agriculture for inflation?

Discussion in 'Economics' started by propslave, Jan 11, 2010.

  1. Was watching a youtube video on inflation, and it talked about the best places to be in times of inflation are gold, silver, and agriculture.

    Can someone comment on the agriculture play? Would it be the price of wheat, sugar etc. that would be increasing with inflation?

    As far as I know there is only one agriculture ETF - DBA. I believe there are a few ETN's but those don't interest me so much. Are there any specific agriculture plays or foreign stocks that would be a good play?
  2. ETFs are not gold, nor are they silver, nor are they agriculture. If their is hyperinflation, do not expect your money to be safe in any of those ETFs. For hyperinflationary situations, you need to be in physical gold, silver, or agricultural farmland.

    The world is in the worst financial crisis in history, unlike ever seen before. The whole world is on fiat money which is backed by nothing more than other fiat money. If you are worried about hyperinflation, buy physical stuff, not paper stuff that is leveraged.

    Today Gold price is about $1150 per oz. If you put exactly $1150 today in the GLD ETF and we have hyperinflation in the future....expect to maybe get back 1/10th of an ounce in physical gold back when the ETF goes belly up. (and you will have to drive to wherever it is to pick it up.)
  3. I agree that we are in scary economic times and a financial catastrophe is possible at any time which could suddenly lead to a devalued or worthless US dollar. However, I am not quite ready to sell my house, move out to the country and put all of my financial assets into bullion just yet. Unfortunately, if our economy ever gets to the point where I want to make such a move, it will probably be too late. I think that it is also possible that, instead of a sudden decline in the value of the US dollar, there will be a continued gradual weakening of the dollar with a corresponding rise in commodities. Therefore, rather than keeping all of one's money in declining US dollars, it may be a good idea to keep a portion diversified into ETFs and inverse ETFs that buy metals (SLV, GLD), currencies (FXA, FXC, FXE, FXS, FXY, etc.), agricultural products (DBA) and inverse bonds (TBT).

    In response to the original post, there are certainly a number of agricultural stocks that stand to rise if there is a rise in commodity prices. Namely, fertilizer companies like POT and MOS:

    I wish there were ETFs dedicated to each agricultural crop, like corn, soy, wheat and sugar, but for now, we are stuck with DBA.
  4. Yes, it could be a slow collapse, but it might also be a fast collapse. Look at how volatile gold & silver is now. Thats a pretty good clue of how fast this is going to happen. I wouldnt tell anyone to put EVERYTHING into gold & silver until you are 100% sure its going to happen withing a few weeks(and how can anyone be so sure?) But I would tell everyone that they should buy at least 500 oz of silver minimum just in case of rapid hyperinflation so you at least have something to barter with and maybe start a business in this new world without fiat money.

    With silver, you could go to farms and buy food by the Metric ton and resell it in 1 pound quantities to hungry people for their silver, or other goods at a large profit. For can buy 1 MT of rice for about 35 oz of silver right now. Most likely rice will not fluctuate far from that price even in hyperinflationary terms (not counting surplus or deficits in supply of rice)

    I would recommend everyone go out and buy at least 500 oz of silver today if you can afford it. At least if hyperinflation takes everything you own, you still have a little bit to get you back on your feet.

    I still think we have at least a year before we really start seeing signs where even the sheeple start to notice inflation though. But I would still go out and buy silver today while its still cheap.
  5. Mr Pain

    Mr Pain

    What is the best way to buy 500 oz?
  6. If you're buying it because you fear hyperinflation, debt would be the obvious answer. Buy now at whatever prices, then pay back with hyperinflated worthless dollars in the future.

    If you're asking what to do to actually physically purchase silver, go to a pawn shop. Check your yellow pages for one that specializes in gold and silver.
    If you're afraid to leave your house, I have heard good things about but not used them myself.
  7. Agreed, although 2 weeks ago would have been an even better time to buy silver if you didn't already have some. Silver is a much better value than gold right now and will be in very high demand if people lose faith in paper currencies.

    Just call several local coin shops and ask how much over spot they charge for 1 ounce Silver American Eagles. If their price is competitive with the on-line dealers, you can buy locally with cash. My local dealer charges $1.50 over spot (if you buy several thousand dollars worth at a time) and $0.25 extra per coin for the current year because they are direct from the mint and uncirculated. If you ever choose to resell a roll, uncirculated coins may also sell for a premium. However, if you are buying groceries, it won't really matter.