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Rising food costs and how to make money off it, and my brief state of the Union analysis

Hello everybody, I am still trying to get all the background on this blog fixed, but today I want to write about a couple of things. These are, my brief thoughts on the state of the union, rising food prices, why food prices are going up, and ways to make money off this growing trend.

If one has been following the market lately, they would notice that the price of food has risen drastically. In fact when I was talking to one my friends, he told me that when buying in bulk, a bag of rice that cost $14.00 a bag last year now costs $26.00. The price of wheat, grain, corn, and numerous types of foods have been increasing at a drastic rate. What really got my attention about the rising food price, were two articles that I read recently. One was about how McDonalds is now considering raising their prices, due to higher food costs (here). The other was about how Taco Bell is getting sued, because their ground beef consists of only 35% beef here. The fact that major national food chains are resorting to these types of cost cutting structures, or price increases, shows you how high food prices are, and how this will be a major problem in the future.

What most people fail to understand is why food prices are rising at such a drastic rate. There are two reasons food prices are rising so much, one is the devaluation of the dollar, and two is the emerging market demand. As the Federal Reserve prints more and more money, also known as QE2, the value of the dollar drops, and as a result, prices of goods and services rise. Secondly, since the dollar is a fiat currency (a currency backed by credit, instead of something with intrinsic value, aka Gold or Silver), our national debt, and trade deficits, have been sending the value of the dollar in a downwards spiral due to the fact that our currency is backed by our credit. The other reason that food prices are rising, is due to the emerging markets. What is happening in emerging markets is that emerging market economies are growing, as a result their citizens are getting richer, and this new wealth is resulting in a higher standard of living for those citizens, and those citizens are now consuming the same things that western societies are consuming. Their engaging in similar diets, consume similar meats, grains, and other foods that American citizens have enjoyed for quite some time, thus driving up demand, which drives up prices. I think that these two factors are going to increase the price of food for the foreseeable future. However, I blame the Federal Reserve and our government much more, than I do emerging market demand for higher food prices.

Sadly, I am not the head of the Federal Reserve, nor am I in government, so if we can’t change this, let’s make some money off it. A good way to make money off higher food prices is by acquiring potash stocks. Potash is a chemical, which is essential for producing fertilizers, industrial and animal feed products. Here are some stocks one might want to look into. For people that have big savings accounts and want dividends to form a stream of dividend income, they would want to look at Potash (symbol POT), Mosaic, and Agrium. For the investors that can’t afford those three stocks I mentioned above, but want to get into the Potash market, you would want to look at Western Potash, Allana Potash, and Potash One. Personally, I think Potash is a must for everyone’s investment portfolio. In fact, I think Potash is going to be one of my top 4 profitable investments over the next couple of years.
In the future, the bureaucrats in Washington are going to blame higher prices on Business, Corporations, Capitalism (Laissez-faire), speculators, the weather, and other up surd reasons, all I ask of you is to please don’t fall for it, be smarter, remember this post, and remember what I mentioned above are the real reasons prices are climbing.

My opinion of the state of the union was, that it was a joke. I love how Obama talked about how we “need to make investments for the changes of the future, in order to grow our economy.” He claims we must invest in our education system, clean energy, and a whole lot of other things such as high speed rail trains, in order to be competitive in the future. Did you all notice that instead of saying the word spending, he said “investment?” I guess investment is new “code word” for spending in Washington. First off, how would he even know what industries we should invest in, so we can become a vibrant economy in the future. If Obama had any clue about how to predict future market trends of energy and industry, the highlight of his life would have been becoming a multi-billionaire that hit it big in stock market, instead of some community organizer. That’s all I have to say about the state of the Union.


Comments ( 40 )

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    Another stock would be AgFeed (FEED) it engages in the animal nutrition and commercial hog production businesses primarily in the People's Republic of China. Because of the droughts last year in China this company (and industry) missed a potiential big haul. Now this year they are poised to grow with the stock price still under 3 dollars. Good buy.

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      This sounds like a very good company. Food and farming is going to be a booming industry.

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