-Food commodities, and the S&P 500. The superiority of the price performance of Agri-Food commodities over U.S. stocks is readily apparent. Despite the positive and negative turmoil created by the hedge fund pestilence, Agri-Food commodities have retained the high ground.

Second, the Agri-Food Price Index has walked through the down trend line drawn into the chart. That down trend is no longer controlling. The more dominant, longer term, structural trend is now the more powerful consideration. Bets against the structural trend will fall to the house. Bets with the structural trend are more likely to prosper.

Third, Agri-Food prices seem to have completed Wave II of an Elliot Wave structure. That should mean that Wave III is soon to unfold. That implies a further advance ultimately into a Wave V some time in the future. That view is supported by, and consistent with, the positive underlying fundamentals which suggest a wave structure of ten year or more in length.

As Gold investors are well aware, the Federal Reserve recently announced that it will mindlessly monetize the deficit of the U.S. government. As a consequence, the bear has returned to the market for U.S. dollars, and Gold has soared. Another beneficiary of that dollar crushing monetary policy will be Agri-Food commodities. Consumers living in national monies other than dollar will find Agri-Food commodities an economic bargain, and demand will strengthen.

Agri-Food investments have not been immune to the ravages of the bear market. This author does wish possession of some magic investment knowledge that will always prosper, without fail. A discovery that will only be revealed to a generous few. Alas that is not the case, the favored Agri-Food stocks went down too. That situation, though, appears to be changing.

The second chart this week portrays the performance of a basket of Agri-Food equities relative to the S&P 500. Prior to the bear market, the relative performance was excellent, but it too succumbed to savagery of the hedge fund liquidation. Over the time period shown, Agri-Food stocks hold a slight edge. More importantly, the Agri-Food stocks have also walked through the down trend line that had been in place. It no longer controls, as the fundamentals again seem dominant.

Agri-Food stocks are part of a structural change in the demand for food arising from economic change in China, India, and other sectors of the world. With more that half of the world now living in urban centers and more than half of the world living in developing nations, the demand for Agri-Foods is moving into a demand structure never before witnessed. Supply no longer is the dominant consideration. Any analysis of Agri-Food commodities built on the decades of supply dominance will miss out on that which is to come, demand dominance.

Commodities is not a homogenous group. Any analysis assuming such is in error. Agri-Foods are just one component of the commodity asset class. Agri-Food will also benefit from the Federal Reserve's intentional destruction of the dollar. Agri-Foods investments are also an offensive investment in that they will benefit from the unfolding prosperity of China, and later from India. Does your portfolio have an offensive element? The rest of the world will move past the economic carnage of the Obama-Bernanke-Geithner financial debacle. Will you also move on?

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View , a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To receive the most recent issue of this publication, use this link: http://home.att.net/~nwschmidt/Order_AgriValueRECENT.html

Copyright © 2009 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules