The Farm Report

There seems to be a major disconnect between what the USDA is saying about what the fall 2009 crop yield is and what the farmers on the ground are saying. Ability to harvest and quality seem to be the biggest issues. Be prepared for higher food prices once the truth hits the markets.

Farmers in the midwest and Mississippi River area are saying they have never seen such bad harvest in 37 years.

Click here for a link to the detailed information. As well as some detail on farming insurance. Most people don’t understand how farming insurance works, read the entire page if you wish to see how low quality harvests are not really compensated.

Farming banks are going to take a hit with farmers not being able to pay out of the fall 2009 harvest. This is the main reason why I think the USDA is painting a rosier picture. This bad harvest will affect the farmers’ ability to get loans for next years’ planting. On top of that, Monsanto has raised prices for their products for 2010 spring planting. This is why I stated in an earlier post that farming loans and the banks that issue them will be folding too (along with everything else).

Look for increase in prices for corn, soybeans, and rice for 2010 and 2011. And any meat that is fed by those grains.

The good thing about having a garden in your backyard or balcony….if the weather is out of the ordinary for your zone one season, you can replant, cover, water and/or drain to help your harvest yield. You can also change crops in mid-season if necessary. Farmers are limited and always a slave to mother nature.

America fails finance 101

Here is an article from BusinessWeek. Click here.

Of course, groovygirl had some problems with this article right away. First, the government, media, and financial industry, including banking, has a vested interest to keep you dumb about money. So, you will have to look hard for the truth.

I find it interesting that this article basically blames people for not being smart in finances, when false teachings are bombarding them on all sides. How can people even begin to search for the truth when our “non-biased” media has been asleep on the job for the past 25 years?

The most outrageous thing in this article…..

Another basic concept for investors is diversification. Only about half of respondents correctly said that investing in a pool of stocks, or a mutual fund, is safer than investing in just one stock. And, says Wharton School of Business professor Olivia Mitchell, since the question was posed as a true-or-false statement, many of the correct respondents were probably just guessing.

This is not necessarily a true statement. The correct answer is “it depends which stock and which mutual fund you are talking about”. If you can’t read a prospectus, don’t invest in stocks or mutual funds.

Get educated about finances. Learn economic theories and especially economic history. History always repeats itself, because people forget the lessons of the past. Don’t be one of those people. You can avoid a lot of wrong turns by studying any type of history.

The government, media, and financial industry formed a consolidated message in 2000, borrow on your home. Now, I predict that they will have another message…save. But they will want you to save cash (dollars) in treasuries, bonds, and money markets (because real investors will not want these things) while the dollar losses another 50%.

So, groovygirl suggests….save, but buy gold and silver to preserve your savings. Otherwise, you are just wasting your time and effort.

Groovygirl is always for financial education, just make sure you know where your teacher’s interests’ lie.

Side musing: controlled banking implosion continues….3 more banks down last friday. Only three? Orion was a big one. It went down because of its commerical real estate loans. The first of many more. The commmerical real estate loan defaults are just beginning.

Seems we are past peak oil

Chris Martenson had a post this week about the recent UK article about peak oil. This is the first hard evidence that global oil production is overstated, as many have suspected.

Click here for the post.

From a financial perspective, the most important portion of the post:

If this is true, and if it needs to be confirmed, it means that all models of stocks and bonds that rely on long-term cash flow models are wrong.  It means that our primary assumption of petroleum fueled growth is wrong.

Make sure you are factoring in this possibility to your investments, savings, income, and overall life.

I believe that even if this is true, you will never hear about it. The rising (probably parabolic future oil prices) will be blamed on the global economic crisis and not peak oil.

Peak oil is a long, long term decline, but it is a decline just the same. Oil will continue to become more and more expensive and it will require more investment and energy to get less out of the ground. At some point it will not be worth the effort.

This problem goes beyond this K-wave winter cycle.

Side musing: And here is another wrinkle in future oil/energy prices from zerohedge (.) com. More dark pools and scams.

Latest letter from Martin Armstrong $5000 Gold

Here is the latest letter dated November 7, 2009 from Martin Armstrong entitled Gold $5000. It’s 17 pages. Click here.

I will make some comments later, just wanted to get this to you ASAP.

groovygirl’s comments:

Check out pages 12-17, especially page 15. If we close December above 1033.90 per ounce for gold, 2010 looks very good for gold. We need to break $730 to break the trend. There is major support at $800.

Martin Armstrong makes some general gold predictions for the time period between now and 2016. He is more specific for the time period between now and 2012. Watching the gold price for the next 2 months will tell us if we should expect an up-trend in April 2010 or October 2010.

Charts are on pages 15 and 17.

The first part of the letter discusses the history of gold. Good stuff. Martin also makes the argument that the rise in the price of gold is always associated with the concern over an unstable government, not a hedge against inflation.

Click here for Jim Sinclair’s website link with comments about the controlled bank implosion and Martin Armstrong’s latest letter regarding $5000 gold. A must read.

Gold is a good investment in deflation or inflation during the K wave winter cycle

Clif Droke wrote an interesting article November 6, 2009 entitled Gold at both ends of the economic K Wave.

Click here for the full article.

The similarities between today’s market behavior and that of 1999 are self evident.  The difference is that this time gold is in a secular bull market and heading into the final years of long wave hyper-deflation (economic winter).  As we’ve talked about previously, gold tends to benefit strongly on both ends of the economic K Wave: both from hyper-inflation and from hyper-deflation.  This is one of the things that makes gold so unique among all other financial assets categories. 

Side musing: I usually don’t post Martin Armstrong’s letters regarding his continued incarceration, so here is a link to those letters if you would like to learn more. Click here.

Crisis Point?

Warren Pollock came out with a very good video today (about 10 min). I highly recommend it. Click here for video.

The dollar is looking over the edge into the abyss. Will it fall soon or will we have another deflation in debt episode like 2008? We will be watching this closely.

Gold protects your savings in either case. Once it is clear which way it is going, then other investments are possibilities. But we don’t know yet.

One thing I do know….we will get to hyperinflation in the long-term. But the action in the dollar (lost 13% of its value in 7 months), is a possible signal of a currency crisis in the short-term.

This is in line with Martin Armstrong’s last letter regarding the DOW. When the dollar loses value, stocks rise (that is what has driven the stock market since March). When the dollar gains value, stocks drop. Gold has been a better investment than the DOW for keeping the purchasing power of your dollars so far. The real value of gold has risen, but the DOW is really just moving sideways, when you factor in the loss of the dollar.

No F-TV talking head is telling you about this, are they? They are saying….recovery. There is no recovery, we are looking at a harmful deflationary or inflationary change in the next 3-6 months depending on the move of the dollar.

Here is another good analysis on the US Dolllar from zerohedge (.) com, scroll down.

Glenn Greenwald

If you can put aside any political subjective ideas and watch this video interview (about 40 minutes) between Bill Moyers and Glenn Greenwald. Lots of interesting points are brought up whatever your political leaning.

Click here for video.

george washington says it best

I would like to introduce you to a wonderful blogger who calls himself George Washington. Click here for his latest blog post. It again illustrates that NOTHING IS FIXED. Expect more of the same and an effort to coverup how bad it is. I could not agree more, so I will let George tell it like it is.

Controlled bank implosion continues with 5 banks down this last friday.

How can I prepare for this coming winter cycle?

So, you have decided that the way you invested in the past may not be the best way to invest in the future. You are ready to take some action. What do you do?

Here are some random thoughts and questions to ask yourself about your personal situation. This is groovygirl’s opinion only, you are responsible for your own investment/saving decisions.

First, don’t panic. Any action, no matter how small, is better than no action.

Make sure some of your investments are outside of the fiat money system. Move the money you are putting monthly into your 401K to a separate bank account. Accumulate some savings and start to purchase physical gold and silver, if you do not already have some. Store it in a safe place. You want to have an investment that will not lose purchasing power.

Start to pay down high-interest credit cards, do not rack them up again. Save for large purchases, do not put them on the cards. You want to get your monthly expenses down to as little as possible in case you do not have a regular income coming in.

Sell your house and rent, if you can get the equity out of the investment. Refinance for fixed lower monthly payments, if you can not sell. If you are facing foreclosure, don’t leave until the sheriff comes and get an attorney to face the bank for you. If you are staying put, make sure you will not have to move for the next 5 years for your job, spouse, or illness, or be prepared to take a haircut on the sell price. The housing market is not getting better, it will get worse.

Take some money outside of the banking system. Have some cash in savings or at home. Make sure that the cash is in at least 2-3 different banks. If the banking implosion starts to accelerate, you may have limited access to your funds. Move your 401k investments to investment choices that will hold up to a falling dollar.

If most of your net worth is in your house or in your 401k or both, ask yourself this question? When will I need that money? How will I survive if I can’t sell when I need to because: there is no buyer, the stock market is down, the mutual fund has a hold on fund withdrawal (happened in 2008), the investment banks/company went bankrupt? How long could I hold out if these things happened? How can I arrange my investments today to minimize that risk in the future?

What if oil was $200 per barrel, how would that effect my monthly expenses?

What if I lost my job tomorrow, how many months could I survive? An unemployment check is not a full paycheck, a part-time job is not a full-time job.

Again, don’t panic. Think about how you can start to be less dependant on the systems in place and more dependent on yourself, family, and neighbors. How can you work outside the systems that are currently under extreme stress?

An example, what if the food supply distribution was upset for 2 weeks. Most cities have a food supply of 3-5 days. In light of this reality, having a pantry with one month of meals for your family seems reasonable. In case of unemployment, sickness, natural disaster, or economic distribution in the supply chain. Having a backyard or container garden for fresh foods circumvents the food supply chain.

Another example, what if the dollar was going to drop in half, how would that effect my current investments? The stock market may go up in dollar amount, but not value. However, gold and silver (or oil) would quickly catch up and keep its purchasing power.

What if there was a disruption in the electric grid (this has happened before)? How long could I survive without electricity. Do I have a gas or wood fireplace for winter warmth and cooking? Do I have a solar panel for emergency power or hot water heater? Do I have a generator (and fuel) for lights or a freezer-frig? This preparation pays off if your electricity gets turned off, because you can’t pay the bill.

The time to prepare for these possible scenarios is now when you have a job and extra resources, not when you get the pink slip.

Do one thing today to prepare for your family’s needs.

Some realities that are coming your way in this K-wave winter cycle:

• Gold and silver will move higher…$10,000 and $500 before it’s all over.
• Housing market is still imploding.
• Banks are still imploding.
• Unemployment rate is really at 21%, it will reach 30% before it is all over.
• This economic collapse will continue running along until at least 2018. Were you planing on retiring before then?
• Oil will be at $200 before 2012.
• US Dollar will continue to lose value.
• We will have a hyperinflationary depression…think Weimar Republic, Germany.
• Crime will rise.
• Prices will rise, including health care.
• Supply chains will be disrupted because of high oil or lack of credit to the business community.
• 5000 banks will close before it is all over.
• Taxes will rise.
• Current wars will continue.

So, you are thinking…groovygirl, I don’t believe all this will happen.

OK, what if only half of it happens, one-third? Are you prepared for that much? What harm would it do if you prepared and nothing happened? What harm would it do, if I was right and you did nothing?

The next twenty years will be completely unlike the last twenty years.

Fed will drain what?

The Fed on Wednesday stated in their ”notes” that they are going to drain a trillion dollars from the economy by March 2010….you know since they pumped in almost 5 trillion in one way or another in the past 24 months.

Never going to happen. If anything they will have to start pumping more into the system by then to keep from another collapse. This is all talk. There will be no draining and no rate increase for many moons. They may shift to whom they sell their treasuries….forcing zombie banks to buy them (since foreign banks are not buying). End result is the same….printing press overheating in a frozen-solid economy.

The Fed is stuck between a rock and a hard place. They can only talk. Their talk may move markets for a while, but not forever.

Gold broke $1,102.30 in intra-day trading today. Highest weekly close ever at $1096.90.

Side musing: the stock market is a casino and Goldman is the house. Click here. If your money is in the stock market, know what game you are playing and who you are betting against.

Side-side musing: John Williams with Shadowstats.com came out with a report on the real stats (Real unemployment is 22.1%). You have to pay for the detail, but here are the headlines:

JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS

COMMENTARY NUMBER 256
Updated General Outlook, Employment/Unemployment, Money Supply

November 6, 2009

__________

Annual Payroll Loss Rivals
End of World War II Production Shutdown

Unemployment Jumps to 10.2% (22.1% SGS)

Systemic Liquidity Problems Still Intensifying

Fed Continues to Explode Monetary Base