Farmers: An Endangered Species

In China, those working in primary industries like agriculture accounted for 40 percent of total labor force at the end of 2010, in comparison with 70 percent in 1978 (Chart 1).

Chart 1: Chinese employment by industry

Since 1990 the percentage of farmers in China has been declining over time, resulting in a shortage in food supply.

The same declining trend in farmers was also visible for the U.S. (Chart 2). Agriculture employment accounted for 40% in 1900 and dropped to 2% in 2000.

Chart 2: U.S. farm population and rural population as share of population

Today, China’s agriculture employment stands at 40% and will likely continue to drop due to industrialization. China will follow this similar path as the U.S. did from 1900 up till today.

The amount of farmers in China is declining, but production is still increasing at a fast pace due to industrialization (Chart 3).

Chart 3: Agricultural Production in China

From year 2000 though, China is facing a water shortage due to depletion of aquifers and this poses a big problem for agricultural production growth. Since then on for example, China became a net importer of grain.

Meanwhile, the Chinese population is expected to grow 0,5 % per annum. For India the growth rate is 1% per annum. If production doesn’t keep up with population growth, food prices will inevitably spike upwards.

Chart 4: Population Growth

P.S.: some funny stuff is happening in the United Kingdom. Gasoline is spiking upwards and this will of course have consequences on the food prices too.

Rare Earths bottoming out?

Attention! Rare earths are bottoming out. After a long decline for about a year, many rare earth metals noted green numbers for the first time. Also some rare earth metal stocks like Molycorp (MCP) have been bottoming out.

Molycorp (MCP)

BrotherJohn at Youtube has also noticed this trend change: Brother John’s analysis about Rare Earth Metals
Noting China is manipulating Rare Earths and that prices should be rising much higher for ex-China countries to import these rare earth metals.

Here are some price charts of Neodymium, Terbium, Europium, DysprosiumYttrium. It looks like they are about to bottom out.

Replacing US treasuries by EU treasuries

In March 2012, the U.S. government bond yields shot up, meaning that people are selling U.S. government bonds. So where did they place that money?

Investors have transferred that money to Eurozone treasuries because a looming default has been averted by the ECB. The ECB printed a trillion euros in a few months time to help Greece, Italy and Spain. This stabilized the Eurozone government debt securities so investors are now more keen to shift their money into Eurozone debt.

To see my analysis, go here: Traders converting U.S. bonds into Eurozone bonds

What if Oil Prices Double?

Today we are concerned about peak oil because global demand in oil and gas is increasing 3% a year while production is decreasing 3% a year. There have been tensions with Iran trying to shut down the Strait of Hormuz, which will affect 35% of seaborne traded oil. The Obama administration is already concerned itself about oil prices and is now focusing on increasing the drilling rate of oil domestically.

The fact is that the U.S. imports of oil have skyrocketed. 30 years ago the United States imported 28% of its oil, while today, oil imports were over 60% in 2008 but have come down to 49% in 2010. Most of those imports are coming from Canada, the country with the third highest oil reserves on the world after Venezuela and Saudi Arabia.

If oil prices were to double, there are a few things to think about.

Please go to my analysis here to find out: Benefiting from $US 200 dollar oil.

Tungsten in gold bar

Tungsten gold bar

Be wary about fraud in physical gold!

Tungsten is only $US 50/kg while gold is a thousand times more expensive: $US 50000/kg.

GDX VS. NASDAQ

Since October of last year the NASDAQ has been greatly outperforming the gold miners (GDX). The NASDAQ went up 25%, while the gold miners went down 20%.

That’s a huge disparity and it can’t last for long.

Gold miners VS. NASDAQ

P/E ratio of the 10 biggest gold miners

Gold miners have been hit hard because of an anticipated drop in gold prices due to bad technicals, lack of quantitative easing, slowing economy in China, overal bearish analysts. Let’s see how cheap these gold miners are.

The 10 biggest gold miners by market capitalization are the following with their (forward) P/E ratios:

		Market Cap ($US billion)	P/E	forward P/E
	Barrick Gold (ABX)	43	9,64	7,15
	Goldcorp (GG)	35,6	20	12,77
	Newmont Mining (NEM)	26	53	9
	Newcrest Mining (NCM)	22,5	20	12
	Anglogold Ashanti (AU)	14,3	10	7,3
	Yamana Gold (AUY)	11,5	21	10
	Kinross Gold (KGC)	11,4	15	8,33
	Gold Fields (GFI)	10	10	7
	Eldorado Gold (EGO)	7	22,5	13,8
	Polyus Gold (POLG)	7	13	13

To see my analysis go to: Gold Miners: A Buying Opportunity

Peter Schiff on the Atlantic's Economy Summit

Peter Schiff on the Atlantic\'s Economy Summit

Peter Schiff on the Atlantic’s Economy Summit