Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Obama Markets Show Boom for China and Commodities as U.S. Stocks Slump

Stock-Markets / Investing 2009 Mar 09, 2009 - 05:23 PM GMT

By: Ned_W_Schmidt

Stock-Markets Best Financial Markets Analysis ArticleYou have already chosen a life apart from the mainstream. The site you are visiting is not part of the real world. Most of what you read on sites like this one are economic heresies. However, most of us realize that $2 of government spending plus $2 of government spending do not equal $5 of GDP. Rather, the sum of that calculation actually equals $3 of GDP. If we channel spending through governments, we get a negative return.


In the U.S., many voters thought they were encouraging change. Instead, what they got was the same old wasteful and failed policies of the previous Congress. That change which is occurring in the U.S. government is not producing economic recovery, so needed by much of the world. What we are getting is the Obama Depression, an economic slide made longer by changing so much of the government for the worse.

This week's first graph documents the failed policies of the current U.S. government. These investment results are for the S&P 500, Shanghai Stock Exchange Index, and $Gold since the November U.S. election. As always, reality trumps ideology. The difference between the return on $Gold and U.S. stocks continues to be about 50 percentage points. This is about as we observed last we visited this data.

Per the equity markets, the collective wisdom of all investors in the world, the Obama Depression is not likely to end soon. The Obama economic plan is wealth destroying, not job creating. Gold, not imaginary and faulty constructed dollar indices, is the ultimate valuation of a nation's money. In less than three months, the true value of the dollar, as measured by Gold money, has fallen by roughly 25%. That is a harsh and real evaluation of the prospects for current U.S. economic policy. Apparently, failed policies are again something on which we can rely.

However, that chart poses another question. Why in the same period of time that U.S. equities are collapsing is the Shanghai Stock Exchange Index rising? The world is filled with many stock markets and thousands of stocks. Not all are to fall victim to the failed Obama economic policies.

Investors are appraising the economic prospects for China to be far superior to those of the U.S. How can that be? Well, the answer is really simple. The government of China is pro-prosperity while the Obama administration is ideologically opposed to prosperity and wealth. The stock markets and Gold have voted, and to argue with that vote is foolhardy.

Gold is largely a defensive investment. Gold is wealth insurance, protecting investors from government policies. With the years of pain remaining under Obama economic policies, investors should be adding Gold on any and all price dips. However, that is not sufficient. We need to also have an offensive element to our wealth portfolio.

Having lived through the first oil shock, this author can assure you than few, in anybody, forecast it to be likely. Few foresaw the technology bubble till well after it had started. Only Hyman Minsky expected the financial mania, and consequences, of the past few years. China is another of those decade long investment themes not being widely recognized by investors. And part of the economic miracle in China is Agri-Food consumption. How many industries have comparable economic growth? Per the USDA, "China's estimated 300 million middle class consumers and rapid increase in demand for protein and feed ingredients helped drive its total agricultural imports to $43 billion in 2007 with the United States' share accounting for a quarter of the total, or $10.7 billion. China's imports of agricultural products have quintupled since its accession to the World Trade Organization (WTO) in 2001. (fas.usda.gov/country/China, 2009)" [Emphasis added.]

Our second chart this week portrays the movement of Agri-Food commodity prices with green triangles. All prices were buffeted by the hedge fund mania in the past year. However, Agri-Food prices seem to have bottomed. That support comes from the long-term trend of rising Agri-Food demand in China. In the years ahead, Chinese demand for Agri-Food will come to dominate global Agri-Food markets in ways few expect. And then in a few more years the world will face rising Agri-Food demand from India.

In that same chart are indicated the likely status of Agri-Food prices in an Elliot Wave framework. Wave II seems to be in the process of being completed. As this chart only covers the most recent years, Wave II's final C-Wave may yet come, if not completed, without any inconsistencies developing. In any event, Waves III, IV, and V remain to unfold in the years ahead.

Riding a structural economic cycle is perhaps both the most rewarding and easiest for investors. Gold is just one example of such a structural cycle, and Wave V still remains ahead for it. Agri-Foods are another, and it has likely only completed Wave II. Bear markets, like those still alive in many markets, are opportunities for investors to buy future wealth on the cheap. Is your portfolio positioned for the coming waves of the Agri-Food structural economic cycle? Or is your portfolio still mired in the banks and tech stocks of the last decade?

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View , a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To receive the most recent issue of this publication, use this link: http://home.att.net/~nwschmidt/Order_AgriValueRECENT.html

Copyright © 2009 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in