Friday, October 15, 2010

THE WORLD'S MOST VALUABLE ASSET

By Porter Stansberry
with Dr. Steve Sjuggerud and Mike Palmer

The World's Most Valuable
Asset in a Time of Crisis
If things get as bad as I expect in America in the coming years, most people are going to lose a lot of money.
So how can you protect yourself... and even potentially make a profit over the next decade?
Well, you should certainly own a significant amount of precious metals... real, hold-in-your-hand gold and silver. Both of these metals have skyrocketed in recent years, gaining more than 400%, in anticipation of this crisis.
But guess what...
There's one investment that might prove to be even better than gold or silver when America's currency crisis hits full tilt.
In fact, since 1970, a year before the U.S. went off the gold standard, this investment has easily outpaced both stocks and gold.
See the chart below...
So what is this incredible asset that has crushed stocks and gold, and how does it beat these things handily?
We're talking about farmland. The chart above shows the total returns of U.S. farmland versus the total returns of the stock market (including dividends) and the total returns of gold (which, of course, pays no dividend).
The returns from farmland come from two sources. According to a recent edition of Ag Decision Maker, published by Iowa State University, roughly half of the overall returns come from the appreciation of the actual land.
The other half comes from the "rent" you can get by farming your land – or hiring someone else to do it for you. Add these components together, and it's easy to see why the overall returns of farmland have outpaced gold, stocks, and just about any other asset we could name.
In fact, some call farmland "gold with yield" – because you book steady income from rents while you wait for the value to grow. I can think of no better asset to own during any kind of financial crisis.
Why does farmland do so well?
When food prices go up, farmland prices go up. There's no shortage of mouths to feed – on this side of the globe or the other.
And as an added benefit, farmland returns have little correlation to the returns on stocks and bonds. Farmland didn't fall in a single quarter during the financial meltdown.
If you believe, as I do, that inflation will only get worse, then you'll want to look closely at an investment in farmland.
Consider...
If you had invested your money in the stock market at the beginning of the 1970s, you would have made about 16%... TOTAL... over the course of the entire decade. Adjusted for inflation, you would have lost about half your money.
But during the same time the total returns of U.S. farmland were more than 600%!
Now imagine what farmland might do today.
I can guarantee, as I've written many times over the past few years, that we are going to experience major inflation.
On top of that, other factors are pushing farmland prices higher...
Just to name a few: A tightening supply of farmland, rising demand for crops, and skyrocketing commodity prices. In short, I expect farmland could be one of the best investments of the next decade.
Of course, farmland has another great benefit as well...
It can actually save your family during a serious crisis.
Barton Biggs, in his excellent book, Wealth, War, and Wisdom, reports farmland was the one thing that saved families in occupied France, Poland, Holland, Germany, and Italy.
An unostentatious farm, not a great estate, is probably best. Bricks and mortar real estate can be expropriated or bombed, but the land is always there. Your land can't be plundered or shipped off to somewhere else.

During World War II in most of the occupied countries, if you had a self-sufficient farm, you could hunker down on it and with luck wait out the disaster. At the very least you were supplied with food in a starving country.

A working farm protected both your wealth and your life.
As my good friend (and multimillionaire investor) Doug Casey likes to say, in a time of crisis, "The best thing you can do is buy a really good farm."
So how can you play it?
Well, just like I prefer owning real, hold-in-your-hand gold and silver rather than owning precious metals on the stock market... I suggest you seriously consider a private land deal. Quite literally, you should investigate buying a plot of farmland.

8 comments:

  1. What is the best way to proceed in getting an
    expert Seattle area professional/advisor/researcher?

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  2. Glad i came across this. What is your advice one farmland for sale in washington? I know the soil is great, but how much space, and the roi? essentially?

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  3. What to do in places with heavy dead winters were nothing grows for 6-7 months?

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  4. You guys are missing the point. You must have a working farm. Forget ROI, think opportunity. Farmland can save a family from disaster, but only if somebody actually farms it. In a crisis, you can't leave those details to someone else- they have their own families to feed, and if it comes to starving or robbing you, they will rob you.

    If you can't run a farm yourself and aren't interested in learning, forget it. Instead, get a large garden and learn to grow tomatoes and other edibles. Much smaller investment, much easier to learn how to manage, much lower risk if no crisis occurs, and much more likely to be of use to you personally than a bunch of land you can't use for lack of expertise, manpower, or diesel to run tractors.

    As for winters, investigate greenhouses. Fairly simple to build. The real problem is water; if you live somewhere with limited water, that will be your bottleneck to production in a crisis.

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  5. And don't forget to think about the COST of Farming! Fuel, Oil, Grains, repairs on equipment, equipment itself! Has anyone here priced a modern tractor or combine? That is a very steep investment after the major investment of the farm.Here in Illinois during 2012 land was going for this
    Good quality farmland averaged $10,500/acre;
    Average quality farmland was at $8,770/acre;
    and Fair quality farmland was selling for $6,980/acre. For a small 25 acre farm starting price would run about $174,500.00 then add 75,000 to 150,000 for the tractor (depending on your taste and farm size)combines 140,000+ most of them don't come with the grain heads add 25,000+ ea.Then all the other implements,(plow,disks,planters, etc). Farming is a Very Expensive way a life! Try finding a bank to loan you 500,000-650,000 to get your feet wet in farming. And Good Luck

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  6. Well to the last 2 comments. I actually work with farmers at my job. And yes there is some (money)risk involved and ALOT of work. But you do not have to own a combine, there is companies that go up and down the united states and will combine all your corn and haul to market. The guy I work with has 300 acre's here in ohio. It cost him this season 2,500 to have them combine and haul it, he sold it at market for 12,500 + he also get's to bail up the hay which he sell's about 100 bucks each bale about 80 bales - what uses for his own livestock. He also raises cows and has pigs and horses. The main thing to keep in mind is the weather is pretty reliable but you have to be prepared to absorb a extended drought or flooding. So it really varies, but he has never came out negative. He still works to have a real income no matter what and married into the family with the farm. On top of that the farm basically grows on its own the livestock takes daily work which includes vet visits, cleaning up after them,etc He restored his tractor which was given to him. Hope that help's. If anyone reads this and wants to know the company that does the combining just shoot me a email duaneobryant@gmail.com I find out and provide you a number if you need that service. Oh and he also diversifies his crop's not 100% of one plant soybeans is and extremely valuable crop as is wheat. Corn is the #1 of course. Obviously we talk a lot at work :) . Oh yeah he has also been hit by a tornado. These are all factors that you need to consider before making a long range plan.

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