Kevin McElroy

“Food riots in America? You’re crazy…”

Just to be clear, “lexicon” is a fancy word that means vocabulary – and “food riot” is a phrase that refers to a group of angry, hungry, violent people who destroy property because they feel (among other things) that food prices are too high.

And yes, to answer any questions from the peanut gallery in my office, I do believe we’ll see food riots in these United States of America sometime in the next year and a half.

I’m belaboring this point because I want to be crystal clear with this prediction, not because I especially like making predictions. Quite the opposite, actually – I detest making predictions because it’s so easy to be wrong on the scope, specifics, time-frame, location, etc.

In that vein, if I am wrong about this prediction, it will probably be a matter of my timing rather than anything else.

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Kevin McElroy

Farmland that pays a dividend

Before I reveal the name of this stock, I want to point out that buying a company with farmland in the mix is a great diversification play - and doubly so when it pays a dividend.

That's because when you buy this type of company, you're getting exposure to the continued profitability of its underlying farm business, but you're also buying actual farmland that the company owns - and if you've been reading this letter, you probably know that I'm extremely bullish on farmland prices.

I also happen to be bullish on the commodities that grow on farms; corn, wheat, sugar, cattle, pigs, chickens, etc.

The dividend is just a small bonus, but I know there are readers out there interested in income, so it's worth a mention - even though it's only a 2% annual yield.

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Kevin McElroy

The world’s most profitable agriculture company

I hate falling into the trap of simply responding to the hottest news headlines - because very few people get rich by reacting to headlines and pulling the trigger on investments based on "hot" trends in the market.

At this point, computers can wipe the floor with most any day-trader, so if you think you can buy yesterday's news and still eke out a profit, you're probably wrong.

In the past couple weeks agriculture has been the hot topic on everyone's mind. First, fires in Russia caused wheat prices to double in less than a month as Vladimir Putin banned Russian wheat exports. In sympathy, many other crop commodities rose in price as well. Then yesterday, BHP Billiton (NYSE: BHP) the world's largest mining company, put in a failed bid to buy Potash Corp (NYSE: POT) the world's largest fertilizer company.

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Kevin McElroy

How to invest in rising wheat prices

I'm back in Vermont after a week in Sea Isle City, New Jersey. And there's nothing like a vacation to make you appreciate the comforts of home. Even though Vermont isn't very far from New Jersey, geographically, the weather difference is pretty dramatic. Vermont does get hot (we broke 100 degrees a few weeks back) but I've never felt the urge to apply and reapply sunscreen here, like I did in New Jersey last week. I still managed to get a sunburn.

And speaking of sunburn, we've seen a doubling of wheat prices over the past month thanks to fires in Russia, brought on by drought. Vladimir Putin just announced an export ban on all wheat for 2010.
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Kevin McElroy

Edible Gold

I hope you had a pleasant weekend and were able to get outside and enjoy the weather if it was amenable in your locale. We experienced some unseasonably warm weather here in Vermont, and I tried to stay outside as long as possible. I even fired up my new Weber charcoal grill, a birthday present from my wife. I grilled some sirloin steak, some mushrooms on a kebab and even some corn.

I’ve heard conflicting views on whether to grill the corn in its husk, or to grill it “naked.” This time I opted for naked, grilling it on the cob over indirect heat for about 10 minutes, and the corn had some nice caramelized flavors. I seasoned it ahead of time with salt, pepper and a little olive oil. If you have a bbq corn recipe (or any bbq recipe for that matter) please send it my way at editorial@resourceprospector.com.

Today’s article isn’t all grill recipes, though. I’ve wanted to write about corn, the commodity, for quite some time. It’s just tough to pull myself away from alluring topics like gold and energy. And I should apologize, because agriculture isn’t something that’s very exciting to read about – not like precious metals or oil. But commodities like corn, soybeans, wheat, pork bellies, cattle, sugar and coffee all fall into the realm of my purview.

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Kevin McElroy

The Biggest, Most Inevitable Bull Market

Does your portfolio have exposure to the most inevitable bull market in the world? I’m talking about a long-term trend that has nowhere to go but up. It’s literally a life and death situation.

The alternative to a bull market in these commodities is something the world’s population has to strive to avoid at all costs. It’s more important than oil, more vital than coal, and way more serious than gold, copper, iron - or any other industrial metal or energy commodity.

Because if there’s not more production of this particular group of commodities every day, in perpetuity, most people on this planet will starve.

Yes, I’m talking about food. And I realize it’s not an “exciting” investment, not like some new oil discovery or a massive gold bonanza. But the world’s population is growing.

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