Grains of Gold

Some excellent articles on POT. The more I read the more bearish I am getting on the dollar. Some stocks may be safer than cash. This is not a recommendation... more on this another time...
POT sell-off overdone
POT insider buys shares
SP Report on POT
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I have spent a good part of my free time examining this economy, the gold situation, agriculture, and more. The more I see the more daunting this economy appears. I don't have time to post the numerous thoughts and details I have come across at this moment. I hope to share the ideas at another time.

For now I want to point out that agriculture (food commodities and related) tends to be much more resilient to a recession then almost every other sector of the market. This is especially true because of the growing middle class around the world and their need for meat and better food in general. You know I am big on the fertilizer stocks... especially the potash ones. CF is also a great stock... The pure nitrogen stocks I'm a little less big on because, unlike potash and phosphate, nitrogen products can be produced in a lab... the supply constraints in the longer term are not as tight. However... it may still take quite some time to keep up with global demand... so they may be fine... just a little lower on my personal priorities list then potash and phosphate stocks.

I also want to briefly discuss ways getting involved in agriculture futures without actually buying futures. On a previous post I mentioned Exchange Trade Notes such as JJA and JJG. The problems with all ETNs is that they are really just bonds. Most are issued by Barclay's. If Barclay's credit gets downgraded these automatically lose value regardless of the underlying futures prices. Also, the prices are based on rolling over futures contracts... that is to say buying new ones due several months from now and selling the ones that are due now. I am not going to get into the details of futures contracts, such as contango and backwardation, on this post. However you are free to look this up yourself if you want learn more. This can be a starting point. Investopedia has some nice information here.

The point is that the more I learn the more I prefer ETFs over ETNs, all things being equal, in this space. UNG is a nice natty gas ETF that tracks the price of natural gas. USO is an ETF that tracks oil price.

Jim Rogers believes very strongly that agriculture commodities may be the place to be... I think I agree... but I have not committed to this yet. So far two ETFs I really like are DBA and DBC. Both have fallen quite a bit from their highs and are starting to move back up. DBA involves several food types, not just corn, so it is probably a bit safer. I have not bought either at this point but I am watching them closely as I monitor some of the best ways to seek shelter in the impending economic slowdown.

This is just to plant the seed in your mind that there are alternative to the traditional stocks, mutual funds and cash. Precious metals provide one such alternative. Agriculture provides another. Store these concepts in your memory banks somewhere. I may very well talk about these and others again. Further, you want to have all the tools at your disposal that you can find. Even if you end up deciding not to use them. We're likely going to need everything we can get here.

How many people think of putting some of their money in food futures instead of into cash? The smart ones. The 'Rose' tries to give us insight into what the smart people are doing. Then we can make our own decisions based on all the knowledge available to us... not just that which is fed to us in the media...

"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice."