The Three Best Investment Opportunities for the Next Decade

Thu, Feb 3, 2011 - 11:28am

“Is the US's financial position hopeless? I've studied the US finances backwards and forwards, and as I see it the US's financial position most definitely is hopeless.

The actual posted national debt of the US is $14.1 trillion. However, the US reports its finances on a cash basis while omitting its unfunded obligations in such items as Social Security, Medicare and Medicaid and various other entitlements. If the entitlements are included, the total national debt including unfunded obligations would be over $100 trillion…

So what in God's name is the answer to all this? How will the US's finances be handled? There are only two ways that I can come up with:

The first is -- to default, just declare that the nation is dead broke and it can't meet its obligations. That would be tantamount to admitting that the US is less than a third-rate power, a dying banana republic. Unthinkable.

The second way would be to devalue the currency to the point where obligatory dollar debts would be financed or paid off with dollars equal to pennies or nickels.

It's now really a question of timing. With the national debt compounding at rising rates, the problem of financing the debt becomes ever-more pressing. For this reason, I believe the process of devaluing the dollar will have to be speeded up.

From the government's standpoint, the deliberate devaluation strategy must be kept secret from the public. They must not be allowed to know that the currency they've worked so hard for, that the currency their savings are in, is to be crushed into a shadow of its former self. Ultimately, the awful truth must come out.

At some point the government may be forced to be honest. The phrase will be three words that I coined many years ago: "Inflate or die." And, the government's answer will be, "You wouldn't want this nation to die, would you? We have no choice, but to pay off, or carry, the debts, with a currency that must be devalued down to ten cents on the dollar.”

Richard Russell, Dow Theory Letters, 2/2/11

“Laos is one of the most sparsely populated countries in Asia; with just 6.3 million people…

…the country is home to some of the most fertile soil in the world: more than 20% of its land mass is ripe for agricultural use. This is an astounding number…

Put another way, Laos, with its vast resources and small population, might loosely be considered an agricultural version of Kuwait…

Given its resources, it certainly seems ironic that the prices of staple foods in Laos, including rice, have soared in recent months…

Thing is, it's not that there are food shortages in Laos; this isn't an issue where supply has failed to keep up with demand (thus resulting in rising prices). The price hikes are simply another indicator of monetary inflation causing severe price inflation, particularly in the developing world.

How does this happen? The trillions of new currency units being compulsively manufactured by central bankers are finding their way to developing countries. This surge heats up local markets, causing prices to rise.

The government in Laos will most likely raise the minimum wage.

Rising wages like this are a common ingredient in hyperinflation, spawning a vicious cycle of higher prices, which then beget higher wages, which then beget higher prices, and so on.”

Simon Black,, 1/18/11

There is an Extraordinary Investment Opportunity, still a “Sleeper” to some degree, which, some would argue, is even better than Gold and Silver.

Indeed, we are among those who agree that Gold and, with the right timing, Silver, are Two of the Three Best.

We need do no more than briefly recall that Gold and Silver are “The Ultimate Money” in an Era of repeated and ongoing Q.E. which debases Fiat Currencies’ Purchasing Power. And Gold and Silver are both Hedges against Inflation and have Great Profit Potential as well. One need only compare these Precious Metals Sterling Performance over the last decade with Equities Value-Losing Performance.

But we must also agree that this “Sleeper” Sector may be the Best of All, because there are still several companies in this Sector stocks in which can be acquired at bargain prices, because they are not front and center on many Trading Screen as “The Best”, Yet! Indeed, Deepcaster just recommended One trading at just over $5/share.

As background for understanding the Great Potential for The Sleeper Sector, consider that the world’s population increases by over 80 million a year.

Consider also that Hundreds of Millions of the 7 billion World Population have entered into the Middle Class, which means of course that they have increased Purchasing Power to command resources.

Also consider Recent Events which give us a Clue regarding this Great Sleeper Opportunity. The recent Riots in Egypt, Tunisia, Jordan, India, China and Elsewhere are in no small part about Food Shortages and increasing Prices. Of course, this has been reflected recently in upsurging Agricultural Commodity prices, but that upsurge has not yet been widely reflected in all Food Production Business Values. And therein lies the Sleeper Opportunity.

Indeed, this is one specific Sector still contains Great Opportunities Now. Businesses operating in this Sector have great Competitive Advantage, because in this Sector there is Price Inelasticity Protection on the Downside and inexorably Increasing Demand and thus Profit Potential on the Upside. That Sector is Food!

Consider also that the ongoing Central Bank Q.E. is already generating ongoing substantial Price Inflation as the Real Inflation Numbers (compared to the Bogus Official Ones Shown). This ongoing Q.E. simply magnifies Food Price Inflation. calculates the Real Numbers for the U.S. the way they were calculated in the 1980’s and 1990’s, before systematic Official Data Distortion and Interventions began in earnest.

Bogus Official Numbers vs.Real Numbers (per

Annual U.S. Consumer Price Inflation reported January 14, 2011
1.50% / 8.91% (annualized December, 2010 Rate)

U.S. Unemployment reported January 7, 2011
9.4% / 22.4%

U.S. GDP Annual Growth/Decline reported January 28, 2011
2.79% / - 2.21%

U.S. M3 reported January 21, 2011 (Month of December, Y.O.Y.)
No Official Report / - 2.83%

Indeed, compared with Energy (demand for which, and share prices of companies in which, tend to slump in Economic Downturns) or even occasionally Gold or Silver, there is one Commodity which people demand above all others, regardless of Inflation or Economic Conditions – Food.

While some of the Major Players involved in Food Production have already had big run-ups – we think of ADM, Monsanto, Potash and the like -- there are still Great Bargains to be had with Great Profit Potential.

Indeed, Deepcaster just recommended one in his most recent Alert, trading at just over $5/share. We believe this company has the potential to be valued as another ADM, Monsanto, or Potash.

Given the foregoing Scenario of Exploding Population Growth with hundreds of Million newly in the Middle Class, who have greater Purchasing Power to command Resources, coupled with agricultural production constraints such as arable land limits, it is no surprise that Food Demand is surging.

Couple this Demand with Q.E. generated pressure on prices, as the Sovereign Man quote regarding Laos above demonstrates, and one has a situation in which prices and thus Profits can explode upward again and again.

Thus, The Best Protection, and Profit Potential arising from this developing Reality, is to own Gold, Silver, and Excellent Businesses involved in producing Food.

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