Monday, August 8, 2011

Jim Rogers: Stop Buying Gold! These Other Commodities are a Better Buy!

Jim Rogers is one of the most successful investors of all-time…and he buys value. Back in 1999, he predicted that a “supercycle” commodity bull market would see raw material prices advancing for longer than in any previous uptrend led by gold and silver. Gold was trading near its low at $252 and silver at $4 at the time but with gold up 650% from its lows and silver with an even greater gain – obviously Rogers was right. Rogers has now stopped buying gold moving, [instead,] towards a greater commodity opportunity that he thinks offers the same kind of values that gold and silver did a decade ago. Words: 909

So says Robert Zurrer ( in edited excerpts from his original article* which Lorimer Wilson, editor of (It’s all about Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. Zurrer goes on to say:

Agriculture: The Next Big Bull Market

Consistent with his devotion to buying undervalued assets, Rogers now sees the same quality of values in agriculture that he saw in gold and silver. [While he] is not selling his gold and silver believing that “gold is certainly going to go to $2,000 over the years; it looks like it’s going to go much higher during the course of the bull market” and that “gold prices are not in a bubble because not everyone is buying yet”, he believes that “agriculture prices are still, on a historic basis, extremely depressed, and in my view I’ll probably make more money in agriculture than other things.”

Rogers thinks that the current commodities supercycle will last for 20 to 25 years, a view supported by the research of Chris Watling of Longview Economics who traced secular bull cycles back to 1750. As this commodity bull started in 2000, if Whatling and Rogers are correct, this bull will run higher until 2020-2025.

In short, if you missed buying gold and silver at extremely depressed levels, Rogers thinks you have another great chance to buy into an imminent bull market at great value because the fundamentals are [so much better than they have ever been].

There is a powerful underlying demand for food. When food prices surged in 2007 millions went hungry with riots from Egypt to Haiti and Cameroon to Bangladesh. Rioting calmed down in 2008 when prices dropped, but starting at the beginning of 2009 they’ve been going up and Rogers expects “more turmoil, but I didn’t expect it to happen this quickly because food prices are somewhat depressed”. Clearly a bull market rise from current levels will cause even more starvation, riots and urgent demand [as the chart below shows].


The FAO Food Price Index measures the prices of Dairy, Oils & Fats, Cereals Sugar & Meat.

On the longer term chart [below it is evident that] real food prices were more expensive in 1917 than they are here today. Demand is there. Agriculture will be “wildly exciting” as global food shortages worsen, according to Rogers. “You pick an agriculture product and I’ll say buy it,” he said.

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Shortages are showing up right now as the world population has more than doubled from 3 billion in 1960 while the amount of arable farmland has been decreasing. If the world population rises from its current 6.8 billion to 9.1 billion by 2050 as the United Nations forecasts, a lot of people are going to be scrambling for food.

Click on the 1900-2008 FAO Food Chart for a Larger Image

What to Invest in to Take Advantage

Good advice from Daniel Keirnan in his article “Farmland Investment, the Next Big Portfolio”:

The question is what are the best ways for making money from the agricultural sector? One way is to invest directly into agriculture stocks such as farm equipment maker John Deere (DE), global seed giant Monsanto (MON) or fertilizer company Potash Corp of Saskatchewan (POT).

Another method is to invest in agricultural futures through Exchange Traded Funds (ETFs) such as AIGA on the London Stock Exchange or DBC in the U.S. which tracks an entire basket of agricultural commodities including corn, soybeans, wheat, cotton, sugar, coffee, cattle and pigs. These commodities ETFs try to track the spot price of the various commodities they include.

The advantage of these stocks or ETFs is that they are easily trade-able by anyone who has an online brokerage account. The disadvantage, however, is that they are still financial instruments, and as such can fluctuate widely in price.

One option most individual investors tend to overlook is direct investment in farmland. In many ways, a farmland investment is more secure, stable and tangible then putting money into stocks.

Farmland investments for individuals will pay a regular yearly dividend from the sale of crops, and also provide the opportunity for long-term capital gains as farmland increases in value during a bull market in food.


Don’t buy gold now. Rogers says food and agriculture are great values and will be the next big demand driven bull market.

Average Length Of Unemployment Surges To New All Time Record 40.4 Weeks

We already learned that the one biggest red flag in unemployment data had been raised when we found that the labor force participation rate was the lowest since 1984. Now we find that the other critical data point: average length of unemployment, just hit a new all time high of 40.4 weeks in July, up from the previous record of 39.9 in June. Someone should tell the average American who is rapidly approaching one year in average unemployment that the stock market soared on good payroll news. They will be delighted.

ECB Said Ready to Buy Italy, Spain Bonds to Curb Crisis

The European Central Bank is demanding that Italian Prime Minister Silvio Berlusconi commit to fast-track specific welfare reforms and a constitutional amendment enshrining a fiscal rule before it will buy Italian bonds, sources close to the matter said on Friday.

The sources, speaking on condition of anonymity because of the sensitivity of the issue, said the ECB had agreed in principle on Thursday to buy Italian and Spanish bonds if key structural reforms were brought forward.

"If Italy announces something very, very soon, this will help overcome opposition by these ... figures in the governing council and facilitate ECB intervention, which is the only thing that can stabilise the market now. I don't see how we can survive another week like this one," one source involved in the talks said.

Berlusconi's office said he and Economy Minister Giulio Tremonti will hold a news conference at 1700 GMT, although it was not clear whether he will make an announcement along those lines.

A senior euro zone official also said the ECB wanted to see extra effort from Spain and Italy before stepping in.

"In principle it is right to say that the ECB could start buying Spanish and Italian bonds if they made an extra effort with fiscal and structural reforms," the official said.

Another source said he was not aware of any specific demand on Spain, but Madrid was also expected to commit to speeding up structural reforms.

Top European Union leaders were applying concerted pressure on Berlusconi to make an announcement by the end of the weekend so that the ECB could intervene in bond markets early next week, the sources said.

"The ECB has already signalled their will to act. People in the market say the ECB has started inquiring about Italian bond prices, but it hasn't bought any," one source said.

He said the ECB did not negotiate directly with governments, but the European Commission and European Council President Herman Van Rompuy were talking to the Italian and Spanish governments, and the French and German leaders were applying vital political pressure.

An Italian government source said earlier that Berlusconi spoke by telephone on Friday to his Spanish counterpart Jose Luis Zapatero and Van Rompuy to discuss market turmoil.

Four of the 23-strong ECB Governing Council opposed the reviving of its bond-buying programme which has so far only bought Portuguese and Irish paper over the past two days.

However, one source briefed on the ECB discussion said that German Bundesbank chief Jens Weidmann and ECB chief economist Juergen Stark had voted against the decision mainly because they wanted more pressure on Italy to carry out serious reforms.

"It was about tougher conditionality, not against the principle," he said.

The source said the German government had made known privately to European partners that it supported a resumption of the ECB's bond-buying.

Italian Economy Minister Giulio Tremonti vented his frustration on Thursday at the ECB's approach, saying that when he talked to Asian investors, they had told him: "If your central bank doesn't buy your bonds, why should we buy them?"

The second source said EU officials were frustrated because Berlusconi had repeatedly pledged to introduce more decisive reforms to liberalise the Italian economy, "but then he goes to parliament and gives a populist speech saying everything is rosy".

EU Economic and Monetary Affairs Commissioner Olli Rehn said on Friday Italy should accelerate the approval and implementation of the welfare reform now in Italian parliament and urged the government to work closely with social partners to open up closed professions and do more labour market reforms.

Jim Sinclair interviewed by James Turk

France AAA Rating on the Line; S&P Says 1 in 3 Chance of Further US Downgrades; Contagion in Downgrades?

Mike "Mish" Shedlock With the US AAA rating gone, how long can France hold its AAA rating? I suspect not long. So where will that leave the ECB attempting to put a circle around Italy? Will Germany have to backstop all of Europe? Those are the new key questions and notice how the key question list keeps growing larger in size and significance. France Vulnerable to Rating Cuts Bloomberg reports AAA France May Be Vulnerable After U.S. Cut
The decision by Standard & Poor’s to downgrade the U.S. credit rating leaves France as the AAA country most likely to lose its top grade, some investors and economists say. France is more expensive to insure against default than lower-rated governments including Malaysia, Thailand, Japan, Mexico, Czech Republic, the State of Texas and the U.S. “France is not, in my view, a AAA country,” said Paul Donovan, London-based deputy head of global economics at UBS AG. “France can’t print its own money, a critical distinction from the U.S. It is not treated as AAA by the markets.” “If Italy and Spain have difficulties, are we sure that, for instance, France can still be considered a ‘core’ country?” said Marco Valli, chief euro-area economist at UniCredit Global ‘Core’ is becoming a narrower group of countries.” While France’s debt of 84.7 percent of gross domestic product is less than Italy’s 120.3 percent, as a percentage of economic output it has risen twice as fast as Italy’s since 2007. French government debt totaled 1.59 trillion euros ($2.3 trillion) at the end of 2010, according to the European Union; Italy's was about 1.8 trillion euros. France has had a larger budget deficit than Italy every year since 2006. S&P rates Italy A+, four levels below France. “If French authorities do not follow through with their reform of the pension system, make additional changes to the social-security system and consolidate the current budgetary position in the face of rising spending pressure on health care and pensions, Standard & Poor’s will unlikely maintain its AAA rating,” S&P said in a June 10 report.
The S&P warned the US, now it has warned France. Notice how the rating agencies want austerity. I asked some tough questions above, here is a cream-puff question: Short-term, what will all these austerity measures do to global growth? Japan Threatens More Yen Intervention Adding to the global tension, Japan Official Warns of More Yen Selling
A Japanese Finance Ministry official said the government is ready to sell yen again following last week’s move if it sees speculative trades driving the currency higher. Further intervention would “maintain the effect and warn those who make unusual moves” in the currency market, Vice Finance Minister Fumihiko Igarashi said on a television program of public broadcaster NHK yesterday. Japan acted alone in selling the yen last week, in contrast with a previous intervention in March that was coordinated among the G-7. The Bank of Japan added 10 trillion yen of monetary stimulus on Aug. 4, hours after the Finance Ministry’s move. Baba and Lee at Goldman Sachs said that Japan has been buying U.S. Treasuries when it sells yen, leaving it with more than 30 trillion yen in unrealized losses that will test the government’s “true determination” to combat the currency’s rise. Japan maintains its trust in the ability of the U.S. to pay its debts and expects Treasuries to remain an attractive investment, a government official from the Asian nation said yesterday on condition of anonymity. Japan is the second-largest international investor in Treasuries, behind China.
Countries do not care much about losses on treasury holdings. They care about exports. Notice how even amidst the S&P downgrade of US debt Japan's reaction is to buy more. I covered this topic at length on Friday in Reserve Currency Curse: Idea China to Stop Buying Treasuries After S&P Downgrade is Fallacious; US Would Welcome China Not Buying US Treasuries!. Global Currency Wars In spite of its stated "strong dollar" policy, clearly the US wants a lower dollar. It is equally clear (and stated) that Japan wants a lower Yen, Brazil wants a lower Real, Switzerland wants a lower Swiss Franc, and China does not want the Yuan to rise. Yet every month, someone talks about China or Japan or some other country dumping treasuries or dumping the dollar. In case you missed it, please consider Global Currency Wars Enter New Stage; Brazil Calls Off Truce, South Korea Reviews "All Possibilities", Philippines Threatens "Prudential Limits". When does this madness blow sky high in a global currency crisis? I will tell you it is going to happen, I just cannot tell you when. Europe's Structural Problems Structurally the only way to resolve the European mess is
  1. Adoption of a European nanny state complete with common bonds and common fiscal policies
  2. Partial breakup of the Eurozone
Euro Endgame Would Germany go along with the former? How difficult is the latter? I cannot answer the former but the latter is easier said than done. Greece for example would immediately blow up in hyperinflation if it was forced to immediately go back on the Drachma. No one would want that. Capital and human capital would both flee Greece. The same might apply to Portugal and Spain. Germany could leave. Otherwise, slowly but surely the European Nanny State solution will be forced down the throats of screaming German taxpayers. The endgame is not clear, and both option 1 and 2 involve huge unresolved issues with global consequences. What is clear is the current path is unsustainable. There has never been a successful currency union in history that did not also involve a fiscal union as well. This time will not be different. Mike "Mish" Shedlock

Top Five Mistakes Made When Submitting Your Resume

The lackluster economy, rising unemployment numbers and dozens, if not hundreds of applicants vying for the same job. With all these obstacles in the way of job seekers, any constructive advice can give you an advantage. If your resume hasn't been updated in years, or you are using an outdated online template or the resume you are emailing to potential employers doesn't contain key words, you probably won't even get an interview, much less the job. (To help you score that dream job, check out .)

The following tips and ideas may not get you the job, but they will help move you closer to the top of the pile and help you to better market your qualifications.

Use Keywords
Nearly every

They also use this same technology to view resumes posted on job boards such as According to the National Resume Writers' Association, 80% of employers now search resumes by using keywords.

Keywords are words geared specifically to both the job description listed by the employer and words that are specific to your profession. You must use both in your resume to pass through the initial scanning software and have your resume put into the hands of a real person.

If you don't include these all-important keywords, you probably won't even earn an interview. Using MS Word, you can easily increase the keyword searchability in your resume by using the "Properties" feature found underFile in Word '03 and under the Word Button in Word '07 then go to Prepare, then Properties. You can also add a link here to any web resumes you have posted online.

Appearances Count
Have you ever emailed your resume to yourself? You should. Cyber-glitches, email attachments, and different programs used to open those attachments can distort or destroy your perfect looking resume. Pages can break where they aren't supposed to, lines can be added between sentences, words cut off, and fonts that looked great on your computer can appear very different in an email. The best suggestion is to send your resume to yourself and several friends to ensure that it looks good on multiple computers. (For more ways to get your resume seen, see )

Words to Avoid
While keywords are vital in your resume, there are some words you should never include. Words that are overused, tired, make your resume appear dated or are just annoying like, "team player," "trustworthy," "problem solver."

Hiring managers, human resource consultants, and employment agencies suggest eliminating these words from your resume. In their place, you should show how you used these traits on the job. How did you solve problems? If you came up with a new way to cut costs, explain how. What makes you trustworthy? Were you trusted with multiple financial accounts? Finding new ways of explaining your talents using keywords instead of overused words will help get you that interview.

Spelling Counts
Spell check does not catch every error, nor will it fix bad grammar. The best option is to have someone else read and proof your resume. You've probably spent weeks writing, refining and tweaking your resume to create the best sales tool possible. After spending so many hours reading, editing, and rewriting it, odds are you won't see the mistakes that could be lurking there. Having someone else, or better yet, several others review your resume could save you from sending it out with mistakes and costing you a potential job.

Include a Cover Letter
Yes, it sounds "old school" particularly in today's fast-paced Internet world. While email speeds your resume to multiple potential employers, many still look for that personal cover letter. Tailoring your cover letter to individual employers increases your chances of have your resume reviewed and gaining an interview. The cover letter should be pasted into the body of the email, not sent as an attachment. Remember, this is still a business letter, follow the standard rules of business writing protocols.

The Bottom Line
There is no magic formula to having your resume reviewed by a potential employer. These tips can help give you an edge over the competition. Your own skills, experience, and determination will be the keys to open career doors for you.

“Basket of Currencies and Gold May Sub for US Dollar”

In the wake of Standard & Poor's dropping America's ranking to AA+, Greencrest Capital senior analyst Max Wolff says this is just the beginning of more serious trouble for the US.

­“I do think this sets up… an environment in which symbolically, politically and economically the United States’ leadership of the global economy has another kind of strike against it,” he told RT. “It does reduce people’s confidence… People get scared, they run away from riskier assets.

“I think the bigger risk is to the mortgage market, with the very fragile situation in US housing, as well as student loans, car loans, credit conditions generally,” he added. “And I would remind people, too, that S&P didn’t just downgrade the United States, they put us on further downgrade watch, so they are suggesting that this downgrade may be the beginning of a process and not the end.”

The analyst pointed out that on top of the poor shape of the US dollar, there is no other currency presently positioned to substitute for it.

“The euro, normally mentioned as a possible replacement, is in a shape that makes the dollar situation look pretty good right now,” Wolff stated. “So, clearly, that doesn’t look likely. But you may see regional currencies emerge, with euros, and rubles, and renminbi, and yen, and even the Brazilian real taking up some of the positions that the dollar historically had in their respective world regions.”

US Weekly Economic Calendar

time (et) report period Actual forecast previous
MONDAY, Aug. 8
None scheduled
Tuesday, AUG. 9
7:30 am NFIB small business index July -- 90.8
8:30 am Productivity 2Q -0.9% 1.8%
8:30 am Unit labor costs 2Q 2.4% 0.7%
2:15 pm FOMC statement 0%-0.25% 0%-0.25%
Wednesday, AUG. 10
10 am Job openings June
-- 2.97 mln
10 am Wholesale inventories June -- 1.8%
2 pm Federal budget deficit July -- -$165 bln
Thursday, AUG. 11
8:30 am Jobless claims 8/6 410,000 400,000
8:30 am Trade gap June -$48.2 bln -$50.2 bln
8:30 am Retail sales July 0.7% 0.1%
8:30 am Retail sales ex-autos July 0.3% 0.0%
9:55 am Consumer sentiment Aug. 62.5 63.7
10 am Inventories June 0.5% 1.0%