March 2013 027

In This Issue
News and Analysis Italian Voters Revolt 1 1

Welcome to this Issue of Joseph Insight!

My 2013 Economic Forecast is now available both in MP3 and video, with a full slide deck. Our top conference of the year, the Marketplace Christianity National Conference is coming April 25-27th. If you are a reformer in your sphere of life this conference is a must-attend. Our keynote speaker this year will be Chuck Ripka, who led over 100 people to the Lord while a banker. Dozens of leaders who are representing Christ in profound ways will share their stories, including Phillip Chang, CEO of Yogurt Land, Michael Stephens, the Starbucks Prophet. Every Blessing, Bob Fraser

Ireland Pioneers a Stealth Debt-Fix 4 Your Wealth is Now Being Transferred 4 Successful Print-Era Investing China Weather Investment Themes 5 8 8 9

NEWS AND ANALYSIS

Italian Voters Revolt
Maybe you were watching the stock market on Feb 25th the Dow jumped 80 points, and then proceeded to fall 300 points: This same dramatic rotation appeared in every market: stocks, bonds, and currencies. The issue of course was the Italian elections. Italian voters rejected the existing political powers, and rejected austerity. The main winner was comedian Beppe Grillo, whose campaign was marked by profanity-laden tirades against the establishment.

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His positions are nothing short of idiotic. Here is a brief rundown of Grillonomics from JP Morgan:

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Markets reacted negatively to the uncertainty Tuesday, with fears about the eurozone crisis coming once more to the fore after months during which confidence had grown.

Italian interest rates spiked up, reflecting the fresh uncertainty in Italy:

The Italian vote highlights the tension inherent in the Europeans current approach to fixing their problems. The austerity measures are causing great economic hardship on the populace of southern Europe; unemployment is over 20% and the economy is slowing. The Danger of Civil Unrest It does not seem possible that Europe can continue this approach and avoid civil unrest. Famed investor George Soros said this: I am terribly concerned about the euro potentially destroying the EU. There is a real danger that the solution to the financial problem creates a really profound political problem. Historically, high unemployment and especially youth unemployment are the breeding grounds of civil unrest. Today unemployment in southern Europe is over 20% and youth unemployment is over 50%. How long can they endure before frustration boils over? Soros believes as I do that the Euro itself is bound to break up the European Union. He says it may take generations but would result in a tragedy of lost political freedom and economic prosperity. (Article) Austerity Cannot Fix the Problems in Europe The austerity approach does nothing to fix the underlying problems in the Eurozone: the imbalances created by the Euro as well as over-regulation and

The election left Italy with a fragmented government unable to form a coalition. From CNN:
This is a case of gridlock, said James Walston of the American University of Rome. Nothing could be worse for Europe. International concern is high that Italy -- the third-largest economy in the eurozone and the eighth-biggest in the world -- could face fresh elections if no coalition government can be formed. In any case, a weak government would probably struggle to push through the tough reforms many observers feel are needed to get the economy back on track. Symbolizing Italians' own unhappiness with austerity and their political leaders, a quarter of the vote in the lower house went to the anti-establishment Five Star protest movement led by comedian Beppe Grillo, who has said he won't join forces with any established political parties. A bloc led by Mario Monti, the former head of a technocrat government that steered Italy through the worst of the eurozone crisis last year, trailed badly in fourth place. p 2 Joseph Insight

beaurocracy, which I have written about extensively. Soros, in a Dutch TV interview said the austerity program was counter-productive and cannot succeed. He said it is leading Europe into a longlasting depression. It is indeed. Raising Taxes Cuts Tax Revenues In the last few months I have been writing about how tax increases actually reduce tax revenues. Here is the latest proof point from Greece: Greek officials recently doubled property taxes and made big hikes in income taxes. The result? Tax revenues have fallen by 16% from a year earlier (article). Austerity Slows the Economy Austerity means reducing government expenditures, which is good in the long-term, but in the short-term slows all economic activity. These charts show the economies in Europe continuing to slip: These official debt-to-GDP figures are high indeed. But as high as they are, they are also understated. For example, Spain does not count the debt of its regions or its guarantees to its banks and other businesses, which add another $350B, making its true debt-to-GDP ratio closer to 110%. When debt grows faster than the economy, it can grow to where it cannot be paid back a debt trap. Greece, Italy, Portugal and Ireland are close to such a debt trap, if not already in it. Europe Rethinks Austerity, which Means Europe is already rethinking its austerity approach to the economic crisis.

France to pause austerity, cut spending next year instead (Reuters) G-20 to Consider Slowing Pace of Budget Cuts (WSJ)

Austerity Increases Government Debt As austerity slows the economy, the slower economy means less taxes collected, and greater government spending on safety net programs like welfare and unemployment. This is why government debt soars in bad times. It is also creating a debt-trap in many nations a situation where debt becomes too large to realistically be paid back. A debt-to-GDP ratio over 100% is considered unsustainable:

The politicians understand that they cannot stay in power on an austerity platform. The harder they push toward austerity, the more likely the people will revolt, as they just have in Italy. As Europe gets closer to abandoning austerity, there is only one other solution: you guessed it the universal solution for all that ails, the perfect economic panacea money printing.

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Ireland Pioneers a Stealth Debt-Fix

Last month, a momentous event took place in Europes financial landscape. It will probably prove to be one of the most important events of 2013 and a harbinger of what is to come, though it was barely reported in the financial press. It was engineered at the hands of the Irish. Ahhh, those clever Irish! But first a little background. In 2010 the insanely overleveraged Irish banks had losses of 100B, endangering the entire nation. At the insistence of the EU, the Irish government agreed to bail out the banks, borrowing 67.5B from the EU another 17.5 billion from its pension and cash accounts. Angered, the Irish people threw out that government at the next election. Since then there have been many calls to repudiate the debt simply not pay it back. But this would be problematic for the EU. When the nations agreed to the Euro, they all agreed that the European Central Bank (ECB) would never able to finance the debt of individual nations. Germany in particular wanted assurance that the notoriously profligate southern European nations would never be able to print money to finance their government debts at the expense of the other European nations, especially Germany. But, if a nation were to borrow from the ECB, then not repay, in essence the ECB financed the deficit a huge issue in Europe. The door would be opened for the financing of all debts, at the expense of the fiscally responsible nations. The Irish knew they could not afford to repay the numbers were too big, and the Irish people too angry; most the European elite knew they could not repay; but not repaying would violate one of the primary tenets of the EU itself and would enrage the German people who already feel like they are the ones paying for everyone elses largesse and foolishness. The Irish came up with a very clever solution one that may be a road-map for the other debt-trapped nations of Europe. I vividly remember years ago a venture capitalist told me with a sadistic grin, I am happy to let a company set the price of my investment so long as I can set the terms. Terms are more important than price. I have never forgotten it.
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And so the Irish have in essence done the same. They will repay, but on their own terms. They have agreed to pay the debts, but not over 10 years at an 8% interest rate (the previous deal), but over 2540 years at a 3% rate (FT, Bloomberg). It seems innocuous enough, doesnt it? But consider this one important factor in the equation: inflation. At 5% inflation, in 34 years (the average maturity of the new deal) a Euro would be worth only 18% of its original value. At a 10% inflation rate, it would be worth only 3% of its original value. Ireland plans to let inflation pay their debts. And the ECB has given it the nod. The ECB has tacitly consented to this approach. ECB President Mario Draghi said the ECB governing Council had taken note of the deal. The Bottom Line Watch for the other PIIGS nations to follow suit, delaying their repayments. Everyone will deny that it is monetary financing, because the debts will in fact be repaid, even if they are repaid in Euros that are worth much less. And watch for the EU to engineer inflation, which will allow the debtor nations to escape their debt trap.

Your Wealth is Now Being Transferred

Deposit your money in a bank, collect interest, and in a few years you are ahead, right? Not exactly In the world of yesterday, you invested your money and you got a return, dependent on your risk:

In the past investors could be assured that most investments would have a positive return. But inflation complicates the picture. If you are earning 3% interest, but inflation is 6%, then the real interest rate is negative 3% because in actuality you are losing money. Due to inflation, you are being repaid in dollars that are worth 6% less each year. This is called negative real rates. Unless interest rates are manipulated, they will always exceed the rate of inflation. In the 1970s when inflation exceeded 10%, interest rates were even higher, so investors still had a positive return. However, we have entered a completely new phase many call financial repression. Interest rates are being held below the rate of inflation, making negative returns the norm. Fed Chairman Ben Bernanke has engineered this system by quantitative easing (QE), which, simply put, is creating mouse-click money and buying government bonds. It has artificially driven down interest rates. Here our investment landscape today:

ed it in 1980, inflation is actually about 10% according to Shadowstats (see the blue line below):

This means that any investment earning below 10%, which is nearly the entire investment landscape, is actually losing money. It is an epic transfer of wealth, from investors to governments. And it is the way the debts will be repaid, as the Irish debt deal indicates.

Successful Print-Era Investing

As part of The Feds QE program, in 2013 the US Federal reserve will create money and buy fully 75% of all 30-year bonds issued by the US Treasury (Article). We are entering into the final stage of the debt Supercycle a stage that will be characterized by rising interest rates and inflation and if interest rates are manipulated, plummeting currencies. Ultimately, the last resort will be money-printing. It is the only politically viable solution to the financial crisis. But money-printing comes with a steep price tag: selective inflation. By selective, I mean that asset prices and commodity prices will rise. Here you can see the effect of the Bernanke-Fed era on commodities:

Negative real returns mean investors are losing trillions of dollars. It is engineered wealth-destruction on a massive scale. Our wealth is being transferred to others. To whom exactly? To the issuers of those investments: primarily the government, which issues cash and bonds; and secondarily to large corporations that can issue investment grade debt. Currently official inflation is in the 2% per year range. But it is actually much higher. Anyone who shops for groceries of fills their gas tank can tell inflation is higher than 2%. In fact, if we were to calculate inflation the way the government calculat-

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But that doesnt mean we have to be the victim. There are a number of investments that will work well in this environment. Simple math tells us that when money in being printed, it will be worth proportionally less. But it also means that anything that cannot be printed will be worth proportionally more! Some things that cannot be printed are: good businesses, housing, precious metals, and many other things as well. Housing I continue to steer people toward US residential real estate. In recent news, new home sales were up 15% in January (article). Foreclosures are dropping:

It is time to buy bargain-priced housing, especially if can qualify for todays 3% 30-year fixed rate mortgages. That is basically free money. Mortgages I have stumbled across an even richer vein than traditional real estate investing defaulted mortgages. I have even started a small investment firm to capitalize on this opportunity. Banks have been inundated with bad loans. When banks accumulate too many bad loans, they are penalized by bank regulators, and are commonly forced to liquidate these loans. Because there are few buyers, these loans can be bought for pennies on the dollar. For example, we were able to purchase one loan worth $109,000 for only $20,000 and there was enough equity in the home to fully cover the mortgage. We purchased another $91,000 note for $6,500. This note had $21,000 in equity when we bought it, but since then the home has risen $22,000 in value, giving us $43,000 in equity. In fact, this investment is structured in such a way that we are capturing 100% of the increase in the value of this $300,000 home with only a $6,500 investment. And our only maximum potential loss on this investment is our $6,500 investment. It is the kind of risk-reward profile that comes along once or twice in a lifetime. It is a shining example of what I have said for years: every crisis is an opportunity. You just have to have eyes to see it. Precious Metals Gold and silver cannot be printed, and will continue to be great investments, until the print-era comes to an end. But gold and silver are heart-breakers, due to their extreme volatility, as recent price action has proven! Hopefully you have followed my advice

And prices have fallen into a reasonable range. The US housing market has fallen 35% on average and is now in its historical price range when adjusted for inflation:

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in timing investment in gold and silver. My timing recommendations have been spot-on the last few years, and I certainly hope my blessed streak continues! I told investors to take profits at the beginning of December, and hopefully you did. But the recent price action in gold and silver do not mean they are finished. I laugh when I read the headlines. It happens every time gold goes into a long correction!

profitably at a market price of $4 per million British thermal units, a relatively small increase from the current price of about $3.43. The study, funded by the nonpartisan Alfred P. Sloan Foundation and performed by the University of Texas, examined 15,000 wells drilled in the Barnett Shale formation in northern Texas, mostly over the past decade. It is among the first to study the geology and economics of shale drilling, a relatively recent development made possible by hydraulic fracturing, or fracking, in which a mixture of water, sand and chemicals is pumped at high pressure into rocks to release gas. Looking at data from actual wells rather than relying on estimates and extrapolations, the study broadly confirms conclusions by the energy industry and the U.S. government, which in December forecast rising gas production. "We are looking at multi, multi decades of growth," said Scott Tinker, director of the Bureau of Economic Geology at the university and a leader of the study.

Gold's Decade-Long Bull Run Is Dead (Gartman) Why Gold Has Further To Fall (Forbes) Is $1200 Gold Possible? (Seeking Alpha) Gold loses glitter; prices likely to come down further Gold Death Cross Signals Price Slump as Soros Sells Goldman Sachs Targets $1200 GOLD Price

I can promise you this: government currency malfeasance has driven golds rise, and that malfeasance is not yet complete. Gold is not finished until its underlying fundamentals change, which they have not. Gold will rise again and probably quite soon. See my full forecast in the Investment Themes section below. Natural Gas The more I study the natural gas boom in the US the more I am astonished at the change of fortunes for the US. A recent highly-regarded study of the Barnett shale formation in Texas made it clear just how significant this new energy boom is. Here is an excerpt from a story in the Wall Street Journal:
U.S. natural-gas production will accelerate over the next three decades, new research indicates, providing the strongest evidence yet that the energy boom remaking America will last for a generation. The most exhaustive study to date of a key natural-gas field in Texas, combined with related research under way elsewhere, shows that U.S. shale-rock formations will provide a growing source of moderately priced natural gas through 2040, and decline only slowly after that. A report on the Texas field, to be released Thursday, was reviewed by The Wall Street Journal. The research provides substantial evidence that there are large quantities of gas available that can be drilled p 7 Joseph Insight

This energy boom will remake the US as an energy powerhouse. Natural gas is extremely inexpensive when compared to other fuels. When compared to the energy-equivalent amount of gasoline, natural gas is 10 times cheaper:

Because of its relative cost, companies that need cheap energy are moving to the US. Chemical companies and plastics manufacturers that also use natural gas are building new facilities in the US. Prices of natural gas are far higher in other countries. In the chart below, the blue line on the bottom shows US natural gas prices, driven low by dramatic increases in production; the red line shows prices in the UK; and the black line shows prices in Japan, which is energy starved since turning off their nuclear power plants in the wake of the Fukushima disaster:

Last month I wrote that China finally appeared to be emerging from its contraction, but that it could be overstated due to seasonal adjustments. The latest numbers show this was the case. Current PMI readings show China a near zero-growth level of 50.4 (50 means zero growth).

The US is set to be an exporter of natural gas in the next few years. There will be thousands of investment opportunities caused by this new energy boom. Keep your eyes peeled for them!

China
China and the US are the worlds economic growth engines today. The US economy is still growing, but at a slower pace, while Europe is still contracting:

Weather
The Potsdam Institute for Climate Impact Research released a recent report studying climate extremes. They constructed a weather extremes index which includes data on temperatures, daily precipitation, and the Palmer Drought Index. They discovered that 2012 broke the last record set in 1934, the peak of the dust bowl:

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should exit the stock and bond markets, and move into hard assets, cash and hard currencies (not in the US Dollar, the Euro or the British Pound), gold and other hard assets.

The Economy
Last month I called for a global recession in the first half of 2013. However with congress acting to reduce fiscal cliff impact from $660M to $250M, our economic outlook is significantly less dim; but with the huge increase in marginal tax rates and the weakness in Europe continuing, we may yet see a recession.

Equities
We may be looking at another such year of drought and heat in 2013. NASAs long range forecast, which accurately forecasted last years heat and drought, is forecasting similar for 2013, though more focused on the central Midwest region, from Canada down to Texas: I wrote in July the following: The bias now is certainly to the upside, but it might be a bumpy ride. I expect the markets to rise, but investors should remain cautious as Europe continues to boil. In October I shifted to a bearish bias pointing out that several indicators were pointing to a short-term correction in the markets. Both calls proved fairly accurate. 2013 started off with a bang on the partial resolution of the fiscal cliff. Last month I pointed out the many sentiment indicators that were all warning the market was in a danger zone: 1. For the first time in years US investors put money into the stock market (CNN), Which is a warning sign, as retail investors are usually wrong on timing, investing near market tops and selling near market bottoms.

INVESTMENT THEMES
Editors Note: In this section we review the inves table megatrends we are currently following. While some of the text will be the same monthto-month because our long-term themes remain unchanged, we will update it monthly with our current outlook. Updates are shown underlined.

Time for Caution

Systemic risks abound, especially in Europe and Japan, but also in the US and many other nations. Unstable debt dynamics and low yields make for a difficult investment environment. Conservative investors who want to invest for the next 5-10 years
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2. The NAAIM survey is a survey of investment managers that also shows extreme optimism, at nearly 100:

sellers versus buyers at a 12-to-1 ratio, the highest ratio since January 2011. In the months after the ratio was last at this level, the benchmark index retreated as much as 19% from April to October of 2011. Gasoline prices north of $3.80/gallon have also served to reverse the stock market in the past, and again we find ourselves at that level. At first glance this might seem like a silly indicator, but high gas prices can keep shoppers home:

3. NYSE margin debt, which is investor borrowings for stock purchases, was also at a level of previous tops.

4. The VIX is called the fear index which continues to track near all-time lows:

The markets have been rising since November primarily on Bernankes QE. But as to be expected with such extreme optimism, we saw the first weakness in the market last month.

5. The Bullish Percent Index also continues to show extreme optimism, at levels indicative of previous market tops:

Last month I wrote: Here is my forecast: the market will move up and/or sideways and choppy in a topping pattern; then by April or so we will see the market roll over and drop. I will still stand by that forecast for now. The Chinese Shanghai index has bounced up strongly after nearly two years of dropping, signaling investors view of the Chinese economy improving. Last month the Shanghai took a break from its moonshot, but is still indicating it believes the Chinese economy is recovering. If the Chinese economy does indeed rebound, this has huge positive

Adding to my thesis, corporate insiders -- executives in the know about their companies, are
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implications for the world economy, and for commodity prices:

2. Negative real interest rates. Today interest rates, after adjusting for inflation, are negative. This means there is no incentive to hold cash, and thus the relative cost of holding gold and silver disappear. At the chart below shows, whenever real rates are negative, gold and silver rises.

In January I called for a long trade in Japanese Nikkei (ETF: NKY). The Japanese stocks will benefit from a weakened Yen and the global currency print-fest. That continues to be a good trade:

3. Inflation. Gold and silver are historically the best protection against inflation. While government inflation statistics are reporting artificially low inflation numbers, inflation actually quite high. 4. Uncertainty. Banking crises and sovereign debt crises mean there are no safe places to store wealth. Gold and silver are the best way to store wealth and will benefit through most crises.

Gold and Silver

Gold and silver fluctuate between being commodities and currencies. When governments are responsible, they become commodities for use in jewelry, electronics, etc. When governments are irresponsible, they become currencies. Gold and silver are now firmly in the process of becoming currencies. They remain the best bet against government fecklessness. Gold and silver are your best defense against the irresponsible monetary policies being madly pursued across the globe. Here are some of the fundamental reasons Gold will rise: 1. Governments across the globe are pursuing money printing schemes to devalue their currencies. Gold and silver cannot be printed and will hold their value relative to all debasing currencies.

So far my forecasts for gold have been fairly good. I forecast gold would hit $1,360 by December 2010. It handily beat my forecast, topping $1400. I also forecast gold would see its 2011 low in May, and that this would be a good time to buy, which it indeed turned out to be. In January, 2011 I forecast gold would hit at least $1900 by December 2011. In my August 2011 newsletter I said, I would not be surprised to see weakness this month, and on August 23 gold hit my target or $1900 and I wrote in my blog post for traders to take profits.

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In 2012 I correctly called for a bottom in August, writing, it is time to buy this month. The seasonal weakness persists through (August). You should finalize any purchases of precious metals by the end of the month. That proved accurate and both gold and silver rocketed out of beautiful bases. If you followed my advice, you should be sitting on 150-200/oz. in profits:

When gold hit its low last month, trading volume set a record indicating investor capitulation a clear sign of a bottom:

This is probably the bottom for gold this year, though it is too early to say for sure. Investors can start accumulating at these lows, but the buying opportunity is likely to persist for a few months: I called for gold to hit 1850/oz in 2012 which proved slightly optimistic; though it came quite close, hitting $1798, though short of my target by $52. In December I wrote, Short term investors should take some of their profits in gold and silver by the end of this month. This weakness has happened and I expect it to continue. Long term investors should just stay put, I think it is unlikely we will see gold drop below $1550-1525 in the near future. The weakness in gold has continued as I thought. Rumors abound regarding large hedge funds liquidating their gold exposure because of getting crushed in their Apple, Inc. investments and selling gold to offset their losses. Indeed hedge funds holding GLD have dropped to a low: Silver always moves in sympathy with gold, and any timing signals I give for gold will always apply to silver as well. Silver has had a great ride too since 2001:

Silver has a major support zone at $26 and I doubt it will drop below that range in the near future. Silver is making a very nice base and is poised for some nice gains in 2013, but I am not buying yet. Gold miners (GDX) continue to show weakness relative to the metal:

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GDX is in a phase of extreme pessimismin fact, I have never seen it this low:

Currencies
In January I recommended shorting the Yen (a simple way to do this is buying YCS the Ultrashort Yen ETF). At the time YCS was at 45.75 and today it is over 57, a 25% gain in just a month. The Yen will suffer as the Japanese print yen and buy their own debt to cover their massive deficit. I would not buy YCS right now as it has moved so far so fast, but shorting the Yen will be a great trade for the next 3-4 years:

The markets are setting up for a great investing opportunity sometime in the next few months. Last month it hit the level of previous bounces (see chart). Speculative investors could nibble. Gold will respond to any rumor of QE or money printing schemes cooked up by the authorities to rescue the world. We dont know when this will be but you want to be invested beforehand. For details on how to purchase precious metals download my free Special Report on How to Buy Gold and Silver.

Bonds / Interest Rates

In the long-term, interest rates are going up, due to simple supply and demand. But in the short term and intermediate term, I expect interest rates to remain low due to the ongoing financial crisis and stock market weakness. As I have said in earlier articles, the US bond market will be the primary beneficiary of the European economic crisis. I expect bonds to remain strong for a while.

The Euro and the US Dollar are racing each other toward worthlessness. But it is difficult to short either of them, because shorting the Euro is essentially betting on the dollar; and shorting the dollar is essentially betting on the Euro. Investors need to exit positions in both the dollar and the Euro, and be wary of all hidden dollar and Euro exposure. The Euro is in trouble. The idea was untenable from the beginning and I have predicted the demise of the Euro since 2006. The Euro strips individual countries of key financial policy levers: the ability to lower interest rates and the ability to devalue its currency. The only policies left are government spending and taxes. Several countries will default on their debts. Governments go bust when they borrow in a currency they cannot print. Either the club-med countries will leave the Euro to form a new weaker currency, or more likely, Germany will

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leave the Euro to form a new, stronger currency. There is simply no alternative. Europe is also very sick economically because of its socialism. Its social contracts are unsustainable due to the large amounts of retirees relative to workers. This will create terrible hardship as government programs are forced to be slashed just as they are now in Greece. The best way protect against the demise of the Euro and the dollar is to buy well-managed currencies Switzerland, Norway, Singapore, Brazil, Chile and South Korea are my top picks as well as the only unmanaged currencies: gold and silver. Secondary currencies that will also do better than the dollar or Euro, but also have some problems are: Canadian, Australian, New Zealand dollars, and the Chinese Yuan. I am recommending the Franklin Templeton Hard Currency Fund (ICPHX) as a simple way to buy hard currencies and earn a 4% yield. Balance your exposure to this fund with the US dollar, which may continue to strengthen temporarily as the markets unravel.

My favorite trade in oil is long Brent Crude and short WTI crude. This trade is fairly market neutral, but will capitalize on the booming supply in the US as well as any turmoil in the Middle East, since Middle East crude is priced on Brent, and US oil is priced on WTI. As you can see in the chart below, the spread between Brent and WTI continues to widen, and if it does, this trade will profit. To enter the trade you can buy BNO and short equal dollar amount of USO.

Oil and Energy

For years I have forecast higher oil prices based on increasing oil demand, especially from China and India, and decreasingly supply, based on decreasing oil discoveries:

Food and Agriculture

Food and agriculture are on a long-term, irreversible megatrend higher, due to 1) global population increases; 2) the amount of farmland globally is decreasing 1.5% per year due to development; 3) rampant money printing of paper currencies drives up commodity prices; 4) Increase in meat consumption: as third-world nations are growing wealthier, they are consuming more meat per capita. It takes eight pounds of grain to produce one pound of beef (though the ratio is much better for pork and chicken thanks Steve!):

However, as of October 2012 I have changed my view. A revolution in oil extraction technologies is extending the life of old oilfields and unlocking millions of barrels in non-traditional new fields. I expect oil prices to remain in a trading range for the next few years, barring war in the Middle East.

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This newsletter is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security. The publisher does not represent that the securities, products, or services discussed are suitable or appropriate for all investors. Any market analysis constitutes an opinion that may not be correct. Readers must make their own independent investment decisions. The information in this publication is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject the publisher to any registration requirement within such jurisdiction or country. Any opinions expressed herein, are subject to change without notice. In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control. We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate. In addition, we may have conflicts of interest with respect to any investments mentioned. Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned. All current and past market commentaries are protected by copyright. Apart from any use permitted under the Copyright Act, you must not copy, frame, modify, transmit or distribute the market commentaries, without seeking the prior consent of publisher.

The easiest way to invest is rising food and agriculture prices is via stock symbol DBA or RJA, which tracks the prices of as basket of agricultural commodities; or MOO, which invests in shares of agricultural companies. At this time I favor agricultural commodities (DBA) themselves over agricultural companies (MOO), since any market correction will affect the companies more than the commodities. I think agricultural commodity prices will be strong in the long term, but in the short term will probably not perform well.

Real Estate
In the May 2012 newsletter, I called real estate The Opportunity of the Next Two Decades. I stated, It is time now to get into a position to purchase US homes in the next few years. I do not think we have seen the bottom yet, but that shouldnt stop investors. I expect housing, especially in the US, to rise because: 1) the central banks of the world have committed to an epic money-printing regime. They will continue to print money to bail out the banks and the sovereign debtors. As the deleveraging completes its course, excessive money-printing will cause asset prices to rise including real estate; 2) the easy-money policies are being directed at lowering mortgage interest rates. For example, my son is getting a first-time mortgage for 3.25%; 3) houses are selling for 50% below replacement cost. At some point the inventory of homes will diminish and housing will return to build-cost. Make sure to focus on extreme value real estate that can earn income. Measure any real estate purchases by dividing the annual rent potential (after deducting taxes and other costs) by the purchase price. If it is above 10%, then it might be a good purchase. If not, wait. In some areas (Kansas City!) this ratio is well over 10%.
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