Why is George Soros selling gold and buying farmland?
Food prices are skyrocketing all across the globe, and there's no end in sight. The United Nations says food inflation is currently at 30% a year, and the fast-eroding value of the dollar is causing food prices to appear even higher (in contrast to a weakening currency). As the dollar drops in value due to runaway money printing at the Federal Reserve, the cost to import foods from other nations looks to double in just the next two years -- and possibly every two years thereafter.
That's probably why investors around the globe are flocking to farmland as the new growth industry. "Investors are pouring into farmland in the U.S. and parts of Europe, Latin America and Africa as global food prices soar," reports Bloomberg magazine (http://www.bloomberg.com/news/2011-...). "A fund controlled by George Soros, the billionaire hedge-fund manager, owns 23.4 percent of South American farmland venture Adecoagro SA."
Jim Rogers is also quoted in the same story, saying, "I have frequently told people that one of the best investments in the world will be farmland."
That's because demand for food is accelerating even as radical climate changes, a loss of fossil water supplies, and the failure of genetically engineered crops is actually reducing food yields around the globe. Ceres Partners, which invests in farmland, has produced astonishing 16 percent annual returns since its launch in 2008. And this is during a depressed economy when most other industries are showing losses.
Rogers & Soros: Farmland “One of the Best Investments of Our Time”
We have no shame here at Notes. When legendary underground investor Jim Rogers makes a call we listen. And we listen good. Rogers correctly predicted the commodities rally in 1999. And between 1970 and 1980, when he partnered with George Soros at the Quantum Fund, his portfolio made gains of 4,200% when the S&P 500 rose by 47%. To say he’s a legend is an understatement.
Rogers and Soros are snapping up farmland right now. These two old hands are betting that demand for food will soar, pushing up the price of arable land.
Falling commodity prices aren’t bringing prices for farmland down with them. Even as the price of grain goes down, the cost of the land it’s grown on keeps going up, leading George Soros and other guru investors to bet big on agricultural land.
The fundamentals are easy to understand: Over the next 40 years the population of the world is projected to grow from 6 billion to 9 billion, hugely increasing the strain on arable farmland worldwide.
The spiking grain prices that caused food shortages and rioting in dozens of countries in spring of 2008 fell some 50 percent by December. Yet even after the correction, grain prices remain above their 20-year average, and food stocks around the world are still near 40-year lows.
“Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050,” Joachim von Braun, director general at the International Food Policy Research Institute, told Fortune Magazine.
“With limited land and water resources, this will automatically lead to increased valuations of productive land. And it goes hand in hand with water. Water scarcity will probably increase even more than land.”
“I’m convinced that farmland is going to be one of the best investments of our time,” says commodities guru Jim Rogers.
