During the mini-crash of August 2011, stories of a market slide and gold going through the roof were prevalent. What no one seemed to be talking about is food futures.
September wheat dropped twenty two and a half cents per bushel to $6.57 and corn dropped 0.17 to $6.86 a bushel. Oats and soybeans also took significant drops as the entire set of major grain futures took a nosedive.
Beef and pork futures also slid lower, but why?
Petroleum products dear friend – that’s why. Across the board Oil, Natural Gas, gasoline, all of them dropped. Usually when commodities sink it’s due to a strengthening dollar. Not this time.
If all commodities futures were falling, a weakening greenback might be to blame, but gold is having no trouble reaching new highs. Closing at 1760+ on Monday, gold is showing all the strength of a temporary safe refuge for money that investors can’t put elsewhere.
Food, grain, oil and fuel are falling because the speculators have seen the same reports the rest of the universe has – the second recession is here. Upon expected dwindling demand, prices will fall.
Gold is NOT seeing anything close to a slowing demand curve. It is precisely where many are moving their money in anticipation of what will almost certainly come next – another round of money printing.
While food may drop short-term, Americans are in for more quantitative easing (a.k.a. federal reserve printing money) which will further devalue the dollar and require more greenbacks to purchase the very goods that are currently on a downward price trajectory.
This is a temporary descending blip. Food and energy will become more expensive as the dollar becomes diluted by further irresponsible printing and that’s what all those gold buyers already seem to know.