"Legendary commodity investor Jim Rogers says "this is going to be one of the best investments of our times."
Why this South Korean raid on an African island could trigger the next global Bull Run
And why you should make room in your portfolio for two Aussie firms ready to profit...
Dear Investor,
Over the past year, quiet moves by corporations in South Korea, Qatar, Bahrain and China have secured vast quantities of one African asset.
These actions now look set to trigger a geopolitical land grab. More importantly, they have already set off an impressive bull market.
I'm not talking about oil, iron ore or any 'conventional' commodity. This asset is far more crucial to basic human survival...
And because of that fact, the story of this land grab could be the biggest investment story you read about for the next ten, twenty, or even thirty years...
Yet these under-the-radar raids by Asian and Middle Eastern countries are just starting to be reported by the mainstream press. Whether the investment public knows it or not these events signal the start of a shift in global power. It's being dubbed "new colonialism". A bull market so combustible that it could topple governments Make no mistake. I'm talking high-stakes geopolitical poker. The stakes are very high in this game. The competition for this asset could win and lose elections, topple heads of states and even trigger wars.
* That may sound dramatic - but in the past twelve months alone it has sparked riots in Kenya, Madagascar and Mozambique. There is literally blood flowing in the streets.
As grim as that is, it is also investment information that can't be ignored. Where there is great risk, there is usually great opportunity too. As Baron Nathan Rothschild said in the 18th century, "The time to buy is when blood is running in the streets."
* Investment heavyweights like George Soros, Jim Rogers, and Lord Jacob Rothschild (yes, a direct descendant of Nathan) have already put this old aphorism to good use. Each has made a big investment in the asset I'm going to tell you about.
But here's the good news. You don't have to be a Rothschild to profit from this idea. In fact, there are two ways to invest in it that I want to tell you about today. Both are based right here in Australia. You don't have to go to Africa or buy a single stock that's not listed on the Australian Stock Exchange. Invest like a billionaire Most private investors won't have a clue how to capitalise on a long-term trend like this. You see guys like Soros and Rogers making million dollar moves and you think it's not possible for ordinary investors to do the same.
* Well, that's partly true. If you want to invest directly in this precious asset, it doesn't hurt to have a spare $100 million to chuck around. That would allow you to take a large position.
Quite frankly, that's not necessary. My research shows there are at least two Australian companies that are primed to ride this bull market for the next 20 years and beyond... and I want to tell you about them today.
Getting a stake in these two companies today—which can be done as easily as picking up the phone and telling your broker to buy them—is your chance to enter a world where high-net-worth players like Soros, Middle Eastern Sovereign Wealth Funds and gigantic companies like Daewoo are jostling for position.
It couldn't be any easier to invest alongside the big players in what I think will be a massive investment story for years to come. But just because you can doesn't mean you should. So why should you? Let me give you the full story...
I'll start by taking you nearly six thousand miles west of Perth - to the African island state of Madagascar.
Recently, the population of this tropical island awoke to find that 1.3 million hectares of the country - an area roughly half the size of Belgium - had been sold to South Korean conglomerate Daewoo.
That's right. A public company purchased enough land to from its own small country!
Not only that - this sell-off constituted HALF of Madagascar's arable land. "Arable land" is an agricultural term for land that can be used for growing crops. In other words, its land you can turn into food.
And if I'm right about this investment trend, that kind of land could be one of the scarcest, most valuable assets in the world shortly. But here's the question...
So why would a company more famous for making cars and TVs need to own half the farmland of a country thousands of miles away from Seoul? Insatiable, infinite demand... Daewoo is growing massive quantities of corn and palm oil and shipping it back to South Korea.
It's doing this because it knows a great storm is coming...
Daewoo, and many companies like it, have observed that the supply of quality global farmland is limited. The human appetite, on the other hand, is not. And if you hadn't noticed, there are more mouths to feed than ever before.
It's an especially urgent problem for countries with little arable land relative to their populations. South Korea is rich. But money can't make the land within South Korea's borders more fertile. So it must look elsewhere to meet its needs.
Even country's with small populations are worried. Why? They are now competing for food with countries like China, Russia, Brazil, India, and many other nations in the developing world.
The obvious strategy is to purchase assets where land is cheap.
Simple math— more mouths, less land— tell you that there is no denying that food and agricultural resources are primed for a big run. Everyone wants them. Everyone that has cash is willing to spend it if it means food security.
Believe me, we've only seen the tip of the proverbial ice berg in terms of demand. The UK government's chief scientific adviser recently claimed global demand for food would grow by a staggering 50% in the next 20 years.Take China alone. A population of 1.3 billion people is getting wealthier, living longer and more accustomed to eating meat and dairy products.
That means more grain is needed to feed cattle. And more rice, soya beans, wheat and corn is needed to feed families. Where will the land come from to grow all that food?
China currently holds a fair chunk of the world's farmland - nearly 10% in fact - but it also has 20% of the world's population.
Unless you can make your land infinitely more productive (you can't) the only solution is to go after arable land in other places. In these places arable land is abundant. And more importantly, it's for sale.
Let me tell you this. China is certainly going after any land it can find. The New Colonialism: A corporate and sovereign wealth fund 'Scramble for Africa' Just as the European powers embarked on the great 'Scramble for Africa' in the nineteenth century, so too are Asian and Middle Eastern countries, securing vast tracts of African soil today.
But the New Colonialism is not about power and prestige. It's about something simpler: food.
Just take a look at some of the deals cut in recent months...
* Mozambique has signed a $2bn deal that will involve 10,000 Chinese "settlers" on its land in return for $3m in military aid from Beijing
* South Korea is now the proud owner of 690,000 hectares of Sudanese farmland
* Saudi Arabia is negotiating to buy 500,000 hectares in Tanzania
* The Indian government has lent money to 80 companies to buy 350,000 hectares in Africa and recently lowered the tariffs under which Ethiopian agri-products can enter India
* Qatar will get 40,000 hectares of Kenyan land to grow food in return for building a $2.5bn deep-water port at Lamu in Kenya
* One of the biggest holders of agricultural land in the world is the Indian company, Karuturi Global, which has recently bought huge areas in Ethiopia and Kenya
Imagine a foreign company buying up the entire wheat belt of Western Australia. Or buying the Yarra and Hunter Valleys...and then plowing all the grapes under to grow some other crop, which would then be exported to a distant land for consumption.
It would be stunning news.
But something like this IS happening all over Africa every day! And it's not only stunning news, it's an important investment opportunity as well. One you are well advised not to ignore.Don't get me wrong.
If my government were selling rich farmland to a foreign company and that company was exporting everything it produced, I'd cry bloody murder. That's why this is such an extraordinary trend. But moral and ethical questions aside, it's also an extraordinary opportunity. Food prices on a knife-edge are fuelling this bull market Think back to 2007 when droughts sent wheat prices here in Australia soaring from below below A$250 to A$492 in just four months.
Countries like China and South Korea aren't going to risk being caught out when growing prosperity puts a major squeeze on food prices.Instead these countries are developing as much land as possible in countries where it's cheap and plentiful - in Africa, in Cambodia, in Pakistan, in Kazakhstan and in the Ukraine.
And this means there's going to be a massive surge in prices for farmland in the next 10-15 years...
This is a surge you could profit steadily from over the next five to ten years, if you play your cards right. Prepare your portfolio for this geopolitical earthquake The two Aussie companies I want to tell you about present you with a golden opportunity to invest at the beginning of what could easily be the most powerful bull market of the next two decades.
Events on this scale are rare. They only occur when economic trends intersect with history, demographics, and geography. A scarce or limited supply of a certain commodity runs headlong into exponentially growing demand.
The California gold rush of 1849 was one such event. So was the 1851 gold rush in Victoria. And so was the 1901 Spindletop oil find in the plains of East Texas. You could also argue that the discovery of iron ore in the Pilbara in the 1950s was one such event, although it played out over a longer period of time.
But the point is that when a particular asset enters a phase of massive demand growth, you stand to make a lot of money. When all these different forces to combine, they deliver some phenomenal profit opportunities...
Think about three examples from more recent history...
* It's hard to imagine now, but in January 1989 the NASDAQ index stood at around 401.3 But as the world embraced (and then went insane) the possibility of the Internet, the Nasdaq topped 5,000 in March of 2,000— a gain in tech stocks of over 1,000% in just over ten years.
* At the bottom of a 20-year bear market in commodities in 1998, a barrel of West Texas Intermediate crude oil was fetching just US$10.82. But as the economic growth of the BRIC countries and a war in Iraq put pressure on energy resources, oil eventually climbed to nearly $145 a barrel by July of 2008— a jaw-dropping rise of 1,240%
* And even whole stock markets and economies can power ahead when the underlying trend is strong. On the 31 December 1979 the Nikkei 225 closed out at 6569.47... Ten years later, on 31 December 1989, it closed out at 38,915.90...a 592% gain as the Japanese 'economic miracle' reached fruition.
Of course all of these booms eventually became bubbles. In the case of the Internet, the earning power of the underlying assets never justified the huge valuations investors placed on them. It was all pie-in-the-sky speculation.
"Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050. With limited land and water resources, this will automatically lead to increased valuations of productive land."
Joachim von Braun, Director General International Food Policy Research Institute. But before they gave way to rampant speculation, the bull markets in Japan and oil WERE based on strong underlying economic and historical trends. And if you correctly read those trends early in their duration, you were already in possession of a powerful investment advantage.
In fact, I'd venture to say that being right about an asset that's in the early stages of a multi-year bull market is the most important element to your success as an investor.
Every so often seismic events occur - events that change the structure of our world. New technologies, wars, power struggles over scarce assets...
When these events occur, MASSIVE profits are there for the taking - and the people who make the most are the ones who spot these developments early, put their money in a few smart places, sit back and watch it grow...
Even the global financial crisis has made serious money for forward thinking investors. Think of Michael Swenson and Josh Birnbaum, two Goldman Sachs traders who made their firm nearly $4 billion betting against subprime mortgages in 2007 (while Goldman was still packaging up and selling subprime loans via CDOs to its clients).
Or John Paulson, the hedge fund manager. Paulson made $3.7 billion betting—among other things—that U.S. homebuilder shares would collapse and that Lehman Brothers would fall.
The thing is, those were risky bets in the sense that these traders were 'short' a market. They were betting that asset prices were too high and irrational. The risk, as John Maynard Keynes once famous said, is that "Markets can remain irrational longer than you can remain solvent."
It's not easier. But making money off undervalued assets is arguably safer. It doesn't involve leverage. And you don't have time working against you. You're either right or you're not. But if you're right, the upside is every bit as big.
That's why I believe it's in your interests to read the special analysis I've prepared on the two Australian firms that stand to make the most out of the New Colonial land grab.
I'll tell you their names. I'll tell you exactly why they occupy such an enviable position in the report. And I'll tell you at what price I recommended their shares to readers of my resource newsletter, Diggers and Drillers.
Suffice it to say that if you could make room in your portfolio for these two home-grown gems, you stand a real chance of making your first profits while the rest of the world is still learning about the opportunity.
When the rest of the market figures it out - and eventually it will - I reckon you'll have cause to thank me many times over.
You see this is going to be HUGE... The Third Wave of the Agricultural Revolution You only need to open your history books to see the impact that changes in food supply can have on the world.
In the 1700s and 1800s, as people flocked to work in newly industrialised cities in Britain and hygiene and health improved, the UK's population grew.
Demand for food soared. People panicked. Thomas Malthus famously predicted a famine that would shave down the population until it was level with food supply. He was predicting one of those rare intersections of economics with geography and demography. But then history swerved. A massive expansion of global farmland took place. Malthus never anticipated the boom in arable land that was just over the horizon. As farmland expanded, new techniques to increase productivity were introduced too. Groundbreaking farming technologies were introduced. Piecemeal plots of land were condensed into larger farms.
Eventually countries like Australia, New Zealand, Uruguay and Argentina began to ship meat and grain to satisfy burgeoning European populations.
At the same time the USA expanded into the farmlands of the Mid-West.
The first wave of the agricultural revolution actually depressed food prices. Supply grew faster than demand. Abundant food made it possible for populations to grow.
The second wave of the revolution led to even more people. "The Green Revolution" in India in the 1950s and 1960s saw the increased use of irrigation and fertilisers and high-yield seeds. It went a long way to ending famine in India.
But it also led to an even faster explosion in the global population, which brings us to where we are now.... The new agricultural revolution will DWARF what has gone before Of the world's estimated 6.7 billion people, only 1.2 billion live in what the UN considers to be 'developed' countries.
That means another 5.5 billion people are playing catch-up. And the two biggest countries by population, China and India, are well on their way - and already securing the land they need to feed their newly industrialised populations.
They realise that land is now scarce. People are abundant. But only so long as there is food to feed them. The developed world realises this too. And now the race is on...
If you take nothing else away from this report today, I hope it's this: Daewoo's farms in Madagascar...Middle Eastern interests in Africa...Chinese settlers in Mozambique...these are just the start of the global land grab.
I don't know yet if it will lead to a new GLOBAL agricultural revolution...or just a fierce contest for what's left of the world's most fertile farmland.
Even the UK is in on the act with the company Landkom International leasing over 10,000 hectares of farmland in the Ukraine, the 'breadbasket' of the former Soviet Union.
By now I think you can see that rich and poor countries alike are aware that there is one extremely valuable asset for the future. And it's an asset that you can't make any more of. You can only buy it.
It's estimated that in 1960 there were 1.1 acres of arable farmland per person. The Food and Agricultural Organisation of the United Nations puts that figure at just over 0.5 acres for 2030.
The math is inescapable. More people. Less land to grow food for them.
It's a basic question of supply and demand...
That's why legendary commodities investor Jim Rogers has already stated "this is going to be one of the best investments of our times."
I believe we're about to witness a 'seismic profit event'. There's a very real chance for early investors to make big, big gains over a period of 5-15 years (and possibly long beyond that)...
The question is: how you can compete with George Soros, Daewoo and Jim Rogers in getting a slice of the next agricultural Bull Run?
Well, that's precisely where the two Australian companies I mentioned earlier come in... Two targeted companies waiting to profit from an agricultural 'land rush' They don't own land - but the specific assets owned by these two companies are crucial to making farmland more productive. If I am right, their products will be in high demand once this bull market gets into full swing.
And if I'm right, the shares of these companies will be in high demand too. In fact, as I write this, one of the companies is fending off the persistent advances of a Chinese company that is keen to acquire it. By the time you read this, the acquisition may have already taken place.
But please understand - these stocks will probably not double or treble in price in the next few months.
These are solid, targeted and long-term plays on the coming boom in agriculture - perfect buy-and-holders to tuck away in your portfolio while this story unfolds.
Just as Lord Jacob Rothschild said recently: "right now is an excellent point of entry for a long term position in agriculture."
Not quite as poetic as his famous ancestors. But the way I look at it, these two firms give you an opportunity that's just too good to miss...
I've put together a full, detailed briefing on each company in Special Report from Diggers and Drillers - Australia's premium resource investment publication.
You can download my research right now and learn the ticker symbols, target entry price for each stock and get the full picture on the genuine potential I believe each company has to make you steady and significant profits over the coming years.
You can also get your hands on the latest issue of Diggers and Drillers. Just click on the link below:
Sincerely,
Dan Denning Editor-in-Chief Diggers and Drillers "
