12/31/2016

Year 2016

Option premiums sold $136K.
Profit took $55K.
Open 235 trades, closed 213 trades with 87.3% winning rate.
Average trade duration 16 days.
Mayor losses came from bonds ($ZB_F), actually underestimated both, bond rally and plunge later in the year. Totally missed Trump´s rally. Biggest profits came from oil ($CL_F)
More detailed and real time portfolio metrics here.

11/30/2016

Drones, satellite innovations put ag markets 'on brink of' data revolution

Wed 30th November 2016
Drones, satellite innovations put ag markets 'on brink of' data revolution

Agriculture markets are, thanks to innovations such as drones, "on the brink" of an information revolution which could help fill the information gap notable in regions such as the Black Sea, and markets such as coffee.

Olivier Raevel, head of commodities at exchange operator Euronext, told the AgriRisk Forum that developments in satellite technology were already transforming the availability of data for energy investors.

Such information can, for example, give an indication of oil inventories allowing investors buying it to position ahead of benchmark monthly reports from the International Energy Agency.

www.agrimoney.com
Read the full article here:
http://www.agrimoney.com/news/drones-satellite-innovations-put-ag-markets-on-brink-of-data-revolution---10214.html
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11/29/2016

Evening round-up

Tues 29th November 2016
Evening round-up
Funds tire of soybean futures amid commodity sell-off
Fears that Opec negotiations are stalling triggers a rash of profit taking in commodities, ending a seven-session bull run
http://www.agrimoney.com/marketreport/funds-tire-of-soybean-futures-amid-commodity-sell-off--3865.html

Hedge funds favour grains to soft commodities - but will it last?
Hedge funds turn more bearish on softs - except cotton - while swinging bullish grains. But has this left the likes of corn vulnerable to selling?
http://www.agrimoney.com/news/hedge-funds-favour-grains-to-soft-commodities---but-will-it-last--10211.html

EU wheat exports to bounce next season, says Strategie Grains
Recovering production within the bloc, and lower competition from the Black Sea and the US, will support exports, the analysis group says
http://www.agrimoney.com/news/eu-wheat-exports-to-bounce-next-season-says-strategie-grains--10210.html

On-farm storage reduces harvest pressure in Black Sea
Increased Asian demand, and higher farm storage, disrupted the seasonal decline of Russian wheat prices this season, but those trends could unwind
http://www.agrimoney.com/news/on-farm-storage-reduces-harvest-pressure-in-black-sea--10212.html

Chinese demand for extra feed to grow, on rising GDP
As Chinese GDP grows, there will be an increase in protein consumption amongst the population, which will be met by imports
http://www.agrimoney.com/news/chinese-demand-for-extra-feed-to-grow-on-rising-gdp--10209.html

EU wheat output to revive, a bit, in 2017 - in line with future trend
Strategie Grains, in its first estimates for EU soft wheat output next year, tells the AgriRisk Forum volumes will recover, but not to 2015 levels
http://www.agrimoney.com/news/eu-wheat-output-to-revive-a-bit-in-2017---in-line-with-future-trend--10208.html

Mounting hedge fund interest 'to boost ag market volatility' ahead
Speculators, "susceptible to popular delusion", are to increase ag price swings, Commerzbank's Eugen Weinberg tells the AgriRisk Forum
http://www.agrimoney.com/news/mounting-hedge-fund-interest-to-boost-ag-market-volatility-ahead--10207.html

www.agrimoney.com
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Hedge funds favour grains to soft commodities - but will it last?

Tues 29th November 2016
Hedge funds favour grains to soft commodities - but will it last?

Hedge funds, despite lifting bullish bets on cotton to a three-year, favoured grains to soft commodities – so much so that many investors saw scope for fresh selling in the likes of corn.

Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 55,896 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The rise in the net long - the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – reflected improved sentiment towards grains and livestock contracts.

www.agrimoney.com
Read the full article here:
http://www.agrimoney.com/news/hedge-funds-favour-grains-to-soft-commodities---but-will-it-last--10211.html
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Mounting hedge fund interest to boost ag market volatility ahead

Tues 29th November 2016
Mounting hedge fund interest to boost ag market volatility ahead

Volatility lies ahead for agricultural commodity markets thanks to the growing influence of speculators -  with the prospect of a stronger dollar and weaker oil also fuelling price moves, Commerzbank said.

One impact of the recovering inflation expectations, which are spurring ideas for US interest rate rises ahead, will be to increase the appeal to speculators of commodities, which might see their own values rise.

"Managed money will be looking for yield," seeking to boost returns and keep ahead inflation, Eugen Weinberg, head of communications at Commerzbank, told Agrimoney.com's AgriRisk Forum in London.

www.agrimoney.com
Read the full article here:
http://www.agrimoney.com/news/mounting-hedge-fund-interest-to-boost-ag-market-volatility-ahead--10207.html
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RUS2K, just run as far as you can


CFTC Copper speculative net positions @46.3K



$WTIC:SPY

Check out this chart from StockCharts.com for $WTIC:SPY

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SPY:TLT

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CFTC Copper speculative net positions

CFTC Copper speculative net positions

 

http://www.investing.com/economic-calendar/cftc-copper-speculative-net-positions-1620

 

 

Waiting for bounce $TLT

Check out this chart from StockCharts.com for TLT

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Copper $HG_F16

Check out this chart from StockCharts.com for ^HGF16

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Is it allready shorting time? $SPY

Check out this chart from StockCharts.com for SPY

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11/22/2016

Billionaire trader says “half the U.S. energy industry will be bankrupt in 6 months”

The End of Big Oil Is Here... 

 

Billionaire trader says "half the U.S. energy
industry will be bankrupt in 6 months"



Dear Reader,

At this moment, oil is caught in an absolute death spiral.

And a handful of billionaires are quietly dumping oil stocks at an alarming clip...

This mass exodus comes alongside oil's fall to an 11-year low, dipping below $35 per barrel for the first time since 2004, even lower than the 2008 financial crisis.

This situation is so severe that legendary billionaire energy investor John Arnold says "half the U.S. energy industry will be bankrupt in 6 months."

Warren Buffett dumped his entire Exxon position worth over $3.8 billion.

Bill Gates unloaded nearly $1 billion worth of oil stocks.

And George Soros couldn't get out of oil fast enough, selling off multiple positions...

Pundits would have you believe a temporary "global supply glut" is to blame.

They couldn't be more wrong...

The real reason is much more ominous and could push oil as low as $10 per barrel, completely decimating Big Oil and sending the broader markets into a full-blown collapse.

You see, a shocking discovery outside Bern, Switzerland has unlocked a massive supply of free fuel.
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Enough fuel, in fact, to power the entire world for 36,000 years.

This fuel is so cheap, so easy to access, and so abundant that Fortune 500 companies - including Google, Apple, and Facebook - are investing billions to move into this technology.

At the same time, nearly every major energy player on the planet is shunning oil in favor of this new fuel. In fact, the U.S. Department of Defense just invested $7 billion in a single day.

And Saudi Arabia's oil minister, Ali Al-Naimi, says the country is investing $109 billion to bring this new fuel on line and could stop using oil entirely.

Please understand: This is NOT a temporary condition. It is the beginning of the end for Big Oil.

A member of the United States intelligence community, recognized for his work with Presidential citations from Presidents Nixon and Reagan, has stepped forward to reveal exactly how this "universal fuel" will enable America to declare complete energy independence for the first time in 40 years.

I suggest you review his complete analysis today...
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To Your Success,

https://files.admin.moneymappress.com/images/Mike%20New%20Sig.jpg
Mike Ward
Publisher, Money Morning

 

The above is a paid advertisement. Barchart.com is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Barchart.com does not guarantee or verify any performance claims made by such systems, newsletters or services. Trading involves a significant and substantial risk of loss and may not be suitable for everyone. You should only trade with money you can afford to lose. There is no guarantee that you will profit from your trading activity and it is possible that you may lose all of, or if trading on margin more than, your investment. Some of the results shown may be based on simulated performance. SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS SHOWN IN AN ACTUAL PERFORMANCE RECORD, SUCH RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED OR HYPOTHETICAL PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. Past performance is not necessarily indicative of future performance. This brief statement cannot disclose all the risks and other significant aspects of trading. You should carefully study trading and consider whether such activity is suitable for you in light of your circumstances and financial resources before you trade.

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10/10/2016

How To Sell Long Term Options

There are various ways to sell options this environment, but my preferred method is to sell deep out of the money options (calls and/or puts), collect the premium, and then let options melt down toward zero. Read more

10/02/2016

The 5 largest companies in the stock market

The 5 largest companies in the stock market right now are all in tech. The current rankings look like this:
Apple $608 billion market cap
Google $550 billion market cap
Microsoft $450 billion market cap
Amazon $393 billion market cap
Facebook $367 billion market cap

9/15/2016

This is good-one: “Gold will plummet to $750… real-estate will drop another 30%... and the DOW will plunge to 6,000.”

Dear Reader, 

If you watch CNBC, it’s likely you’ve seen this man.  

He’s the economist who recently said, “Gold will plummet to $750… real-estate will drop another 30%... and the DOW will plunge to 6,000.”  

He even had the audacity to tell CNBC contributor Ron Insana, “You and Robert Malthus don’t know what you’re talking about!” 

When I heard this, I wondered, “Who the heck does this guy think he is?” 

Then I took a look at his track record...  

Harry Dent has predicted nearly every major economic trend over the past 30 years…including the 1991 recession, Japan’s lost decade, the 2001 tech crash, the bull market and housing boom of the last decade and, most recently, the credit and housing bubble.

And I’m thrilled he’s letting us share his latest research with Stocks & Commodities readers. I must warn you, I was shocked when I heard what he's forecasting for the coming months.

The scary thing is, much of what he predicts is already starting to happen.

But you can see it for yourself right here. 

Shannon Sands

Publisher

Bank of England


Undeniable facts


9/08/2016

FED, ECB, BOJ

 

The Big Picture ... Market Perspectives

By Bryan Rich 

September 8, 2016, 2:00pm EST 

 

https://staticapp.icpsc.com/icp/loadimage.php/mogile/1014329/89450b52c102565f481ecfe4550f7cc5/image/pngThe ECB met this morning.  As expected Draghi and company sat tight.  The big events of the month are in two weeks, when the Fed and BOJ decide on rates/monetary policy.

Today let's take a look at the total assets that have been hoovered up by the world's biggest central banks, an activity that the central banks thought would lead to growth, and the gold-bugs thought would lead to hyper-inflation.  They've both been underwhelmed.   

The Fed's balance sheet has grown to almost $4.5 trillion ...

sept 8 us fed

The ECB's balance sheet is at $3.7 trillion and growing ...

sept 8 ecbj

The BOJ's has rocketed to $4.4 trillion and growing ...

sept8 boj

And China, the stealth QE'er has ballooned to $5.1 trillion ...

sept 8 china

That's nearly $18 trillion of assets on the balance sheet of the world's top central banks.  That means much of that $18 trillion of capital has been injected into the system.  It was widely believed that this strategy would put money in the hands of consumers.  Consumers would spend and borrow.  Employers would hire.  Banks would freely lend.  And the burden on global demand would be lifted.  

But it hasn't happened. Why?  The next chart tells the story ...

sept 8 vel of money

This chart above is the velocity of money. This is the rate at which money circulates through the economy.  And you can see to the far right of the chart, it hasn't been fast.  In fact, it's at historic lows. Banks used cheap/free money from the Fed to recapitalize, not to lend.  Borrowers had no appetite to borrow, because they were scarred by unemployment and overindebtedness.

Bottom line: We get growth and inflation when people are confident about their financial future, jobs, earning potential … and competing for things, buying today, thinking prices might be higher, or the widget might be gone tomorrow. It's been the opposite for the past eight years. 



 

 

European 10-year bond yields up after #ECB decision

 

Interest rates by country

 

Current inflation by country / region (CPI)


9/01/2016

Big Picture ... Market Perspectives 9/1/16

 

The Big Picture ... Market Perspectives

By Bryan Rich 

September 1, 2016, 2:00pm EST 

 

https://staticapp.icpsc.com/icp/loadimage.php/mogile/1014329/89450b52c102565f481ecfe4550f7cc5/image/pngLast month, this time, the famed oil trader Andy Hall (and oil bull) was dealing with a sub $40 oil market again.  And he was again explaining losses to investors in his multi-billion hedge fund.

A guy that has made a career, and hundreds of millions of dollar in personal wealth, picking tops and bottoms in oil, had had entered 2016 coming off his worst year ever.  And 2016 started even worse.  

I've talked about the oil price bust extensively, at the depths of the decline in January and February.  While most were glorifying the benefits of a few extra bucks on the pockets of consumers from low gas prices, we walked through the ugly outcome of persistently low oil prices.  It would be another global financial crisis, as failing energy companies and defaulting oil producing countries would lead to crush banks and the dominos would fall from there.  Unfortunately, the central banks don't have the ammunition to pull the word back from the edge of disaster for a second time.

With that, central banks stepped in with more easing in the face of the oil price threat earlier this year, and oil bounced sharply.     

Hall's fund bounced sharply too, running up nearly 25% for the year by the end of June.  But he gave a lot it back by the time July ended.  And now oil is closer to $40 again, than $50.  Thanks to a report yesterday that oil supplies were bigger than expected, the price of crude has fallen 10% since Friday of last week

Hall was the Citigroup oil trader who made billions of dollars for the bank energy trading arm, Phibro, in the early-to-mid 2000s.  He was one of the first to load up on oil futures in 2002, when oil was sub-$30, on the thesis that a boom in demand was coming from China.

He reportedly made $800 million in profits for Citi in 2005 from his original bullish bet.  He then made over $1 billion in 2008 for the bank, as oil prices soared to $147 a barrel and then abruptly crashed.  He profited handsomely from both sides, earning a payout from Citi of more than $100 million. 

So he's a guy that has been very right about turning points, and big trends.  And he's been pounding the table for much higher oil prices.  He thinks oil prices are in for a "violent reversal" (higher). With an important OPEC meeting scheduled for later this month, Hall, in a past investor letter, reminded people how powerful an OPEC policy shift can be.  In 1986, the mere hint of an OPEC policy move sent oil up 50% in just 24 hours.  


 

Coffee futures staged a strong start to September


Pildiotsingu coffee tulemus
Coffee futures staged a strong start to September, attempting in New York to record their second highest close in more than a year, as data showing a slump in world exports crystallised concerns of tighter supplies.
Arabica coffee futures for December stood up 3.8% at 153.65 cents a pound in late deals in New York, a level which, if held to the close, would represent the strong finish for the contract, bar one, since May last year.
In London, the best-traded November robusta coffee futures contract stood 1.4% higher at $1,854 in late deals.
'Bullish as anything'

8/30/2016

#Sugar price rally not over yet, says ISO, flagging 'critically low' stocks

 

 

Tues 30th August 2016

Sugar price rally not over yet, says ISO, flagging 'critically low' stocks

The rally in sugar prices, already close to four-year highs, has further to run, spurred by the fall in world inventories to "critically low" levels, the International Sugar Organization said, despite foreseeing a rise in output.

The intergovernmental group, in its first forecast for the world sugar production deficit in 2016-17, pegged it at 7.05m tonnes, one of the highest shortfalls on record.

Following on from a 5.74m-tonne deficit in 2015-16, on an October-to-September basis, the shortfall leaves the world looking at a tumble in stocks below 75m tonnes by the end of next season.

www.agrimoney.com

Read the full article here:
http://www.agrimoney.com/news/sugar-price-rally-not-over-yet-says-iso-flagging-critically-low-stocks--9876.html

 

 

8/25/2016

EU #milk output surge 'over', boding well for prices

 

http://www.agrimoney.com/email_breaking.jpg

 

Thurs 25th August 2016

EU milk output surge 'over', boding well for prices

The surge in European Union milk production, blamed by many commentators for the extent of the world milk price downturn, is over, said Fonterra and Rabobank, which flagged support for values from Chinese dryness too.

"Milk production in the EU is now in decline," said John Wilson, the chairman of New Zealand-based Fonterra, the world's top milk exporter, which monitors closely the global industry.

Rabobank estimated that milk output in the EU, the top producer, had fallen by 1.5% in June, a month for which official data are due imminently.

The European Commission's latest data, for May, show a year-on-year increase of 0.8% in output, the slowest since the removal at the end of March 2015 of production quotas, which sent volumes soaring.

www.agrimoney.com

Read the full article here:
http://www.agrimoney.com/news/eu-milk-output-surge-over-boding-well-for-prices--9865.html

 

 

8/24/2016

Volatility And The Bond Bull Market For the full story: http://www.investing.com/analysis/volatility-and-the-bond-bull-market-200149546

8/15/2016

Corn $ZC_F

Corn

Corn futures are trading mostly 3 cents higher this morning. Prices closed higher on Friday despite USDA projecting US average yield at 175.1 bpa and a record crop at 15.153 billion bushels. Ears per acre in the objective yield plots were only the 4th highest on record, but USDA used a new all-time high for grain weight per ear. The projected new crop ending stocks are now 2.409 billion for 2016/17. World ending stocks rose because of the hike in the US, to a projected 220.81 MMT from 208.4 MMT last month. The weekly Commitment of Traders report showed managed money adding another 32,645 contracts to their net short position during the week ending Tuesday, August 9.


Can´t wait shortcovering rally :-)

8/11/2016

Alarming Amount of Americans Going Hungry

http://r20.rs6.net/on.jsp?a=1101420438425&r=3&c=ba0624f0-a61f-11e5-b703-d4ae52986b44&d=1125537241249&ch=ba20b1d0-a61f-11e5-b704-d4ae52986b44&ca=1cd20b48-2207-4c10-8ba5-f0d124316eea&o=https://imgssl.constantcontact.com/ui/images1/s.gif
http://img.constantcontact.com/letters/images/sys/S.gif
http://img.constantcontact.com/letters/images/sys/S.gif

http://img.constantcontact.com/letters/images/sys/S.gif


It started with GMO crops in 1994, which are now found in every grocery store we visit - some may be on your table right now. Then it moved to burger patties produced at a laboratory in London inside of a petri dish; and now, insect farming for human consumption, namely crickets which have been used in tacos, flour, cookies and their own form of bite size snacks in a bag... It might sound gross today, but fake meat, and insects will be commonplace in our food system within 10-15 years. Fact is, we are headed toward a global crisis if we don't find alternative food sources; and unless we are okay with widespread social unrest across the world (including here in the West), we need food alternatives such as the ones just mentioned...
Cricket farming to create sustainable food source


Nearly 15% of America can't afford enough food for basic nourishment... Even middle-income Americans borrow money on occasion to put food on the table, according to Market Watch.


An estimated half of Venezuelans aren't getting the food they need to maintain proper health. A former Venezuelan elevator repairman recently told the Guardian that he now eats food once given to his dog.


Amidst Venezuela's economic collapse and soaring inflation environment, its people are growing hungrier and more desperate by the day. The Guardian reported in May that, "With prolonged shortages of basic foods, Venezuelans have been forced to shift their diets to whatever they can find. And what they can find is not necessarily healthy."


The country is so broke, it has literally reverted to the barter system in international trade, exchanging oil for food with Jamaica this past week. As the nation is crippled with near 1,000% inflation, an outbreak of riots, killings, looting and robbery unfold in the streets as many struggle to find the bare necessities of life (food and adequate shelter). Meanwhile, the Venezuelan government announced it may enact quasi forced labor programs, and it banned the use of hair dryers in some areas to preserve what little cash it has left.
Venezuelans desperate for food 
Click image to watch a mob of Venezuelans surround a stopped truck transporting chickens to rob it. This incident occurred in June. 
           

 
Venezuelans trek to Colombia in search of food
Click image to watch as Venezuelans flood Colombia in search of food


Yes, Even Canadians Should Be Concerned

If you've been to Costco or the local grocer even once in the past six months you may have noticed a higher than average bill. That's because the cost of food for Canadians has been rising... and we're not alone. Many parts of the world have endured soaring food costs in recent years, including much of the EU. England is the next country expected to have to deal with soaring food prices in light of its collapsing currency following the BREXIT aftermath...


Many Scapegoats - One Culprit
Back in 2012 and 2013, soaring food costs were blamed on rising crude prices. We now know that was a bunch of hogwash. Rising food costs are an emerging symptom of the global currency war, and will inevitably cause civil unrest in many countries that have engaged in the most egregious monetary devaluation.

A new crowd-funded investigative journalism project, INSURGE INTELLIGENCE, released shocking data last year:
"New scientific models supported by the British government's Foreign Office show that if we don't change course, in less than three decades industrial civilisation will essentially collapse due to catastrophic food shortages, triggered by a combination of climate change, water scarcity, energy crisis, and political instability."
Note: "The model does not account for the reality that people will react to escalating crises by changing behavior and policies."


While the cost of food, as a percentage of the median income in Canada, is still among the lowest globally (the same goes for the U.S.), food bank usage in Canada is at record highs. Food stamp dependency is near record highs in the U.S. as well.


The Canadian Press reported earlier this year, "Some four million Canadians, or about 12.7 per cent of households, experience some level of food insecurity, according to PROOF, a research group studying policy options to reduce the problem."


Look at the stunning increase in food bank use in just the past 8 years across Canadian provinces:
Food bank usage in Canada at record levels
Food bank use in Canada is at record levels
chart source: www.foodbankscanada.ca


According to a recent Stats Canada consumer price index report, the cost of fresh vegetables rose 11.7% and fresh fruit prices increased 11% year-over-year in April 2016.


A staple protein for Canadians, beef, is up roughly 200% in price at the butcher in the last decade. Since the early eighties, real wage growth in Canada is up just 14%! This is a shocking discrepancy.


Despite the price of cattle falling more than 20% this year, consumers haven't seen any price relief because of the weak Canadian dollar and growing global demand for the higher-end protein source.


The Global Picture
Warning signs from around the globe confirm that increasing inflation is jeopardizing food security for nearly 2 billion people. The proof is in the breakout of the global FAO Food Price Index in recent months...
FAO Food Price Index


FAO Food Price Index on the Rise
After more than doubling from 91.1 in 2000 to 201.4 in 2008 the FAO Food Price Index (FFPI) collapsed to 164 in 2015. The opposite has been happening in 2016 as prices of the five commodity group index (meat, dairy, cereals, vegetable oils and sugar) have been increasing rapidly.
The FFPI averaged 163.4 in June 2016 - 4.2% higher than in May, but 1% below June 2015, according to the FAO. However, the FAO reported, "Not only did the June increase mark the fifth consecutive monthly rise in the value of the FFPI, but it also represented the largest monthly increase witnessed over the past four years."


Note: While 2013-2015 on the above chart looks great as food prices were dropping, keep in mind prices had risen more than 100% in the few years prior.


The rising cost of food and related shortages in 2010-2013 caused mass riots and coups throughout the Middle East in what was dubbed the 'Arab Spring'. With oil prices hovering near $40 per barrel and countries such as Saudi Arabia and Venezuela facing economic crises (of different scales), the threat of widespread social unrest in the Middle East and South America is rising once again. Hungry people become angry mobs very quickly.

* Read 'Thousands of Indian workers stranded in Saudi Arabia without pay or provisions' by Rama Lakshmi of the Washington Post - story released this past week.


The FAO Food Price Index traded above 200 between 2011 and 2014. If the gains keep up, we could be back above 200 by early next year. This would spell turmoil and possibly violent social unrest in many parts of the world...


The Boston Globe recalled a conversation between two retired Egyptian generals, poolside at Cairo's Gezira Club, back in February of 2011. The conversation went as follows:
"The only thing we really need to worry about is a revolution of the hungry," said one, a retired Air Force general. "That would be the end of us."


Let Them Eat Cake
Within weeks of that reported conversation, Egypt's President Hosni Mubarak was ousted. The U.S. was blamed and revolution spread across the Middle East. Was it a coincidence that food prices were soaring and the poor could no longer afford to feed themselves at that time? Absolutely not. It was the underlying reason for the violence.


For centuries, revolutions and coups have taken shape because of food scarcity, just look at the French Revolution as an example we all studied in school...


The term 'bread politics' is a familiar one in the Middle East and is founded on a system where the significant populous rely solely on government to provide access to affordable food. When this access is disrupted, riots ensue and powerful dictators are often overthrown or murdered by angry mobs.


Check out the year over year food price increases from 2009...
Food price chart from FAO
source: FAO.org



2015, as you can see above, marked a reversal of food costs. However, as gold and some commodities emerge from epic bear markets, one has to wonder if reckless monetary debasement and inflation will push food prices and the FAO index to new all-time highs.


Where were commodity prices in the lead-up to record food prices in 2011, 2012 and 2013? Put simply, higher. As a matter of fact, food prices soared when gold touched its all-time high above $1,900 an ounce (2011), oil traded near $110 and copper for $4.20 per pound...


Consider this: Nearly 50 million Americans are on food stamps right now... if this problem worsens another 25% (which is just one bad recession away from happening), America as we know it is finished for likely two generations. Socialist governments will undoubtedly emerge.

Bloomberg Commodity Index - 5 Year Chart
Blomberg commodity price chart


Annual income spent on food - the riot indicator
The amount of income set aside to pay for food is a key metric to monitor when gauging the potential for social unrest, regime changes and increased inflation. As annual food costs approach 50% of income, economic instability and riots virtually always follow...
percentage of income allocated to food by country
Click to enlarge
source: Washington State University



The above graph is from 2008 and shows Canadians used just 9.1% of their annual income on food, compared to just 6.9% in the U.S. Look at how many countries were in the 30-40 percent range during this time, prior to food prices exploding between 2009-2012.


We have little doubt middle-income Canadian families now spend much more than the 9% outlined above - likely near 18-20%. Median after-tax income of families of two or more people in Canada was $71,700 in 2012. For a family of four, $1,000 a month on groceries is now the norm in the Great White North...


According to a recent op-ed by Canadian professor Jino Distasio, an expert advisor with EvidenceNetwork.ca, titled, Why are so many using food banks? (in reference to the more than 850,000 Canadians who use a food bank on a monthly basis to get by) the affordability of food in the Great White North is getting worse...


Distasio explains, "The ability to afford food is increasingly problematic. Average prices run as high as $900 a month for a family of four in major cities like Vancouver and Toronto."


A Bad Episode of The Walking Dead...
Look no further than Venezuela; in 2008, its citizens needed a whopping 29.3% of their annual income just for food - the third highest in South America at the time. Today, many Venezuelans are starving and have resorted to desperate survival means:

Inquisitr.com reported, "Last week, a group of intruders broke into the Caricuao Zoo in Caracas, Venezuela, tore open the cage of a rare black stallion, and dragged the poor creature out. The group then slaughtered the horse on the spot and tore the flesh from its body. The savage nature of the crime has left zoo officials terrified. The hungry savages left only the head and bare ribs of the stallion."


With some inflation estimates approaching 1,000% annually in Venezuela, the government has released a new agenda where people may be sent to forced labor camps to grow food for its starving population. It's like a draft, except for farmers.


America has roughly 46 million people on food stamps. These people are reliant on government support to get the sustenance they need. Scary...


The U.S. is going $2 billion more into debt every day; and, if food costs were to rise the current food stamp program would not suffice. 'Bread politics' is coming to America if food prices keep rising...


Groups such as Black Lives Matter are not solely representative of how bad race relations have become in the United States. They represent a disenfranchised group of people; the vast majority of which are vulnerable and poverty-stricken minorities. For example, the black unemployment rate is nearly double the national average...
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Wrapping Up

The havoc rising food prices create can be seen in Venezuela, the Middle East, Africa, and even in pockets of the Western World. Stagflation is the key driver behind this food crisis coming to a country near you. Rising food costs and stagnant wages will be the primary issue for central banks around the world as they weigh the decision of raising or lowering interest rates. And what happens when oil rebounds and inflation picks up steam?


If we protect our wealth, via investing in inflation resistant hard assets such as land and gold, our future summer barbecues may not consist of petri dish burgers on the grill, cricket tacos and watered-down beer.


All the best with your investments,



PINNACLEDIGEST.COM






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