Back in 2008, world crude output was fairly flat due to geological and technical issues. Oil demand was rising especially in the emerging markets, like China. It looked like market forces would cause oil prices to rise and energy-based industries would suffer big financial losses (airlines come to mind but there are many others).
Indeed, just a few years ago, it was safe to say that the world would go to hell in a hand-basket mainly due to “not enough oil.” But you can not say that any more.
Looking ahead, oil supply is a problem. However, we also have to face the fact that the world has other critical resource-based problems. It is not just oil. We are looking ahead to a future of multiple problems, crises, and conflicts triggered by shrinking access to water, food, and many other kinds of minerals.
Let’s focus on a different form of global disruption that we have seen lately. It relates to the price and availability of food.
We saw food riots in Pakistan last year after flooding wiped out vast swaths of agricultural land. Food prices skyrocketed even if food was available to sell. In many parts of Pakistan, life became a nightmare.
In the first months of 2011, we saw food riots in Tunisia and Egypt as well as many other nations throughout the Middle East. The riots began in the same manner as in Pakistan with food shortages and price increases.
These riots reflect the abject poverty in which people live in many parts of the world. That is, hundreds of millions of people truly hang on by a thread, literally at the edge of biological existence. In regions where many households have an income of as little as $2.00 per day, the change in price for wheat or vegetables by just a few pennies is a matter of life and death.
The Tunisian and Egyptian food riots quickly morphed into government-changing revolutions. While there are always people out there working to toss out old rulers and install new faces at the top, for sure the spark of revolution in Tunisia and Egypt began at the food market.
Half way through 2011, there is a vast swath of uprising from Syria to Oman, from Morocco and Libya to far-distant Pakistan and we have got our “year of living dangerously.” It all began with rising food prices however we could very well be living in an era when every year is going to be a year of living dangerously.
It is hard to predict exactly when or where the next social explosion will occur. With food prices still climbing, job creation and wages stagnant in many regions, and other economic pressures mounting, expect more upheavals to occur for a long time to come.
While the Middle East is blessed with rich geological hydrocarbon formations, there are vast populations of urbanized, undereducated and underemployed people. There is the obvious water scarcity and that makes it tough to grow food in that climate. According to a 2009 report by the World Bank, “Arab countries are the largest importers of cereal in the world and must import at least 50% of the food calories they consume.”
Some wealthy oil states in the Middle East, with their sovereign wealth funds, have been buying arable land across Africa to produce food dedicated to their own national interests. Predictably, the foreign effort to gain food security is perceived by affected local African people as a modern colonial land grab. There is mounting anger in African countries where governments are permitting vast tracts of farmland, viewed as the continent’s last great resources, to pass away to foreign control with hefty profits to insiders. In August 2010, there was even a coup in the Indian Ocean island of Madagascar, off the shores of East Africa, after the sale of prime farmland to foreigners restricted domestic production, leading to food riots.
The bottom line is that there are serious structural problems with the world’s overall food supply. Starting with energy issues and moving to food issues, nothing is really getting better. We need to accept the fact that we will likely involve living in a tough world and we will be suffering from “not enough” of many things and it is not just having enough oil. We have many years of living dangerously before us.
What should you do? Obtain more financial education and learn how to protect yourself during these trying times of massive money printing, fiat currency, and runaway inflation. Purchase precious metals, including gold, to hedge or protect your net worth against the decreasing value of the US Dollar, which is just paper money.
I favor a quote from Steve Forbes … Forbes says that pursuing additional financial education and the resulting increase in our financial literacy will open our eyes to being savvy with our money and using alternative wealth creating strategies; this will be they key to resolving our financial crisis.
To gain the necessary financial education, it is best to pursue association with, access to, and membership in, a wealth creation community. As a result, you will learn about alternative wealth creating strategies and consider investments in non-dollar denominated assets … perhaps emerging markets … perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants … perhaps precious metals, rare earths, water rights, oil, natural gas, potash mines, or gold mines … things hard to build, difficult to replace, and costly to substitute … definitely not financial stocks, definitely not retail stocks, definitely not commercial property.
For those wanting protection of their purchasing power in gold, there are several ways that may be appropriate to obtain this protection. These include direct ownership in minted coins, use of gold exchange traded funds, gold mutual funds, and junior gold stocks. Many are investigating having part of their IRAs in gold, silver, precious metals, and non-dollar denominated currencies.
In addition, for those that truly believe default of sovereign debt is the greatest risk we all face, it is wise to learn how to implement a multiple flag strategy to diversify this risk or provide protection against higher taxes, capital controls, hyperinflation, civil unrest, erosion of personal liberty, and the rise of a police state. With a multiple flag system, you consider taking preparations like, but not limited to, establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, dual citizenship, and carrying multiple passports.
I will continue to provide examples of things we need to learn, the secrets of the insiders, as part of being savvy with our money, and introduce alternative wealth creating strategies, in future articles and updates at my blog over the next few weeks.
Finally, I want to thank Byron King, editor of Outstanding Investments published by Agora Financial, as he was the source of some of the material mentioned in this post.
In closing, be sure to Meet Me at my website, WhoIsMikeFarrell; Read Posts about my Internet Marketing Business at aspenIbiz BlackBox; and Obtain Some Tips About Being No 1 on Google at aspenIbiz My Go-To-Market Partners website; and Learn How to Live Longer at aspenIbiz My Life’s Advantage Today site.
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