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David Goldman at Asia Times Says Buy Fertilizer

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September 23, 2009 – Comments (7)

2 Asian fertilizer stocks to watch : CGA & YONG

Buy Fertilizer, Not Gold To Profit From The China-Dollar Unwind

Joe Weisenthal |Sep. 10, 2009, 10:59 AM

http://www.businessinsider.com/buy-fertilizer-not-gold-to-profit-from-the-china-dollar-unwind-2009-9

David Goldman at Asia Times has some good thoughts today on gold, inflation and the future weakness of the US dollar. Gold briefly traded over $1,000 an ounce, while CPI inflation as embedded in the spread between TIPS and Treasury coupons actually fell slightly. Why should there be a divergence between two measures that in one way or another reflect inflation expectations? The answer is that gold and TIPS play very different functions. Gold is an end of the world hedge; as a portfolio asset it costs money to own (vault storage, insurance) and has no legal standing. It only comes into play as an asset in the still-unlikely event that the dollar breaks down as a reserve currency and no combination of other currencies can be found that can subsitute for the dollar. It’s peak in real terms came with the Soviet invasion Afghanistan over Christmas 1979, when the world considered the possibiity that American power would collapse and with it the reserve role of the dollar. I just spent two weeks in the Far East talking to a variety of financial types (although the main purpose of my trip was unrelated to finance). Everyone is sick of the dollar as a reserve currency; everyone foresees a diminution of American power under the Obama administration; and no-one has a clue what alternative might present itself to the dollar. ... Over time, China will attempt to trade $2 trillion worth of Treasury securities for $2 trillion of production inputs. In this order, China’s priorities are food, food, food, energy, food, iron ore, food, copper, food, and food again. As an Asian growth play I continue to look at production inputs into food. That probably explains why fertilizer companies are among the year’s best performers.

7 Comments – Post Your Own

#1) On September 23, 2009 at 1:10 PM, portefeuille (99.61) wrote:

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#618) On July 29, 2009 at 7:52 PM, portefeuille (99.99) wrote: MOS - 49.55 - outperform

#619) On July 29, 2009 at 7:53 PM, portefeuille (99.99) wrote: AGU - 44.33 - outperform

#620) On July 29, 2009 at 7:55 PM, portefeuille (99.99) wrote: POT - 93.16 - outperform

#773) On September 06, 2009 at 12:03 AM, portefeuille (99.99) wrote: YAR.OL - 29.88 (179.30 NOK) - outperform

#774) On September 07, 2009 at 1:13 AM, portefeuille (99.99) wrote: SDF.DE - 53.32 (37.20 EUR) - outperform

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#2) On September 23, 2009 at 1:35 PM, IBDvalueinvestin (99.64) wrote:

portefeuille those were some really good calls. But the fertilizer stocks in China itself have a much bigger opportunity to take advantage of China's fertilizer needs.

Thats why I like CGA, YONG & even SDTH over the others.

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#3) On September 23, 2009 at 1:57 PM, portefeuille (99.61) wrote:

portefeuille those were some really good calls.

The stocks have hardly moved since I made the calls. I just wanted to show that I also like "fertilizer stocks".

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#4) On September 23, 2009 at 2:07 PM, topsecret09 (38.63) wrote:

India has an urgent need for fertilizer also........    LGDI Legend International Holdings Inc Kisan International Trading Fze (10% Owner) 2,849,964 .60 1,709,978 2009-09-10   Indian Farmers Fertiliser Cooperative Ltd (10% Owner) 2,849,964 .60 1,709,978 2009-09-10   Kisan International Trading Fze (10% Owner) 2,323,700 .60 1,394,220 2009-09-09   Indian Farmers Fertiliser Cooperative Ltd (10% Owner) 2,323,700 .60 1,394,220 2009-09-09   Indian Farmers Fertiliser Cooperative Ltd (10% Owner) 727,300 .60 436,380 2009-09-08   Kisan International Trading Fze (10% Owner) 727,300 .60 436,380 2009-09-08

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#5) On September 23, 2009 at 2:26 PM, topsecret09 (38.63) wrote:

#4) On September 23, 2009 at 2:07 PM, topsecret09 (63.72) wrote:

India has an urgent need for fertilizer also........    http://www.lankanewspapers.com/news/2009/6/45147_space.html

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#6) On September 23, 2009 at 4:04 PM, IBDvalueinvestin (99.64) wrote:

#3) On September 23, 2009 at 1:57 PM, portefeuille (99.98) wrote:

portefeuille those were some really good calls.

The stocks have hardly moved since I made the calls. I just wanted to show that I also like "fertilizer stocks".

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I know thats why I said the Chinese fertilizers are better plays.

They are tiny and can easily grew quickly as China's economy restarts its 10%+ GDP growth of the recent past..

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#7) On September 23, 2009 at 4:24 PM, catoismymotor (< 20) wrote:

IBD, thank you. Fertilizer is a great play no matter which direction an economy is in. It is vastly overlooked by the general public that tend to focus on oil and gold. All the better for us Fools.

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