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Food Glorious Food!

Food will be everything (EVERYTHING) in the next 10 years.

From ZH:

There are so many factors driving food prices higher. From a demand perspective, world population is growing at an extraordinary rate… plus the rise of billions of people from developing countries (especially in Asia) into the middle class is quickening demand for resource-intensive foods like beef.

From a supply perspective, drought, soil erosion, and reduction of available farmland all put significant pressure on global agricultural output. And finally, from a monetary perspective, the enormous amount of paper currency being printed in the world is finding its way into agricultural commodities.

I cannot envision a slowdown in any of these factors anytime soon. Central bankers will continue printing, people will continue procreating, developing countries will continue becoming wealthier, etc. So we should absolutely expect rising food prices for quite some time.

Long-term, technology will ultimately solve these problems… but large-scale implementation is a long way off, and it may certainly be a bumpy ride ahead.

Individuals can hedge their exposure in a number of different ways. The simple option is to invest in agricultural ETFs or long-term futures contracts. But I can hardly recommend this as a course of action given the massive systemic risk in the financial system.

Just as we often recommend holding physical gold and silver rather than owning a gold ETF, it’s much better to own physical agricultural assets.

If you’re on a budget, small gardens can be planted for a pittance as long as you’re willing to roll up your sleeves. Even if you live in an urban area surrounded by a sea of concrete, tabletop hydroponic and aquaponic systems can be set up on the cheap… and they’re easy to maintain.

If you have more capital to deploy, consider buying agricultural property, preferably overseas. Buying foreign real estate is a great way to move money overseas, plus it gives you a place to go if you really need to escape.

As I survey farmland prices around the world, the best region to buy is South America, particularly Chile, Paraguay, or Uruguay.

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