Apocalypse maybe...

In an earlier post I had disparaged the idea that the American Energy Crisis could lead to food shortages.  

"I know that a lot of the peak oil blogsphere is filled with disaster scenarios, but I sincerely doubt this is the most likely outcome. That argument that we will experience immanent agricultural disaster due to declining energy inputs is just not that likely. The markets are efficient enough to redistribute those inputs away from Suzie-Cuzie’s trip to the mall and into the farmer’s tank and fertilizer bin. Yes, food is going to get much more expensive, and yes, this will fall disproportionately on the poor. But the aggregate AMOUNT of food available to Americans is not the problem, but rather how to pay for assistance to the poor." (click here to read article full article)

Whoops!  Perhaps I should not have been so strident in my opinion at the time.

Also in a recent post I linked you to comments by the CEO of Potash, the world's largest fertilizer company (click here) that if the world does not rack up record crop production, right away and from now on, the world will experience famine.  Under no circumstance do I think I am the smarter guy in this space, and will defer to Mr. Doyle.  Frankly, I believe William Doyle is making sure he is in a position to say "I told you so" rather than having to fall on his sword.  I sincerely doubt that these remarks were "off the cuff", but rather were a long considered public warning.  Considering Potash's data resources you would have to be 9 cents short of a dime to ignore this if you were a political leader/policy maker (or a parent).

The seriousness of Doyle's comments are more apparent after some further consideration of his choice of words.  Since it is not possible to have record crops year after year after year, what Doyle is clearly saying is that in his opinion, and by definition the opinion of Potash, Inc., the world will experience famine at some point in the very near future.

For arguments sake, let us accept his comments at face value, and let us consider this:

Gold traded above $950 per ounce recently.  1 ounce of shinny, yellow metal is worth $950 in a fair and open market.

Corn traded above $5 per bushel recently.  I wonder how many American's even know what a "bushel" of corn is?  No, it is not those baskets you might remember from your childhood (if you are over 45 that is).  A bushel of corn is defined as 56 lbs of dried, cob free kernels.  

In a food/energy crisis what would you rather own?  1 ounce of shiny gold or 56 pounds of dried corn?  Forget for a moment that an ounce of gold is worth 190 times more than 56 pounds of corn in dollar terms...  You would go with the corn, right?

So, which is the better investment at these prices?

Mentatt (at) yahoo (d0t) com