Monday, February 13, 2012

Five Year Returns: Barley Beats Gold

Be on the lookout for pissed-off German bier drinkers.
Via SafeHaven:

Barley? Better Than Gold and Silver
Over the past five years, barley, of the eighteen commodities we follow, was the top performer. Rising by 180+% it bested Gold, +170%, and Silver, +150%. But why quibble? Nearly all commodity prices have done than paper equities. And perhaps they should, as real assets require real work to produce and are essential to the real world.

Paper equities, today really electronic equities, are created for every willy nilly idea around in abundance and without constraint. Does anyone truly believe that Facebook will still exist as a meaningful venture in a decade? Pachinko machines were once a social networking fad, but too faded. The world needs barley and other Agri-Foods to live, and FarmVille will just not do.
Agri-Food Price Index vs SP 500
Above chart portrays the returns over the past 5+ years for Agri-Commodities and the S&P 500. The dominance of those green bars is readily apparent, even to a hedge fund analyst. By the way, we chose red for the equity market bars as it has spent most of the past decade plus generating losses rather than profits.
Over the past 5+ years only one of the Agri-Commodities we follow failed to do better than the S&P 500. That one was eggs. However, to give eggs their due, they serve many useful purposes. Breakfast being one that comes immediately to mind. On the other hand, paper equities apparently provide little of value....MORE
Sept. 19, 2011
European Malting Barley: "Damit ist Eine Katastrophe Vorprogrammiert".
(It's a recipe for disaster)
This is the second consecutive year that I've had to use that headline and, while last year it was in November this time it's at the start of Oktoberfest!...
Dec. 6, 2011 
Commodities: Contaminated Malting Barley Causes Super-effervescent Beer, Barley Prices Explode

For now supply/demand is recalibrating at the higher prices so in the words of Hermann Goering
"Shut up. You've got your beer, haven't you?"
-during the 1923 Beer Hall Putsch