Baltimore — (TFN): Want to know when a specific trend has no legs? Simple, when the government backs it, you know its DOA.

Just ask the folks that dumped millions into the biofuels industry. I have never seen an industry fall off the map as quickly as ethanol, except maybe clean coal, but that’s a whole different story.

Now that Cash for Clunkers is in the history books and the economy appears to be in worse shape despite jaw-dropping levels of government prodding, the Obama administration has moved on to the next vote getter, er, I mean, stimulus package, er, I mean, jobs program.

It’s a kiss of death for the “green” initiative.

If you loved Cash for Clunkers, you’re going to flat-out be infatuated what the press has dubbed Cash for Caulkers.

It includes the same market-bending incentives. It gives your hard-earned tax dollars to somebody that likely doesn’t deserve a penny of it, plus it allows immense room for corruption and deceit.

But best of all, it isn’t limited to just $4,500. Nope, this time Uncle Sam’s writing checks for up to $12,000.

Fall in line, folks.

It’s a buy-one-get-one-free extravaganza at the White House. For every dollar you spend on “weatherizing” your house, Obama wants to hand you fifty cents in return.

If the first stimulus created scores of jobs in previously unrecorded political districts, imagine what this program will do.

I think I’ll install a high-tech “man cave” in the basement and label it as “internal carbon sequestration.” The former Acorn thugs rummaging through the reams of paperwork will never know the difference.

I’ll thank you in advance for the hard-earned tax dollars.

More seriously, we’ve got another politically motivated Ponzi Scheme on our hands here. It may send a well-tuned shockwave through the economy at a politically sensitive time for Obama, but it will do nothing for the nation’s failing attempt to pull up our boots and strut out of this mess.

What it will do is have much the same effects as the ill-planned Cash for Clunkers program. (I wonder if all those car dealers got their rebate checks yet.)

As mentioned above, just about anything will fall under the cloud of “weatherization.” We’ll see taxpayer funded swimming pools, sunrooms, outdoor kitchens, sprinkler systems… you name it.

Before you know it, Obama will be calling this thing a bigger success than he imagined and Congress will shove another sticky hand in our back pockets to fund some more votes.

Meanwhile, the price of just about everything you need to pick up at Lowes this weekend will surge in value.

Want to insulate your attic? It’ll cost you plenty more if Obama gets his way.

Want to replace the window Lil’ Johnnie broke with an errant foul tip? Get out your checkbook.

But the news should be good for McCain’s favorite campaigner, Joe the Plumber. His business is going to be through the roof… for about a month. Then just like we’re seeing at the nation’s car dealerships, he’ll be lifting his phone checking for a ring tone.

As for consumers, this is a great deal if you were already planning a new kitchen or some renovations.

But for the out-of-work father of two with a drafty house and a leaking roof, it’s going to do little more than incentivize him to break out the credit card and go even further in debt.

By why deal with that now? Just like national debt, that’s something the future can deal with.

*** Really, why should I complain? We’re making money hand over fist thanks to this political pandering.

I should be more specific. TFN Strategic Trader members are making money hand over fist.

Just today, we sold the second half of a position for gains of 100%. If you recall, we sold the first half for whopping gains of 400% just a couple of weeks ago.

All of our recent gains forced me to run some calculations today. It turns out, we’re kicking some serious behind.

Out of the 35 positions we closed since our debut in March, 26 of them have been breakeven or better.

Thanks to 14 trades with 50% gains or better (yes, you read that right), we’ve got a batting average of 0.743.

Nearly 75% of our trades have led to gains. That’s nearly unheard of for an options-trading service.

Let’s just say I can’t wait to see what next year brings.

*** It’s been a strong year for TFN Strategic Trader and it’s been a strong year for the biotech sector. As I told TodaysFinancialNews.com readers this morning, if the year would end now, biotechs would beat the market by a two-to-one margin.

The S&P 500’s up by about 18%. The biotech sector is up by 39%.

That’s good news for one biotech player, Fact Biotech (NASDAQ:FACT) as it searches for a deep-pocketed buyer.

Here’s some of what I told investors this morning:

“To be certain, if your goal was to beat the markets in 2009, the biotech sector was the place to do it. Unless something dramatic happens between now and the end of the month, biotechs will have outpaced the broader markets nearly two to one over the past twelve months.

“The S&P is up 18% year-to-date, while the biotech sector (according to the AMEX Biotech Index) is up by a whopping 39%.

“That kind of figure is good news for Fact Biotech as it mulls its future.

“Since September, Biogen Idec has had its eye on a Fact takeover. Its first offer of $14.50 per share was promptly rejected. And now we are receiving word that the company’s second tender offer of $17.50 has been unanimously rejected by the company’s board.

“According to the letter released to shareholders this morning, Fact’s top brass believes Biogen’s offer significantly undervalues its product pipeline and overstates its liabilities.

“What’s even better for investors, however, is the fact that the board is essentially putting a for sale sign on the company’s shares. “Beat this price and we’re yours,” their actions say.

“The news is good for share price. As I write the stock is up by nearly three percent, surpassing Biogen’s tender price by nearly forty cents.

“What comes next?” Keep reading to find out.

*** What am I watching for tomorrow? You should know by now. It’s all about the dollar and its sudden strengthening. The greenback’s up again today.

Gold bugs managed to stop a week’s worth of bleeding this morning, but if the dollar rises again tomorrow, don’t expect today’s gains to hold.

What’s more, next week is the final expiration date of the year. All sorts of crazy things will happen as those big institutional buyers shore up their books for an end-of-the-year review. It won’t be good for bullion hoarders.

Look at it this way: there likely won’t be enough demand for that many gallons by 2022 at the current 10% blend, so the only way to reach the target is by increasing the blend to 15%, perhaps 20%.

If it were only that simple.

Already, there are numerous reports of engine failure due to ethanol blends that are higher than 10 percent. Simply put, existing engines are being destroyed at a 10 percent blend. A higher blend will accelerate the process. The other big problem: auto manufacturers’ warranties cover fuel blended with up to 10 percent ethanol. Increasing the blend to 15 percent will void all factory warranties, and rightly so.

But here’s the real rub: just a little over a week ago, the Obama Administration proposed raising mile-per-gallon requirements by 2016. This would raise the required fleet average from the existing 27.5 to 35.5 mpg. Cars would see the biggest increase in fuel economy, from the current requirement of 27.5 mpg standard to 39 mpg in 2016. Light trucks would see the requirement rise from the current 24 mpg to 30 mpg.

The problem with all of this is these requirements are to be met by 2016, in the middle of the timeframe to increase the use of ethanol in a gallon of gas (remember, 36 billion gallons by 2022).

The problem is that ethanol is less efficient that gasoline!

A gallon of E85 (85 percent ethanol currently used in “flex-fuel” vehicles) has approximately 27 percent less energy than a gallon a gasoline, according to drivingethanol.org. This translates into a 10-25 percent loss in fuel economy.

So on one hand, the government is requiring that more ethanol be blended with gasoline by 2022. This will undoubtedly lead to lower fuel economy. On the other hand, the President just proposed a major increase in fuel economy be in place by 2016.

Time will tell how this plays out. But I hope that the increased fuel standards take effect and we can finally end the ethanol fraud.

Source: The Ethanol Fraud

But finally it looks like ADM has turned a corner and is set to push higher over the months ahead.

As you can see, ADM has risen nearly 100% from its mid-October lows. While that’s a great rally, the real bullish signal is coming from the fact that ADM just broke above its 200-day moving average.

The 200-day moving average tends to be one of the strongest moving averages you can use as a support or resistance line. Usually, when a stock breaks above this long-term moving-average, it signals more gains to come.

To keep this play safe, all you have to do is enter a stop-loss about 10% under 200-day moving average. If ADM drops 10% under that average, it’s safe to say that the bull run will never materialize.

If ADM is on a real bull run, you could end up riding ADM shares back up to their previous highs by this time next year.

This from Today’s Financial News:

When Americans want something, we want it now. We want our big house with a white picket fence, and we want it now. We do not want to have to wait until we have a sizeable down payment or a job that pays well enough that we can afford it.

When we want a new car, we want it now. We will not wait until we can buy it with cash.

And most importantly, when we want our economy to get back on its feet, we want it now. That is why we are constantly bombarded with terms like bailouts, TARP, life preservers, and rescue packages. Americans are willing to risk everything as long as it will provide positive short-term results.

Short-termism is a deadly disease that could kill an investor’s shot at success.

****** Oil at $70 a Barrel — Gold at $500 by Christmas? ******

With stocks as volatile as nitroglycerin, gold should be trading above $2,000 an ounce! But the dollar insurrection has shaken up the commodities markets. Some experts now put gold’s downside at $500… even $400.

What if they’re right?

TFN’s options strategist Andrew Snyder has developed a gold hedge strategy that could make you money on your gold position either way. Find his Special Report on the Members Only Reports section of HotStockConfidential.com. To become an instant member, click here…
———–

Fortunately, the short-termism pandemic has not affected everybody in this country. There are still plenty of investors and companies looking for strong, long-term returns.

One of them, surprisingly, is Archer Daniels Midland (NYSE:ADM), the company known for its huge stance in the heart of the bubble of all bubbles, the ethanol industry.

As you probably know, the nation’s ethanol industry has all but dried up. The hype we saw 24-months ago is gone. The profit potential is nearly nothing. And, because they focused solely on short-term profits, many of the industry’s largest players are in bankruptcy or darn close to it.

But ADM is different. In fact, it is doing surprisingly well and is even increasing its stake in the world’s ethanol industry.

Why is it running into an industry when everybody else is running out?

ADM is one of the industry’s only companies that focus on long-term profitability. It is using the recent ethanol bust as an opportunity to strengthen its stance, increase its competitive moat, and buy its competitor’s assets at rock-bottom prices.

Life after tomorrow

Investors once debilitated by short-termism are finally starting to see the logic behind ADM’s maneuvering. A blow-out earnings report, which showed the company more than doubled its first-quarter profits, helped prove to many investors ADM is a long-term leader. Since the report, share price has risen by about 20%.

Of course, ADM is involved in a lot more than ethanol, it is a global commodities powerhouse, but the biofuel sector is getting a lot of the company’s attention. In fact, just yesterday [Thursday] executives announced the company is investing $370 million in Brazil’s ethanol market.

When one industry is sagging, good companies look for opportunities elsewhere. Instead of begging the government for bailout assistance or closing shop, ADM’s superb management team put on its long-term glasses and searched for better opportunities.

The company has a great shot at success throughout the world as alternative energy grows from short-term hype to a long-term power industry.

Even if Obama makes good on all of his immense promises, the nation is not going to be “green” by 2010 or even 2020. But you can bet, in the long run ADM will be competing with the likes of Exxon Mobil (NYSE:XOM) in a drastically greener America.

If you want to get rich and stay rich, you have to treat short-termism like an evil enemy. The mental flaw will do you no good.

Source: Patience is a virtue

Five years ago, almost no one believed that oil prices would soar past $30 per barrel. $50 seemed utterly unthinkable. As oil prices continued climbing, so did disbelief. The skeptics never abandoned their misguided notion that oil was “overpriced.” So when crude retreated from $75 to $50 early last year, the prospect of $100 oil seemed like a ridiculous prediction

Due of Peak Oil, the prices of agricultural commodities are going much higher…

Most of the agricultural markets have had a big move already, but these markets could easily suffer a big correction from current levels. The long-term investor will want to buy these markets on weakness, not sell them.

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627% Profit in Four Years and Rising!

The New York Times and USA Today called it a “bonanza” for everyone involved…

There’s an energy revolution about to reemerge and impact the entire nation…and it’s neither oil nor ethanol…

You’ll be surprised what this revolution is…

Click here to read more…

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A hundred years ago, the average American spent about 45% of annual income on food. Today, that figure is down to about 15%. So we’ve been taking cheap food for granted and have spent our “extra” cash on plasma TVs and leased BMWs.

We don’t worry about food costs or whether it will be readily available tomorrow. But the agricultural markets may have some major surprises in store for complacent Americans…and unprepared investors:

While shortages of key industrial and energy commodities are frightening, no sector will threaten global stability more than agriculture…

In 2007, we saw stark glimpses of just how bad this situation will get. The “Tortilla Crisis” in Mexico, the “Pasta Protest” in Italy, the riots and crushing of one supermarket shopper in China over cooking oil… We have seen dairy, meat, and bread prices skyrocket.

It’s ironic that as global population is reaching an all-time high, we are turning a huge percentage of our crops into ethanol or biofuel…

This questionable, if not idiotic, alternative produces little, if any, short-term benefit and considerable long-term harm — both to the quality of farmland and to the integrity and stability of the global agriculture markets. In other words, using food as fuel can make a big mess out of the global food supply…and the prices that we all pay for that supply.

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The Greatest Hoax in 30 Years…

This will have worse effects on the U.S. economy than 9/11…and it’s only a hoax…

The U.S. has been lied to for decades and the government is just now figuring it out…and there hasn’t been a public announcement because it will cause hiatus on Wall Street… We know the hoax and how you can make killer profits off of it…

To find out what Bush was informed behind closed doors and how to make a fortune from it… Click here for more info…

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From sea to shining sea, the U.S. has croplands as far as the eye can see. For years, its bounty has been a supermarket for the world. Now it’s a fuel station, too.

China, which has hundreds of millions more hungry mouths than we have, has far less arable farmland. And worse, China has far fewer controls in place to regulate farming methods.

Trends like these strongly suggest that the agricultural markets will imitate the price action of the energy markets. As investors, we must look at this situation as an opportunity…

We should be looking to buy stocks of some of the key agricultural companies that help support the industry: those dealing with equipment makers, fertilizer, irrigation, and transport.

In my own portfolios, I have exposure to soybeans, wheat, and corn. I also think the soft commodities are much undervalued: coffee, cocoa, sugar, and cotton. These markets are also poised to move much higher…

The planet is not running out of food, but it might be running out of cheap food. So stock up your pantry and start shopping for the kinds of investments that will prosper during the coming agriculture boom.

Regards,
Kevin Kerr

P.S.: Agriculture is a profitable market and safe bet for several years…but there’s another market out there that’s a lot more lucrative, a lot less obvious. We’ll give you a sneak peak to find out how to make easy millions. To find out what his hot market it… Click here…

Source: A Grainy Picture

Thomson Reuters reports that, according to the National Venture Capital Association, the alternative energy investments sector boasts the highest growth in venture capital investments in the last five years.

Big bucks are also flowing in from US pension funds into an array of alternative energy investments, stoking concerns of a possible bubble. Reuters says that the “exposure of pension funds and other institutional investors to alternative energy projects is small but growing with investments in geothermal to hydro, wind, solar, biomass, tidal energy and landfill gas.”

Charles Delvalle in Investor’s Daily Edge says it’s a great time for alternative energy investments…

The government recently incentivized production of ethanol, biofuel, and solar technology. If a Democrat gets into office, these incentives should grow. Congress even pushed up the Corporate Average Fuel Economy (CAFÉ) guidelines for the first time since 1975. And the idea of carbon credits is beginning to gain traction in Congress.

So the government is helping fuel the creation of cleaner energy. Step one is complete.

What about step two?

If I talk to any of my friends and tell them I love the things oil does to the earth, they’ll slap me (yes, I know oil is bad for the earth). If I told them that I didn’t recycle, they’d yell at me (yes, I recycle). My friends are already convinced that the green movement is the way to go.

If you type in the word ‘green’ in Google, you’ll see thousands of new websites that all talk about how great it is to be green.

Look at corporate trends, and you see more commercials with companies talking about going green. Wal-Mart, IBM, Intel, Google, and even ExxonMobil is getting into the act. The idea of going green is spreading like wildfire. And it will only increase as gas prices move higher.

The green market is definitely seeing the second step. But how about the third?

Have you seen solar stocks lately? In the past two years, these companies have popped by 100% – 300%. And it seems like a new solar company pops up every other day touting a ‘breakthrough’ technology that allows amazing conversion of light to electricity. Many have no profits to speak of and don’t plan on entering production for years.

Ethanol stocks were moving higher for a while, but have gone down since the middle of last year (maybe investors are catching on to how ‘not green’ ethanol really is). Geothermal producers are shooting higher. And those who sell wind turbines are making great money on increasing orders.

By 2030, Morgan Stanley expects green sales across the globe to total over $1 trillion (that’s bigger than the Gross Domestic Product of 169 of the 181 member countries of the International Monetary Fund!).

Most people I speak to see green technology as the wave of the future. It’ll only be a matter of time until they think that investing in green companies is a no-brainer.

In the end, this whole green movement we see today could very well be the start of yet another massive bubble. And considering the riches that were made during the two previous bubbles, catching the green investment mania early on would be a great way to make a lot of coin in the next few years.

Jason Simpkins in Money Morning reckons one of the best alternative energy investments is in uranium and uranium mining stocks:

Uranium has become one of the most coveted and volatile commodities on the planet. Overall, uranium gained 28% in 2007, but that seemingly simple statistic masks a much-more-complex story.

At one point in June, uranium prices were up 84% for the year. But then a mass sell-off – accelerated by the U.S. Department of Energy’s decision to auction off as much as 200 tons of uranium from its own inventory – drove prices from $138 a pound down to $75 a pound in just three months.

So far this year uranium has skidded even more, reaching its current trading price of about $65 a pound. Despite the dip, however, the underlying fundamentals remain strong, meaning it’s probably the perfect time to start stocking back up on the yellow cake providers.

In a recent research note, analysts with the RBC Capital Markets Group of the Royal Bank of Canada (RY) said that the current spot price of uranium has been “driven to excessively low levels due to intense selling pressure and lack of buying demand, coupled with the typical illiquidity of the spot market.”

The RBC analysts also said that “the long-term price, on the other hand, has not changed since May 2007 and we think this better reflects the market’s view of longer-term supply-demand fundamentals.”

So where should you look for profit opportunities? If you look at the charts, some uranium mining company stocks appear to move up and down in virtual lockstep with spot prices.
If you want a pure play on an increase in the price of uranium itself, Cameco Corp. (CCJ) is your best shot. It’s the largest producer of uranium in North America and – despite flooding at its Cigar Lake site last year – Cameco remains the world’s largest and most liquid uranium miner, making it vital to the global supply.

The company’s profit more than doubled in the first three months of 2008, surging 125% on its uranium and gold mining operations. RBC also likes Cameco’s potential.

Read more here for Jason’s tips on maximising profit from blue-chip uranium mining stocks.

World leaders have gathered in Rome this week to try and sort out the global food crisis amid claims of an imminent Malthusian catastrophe. But is this just another old chestnut or are these claims right this time?

When the pessimistic clergyman published “An Essay on the Principle of Population” in 1798, he argued that populations would continue to grow and grow – but land itself was finite. He predicted starvation, death and societal breakdown as the amount of mouths exceed the supply of food.

It turns out he was wrong…

The industrial revolution allowed greater efficiency in food production and a catastrophe was averted. Then in the 1940s and 1950s there was the so-called “green revolution,” where new farming methods significantly boosted food production.

The green revolution allowed food production to keep pace with worldwide population growth… but even this was not enough. As food prices shot up in the 1970s, the work of Thomas Robert Malthus became popular once again.

The worries about overpopulation proved mistaken… history repeated itself. The green revolution continued and agricultural yields improved… but population growth continued and continued. Today we are faced with accelerating food prices yet again. The good Reverend Dr’s name is once again being seen in newspaper leader columns.

Biofuels changed the equation

The main complication this time is the fact that we are burning food for fuel. This implied to me that there is a way back from the brink of starvation – and that involved convincing the Americans to cut their (immoral) subsidies to produce ethanol.

This policy is responsible for taking food off the plates of the poorest people in the world. I do not think a Malthusian catastrophe is imminent in food… but there might be one area where Malthus’ predictions can be applied… and it relates to the most vital commodity of them all.

I have always argued that water is more precious than oil or gold – and this will be proven in the coming decades. Yesterday, Governator Arnold Schwarzenegger declared a drought in California. The Middle East is in real trouble and central Asia is suffering from acute shortages.

Speaking at a Goldman Sachs conference on the top risks facing the world, Lord Stern (author of the Stern Review on the economics of climate change) said that we should be applying the theories of the good Reverend Dr, to water.

The Goldman panel concluded that a catastrophic water shortage could prove an even bigger threat to mankind this century than soaring food prices and the relentless exhaustion of energy reserves. Stern warned that underground aquifers could run dry at the same time as melting glaciers play havoc with fresh supplies of usable water.

“The glaciers on the Himalayas are retreating, and they are the sponge that holds the water back in the rainy season. We’re facing the risk of extreme run-off, with water running straight into the Bay of Bengal and taking a lot of topsoil with it.”

“A few hundred square miles of the Himalayas are the source for all the major rivers of Asia – the Ganges, the Yellow River, the Yangtze – where 3bn people live. That’s almost half the world’s population,” he said.

Goldman’s said it thought the best way to play the sector was to buy a basket of small “potential takeout candidates” such as Badger Meter, Calgon Carbon, Clarcor, Pentair, Pall, Instituform, Hyflux, Tetra Tech, Acqua America and Watts Water.

Population growth fuels commodity demand

The problem is not the growth in population per se, but the fact the population is getting more affluent. As standards of living rise across the Earth and human footprints grow, the number of people the planet can support will diminish.

According to UN research, the world population is expected to increase from around 6.5bn today to 9.1bn in 2050. Almost all of this growth is expected to occur in the less developed regions, whilst the population of the more developed regions will remain mostly unchanged, at 1.2bn.

All of this new demand will have to be supplied with “stuff”. That means food, materials and energy. Demand is soaring for all finite resource and that’s why the commodities supercycle will run for years.

Commodities are sliding at the moment as the rising US dollar takes centre stage. I do not expect that this will continue for long. The long-term argument for investing in commodities is still intact.

As the dollar rises buying opportunities will be created all across the sector… discover what I think the pick of the bunch are right now…

Regards,

Garry White
Editor
Smart Commodities UK

Source: Malthusian Catastrophe Coming Soon

On the second day of a three-day summit hosted by the U.N.’s Food and Agriculture Organization in Rome, leaders from 40 nations and representatives from 183 countries met to address the growing world food shortage.

“We must focus on the underlying causes: years of neglect of the agricultural sector and the lack of investment in increasing productivity,” U.N. President Ban Ki-Moon told reporters, Bloomberg News reported. “The price of oil has contributed significantly in the price rise of food. There is no doubt about that it affected the cost of transportation.”

The summit has been contentious, as leading biofuel producers such as the United States and Brazil have tried to deflect criticism that ethanol derived from corn and sugar is also driving up food prices, The Wall Street Journal reported.

“We don’t have clear evidence on the trade-off between agriculture products and biofuels,” Ban said, but there is an “urgent need to establish an international consensus and agreed policy guidelines.”

Meanwhile, less-developed countries that have set limits on exports such as rice, in order to feed their own populations, were fighting off calls for more free trade.

“We shall renew our efforts to further improve the environment and establish a fair and equitable order for international agricultural trade and protect the initiatives of farmers for production in developing countries,” Sun Zhengcai, China’s agricultural minister told state-run news agency Xinhua.

Ban laid the blame squarely on the rising cost of grains, which have increased dramatically over the past two years. The U.N. estimates that if countries do not act to stem growing global hunger, more than 800 million people could soon not have enough to eat.

The Global Ag Boom

When asked about the causes for the massive run-up in food prices, “experts” listed many of the same catalysts that have been discussed at the U.N. summit:

• Rising fuel costs.
• The use of certain foods – such as corn – for the creation of biofuels that are being developed to combat global warming.
• Rising populations.
• Growing demand from emerging economies – particularly China and India.
• Floods and droughts that are being blamed on ongoing climate changes.

But two causes aren’t on that list and they should be. The first is subprime mortgage crisis, which caused the U.S. Federal Reserve to go on one of the most aggressive rate-slashing campaigns in its history. The second is a greenback that’s been made weaker with each cut of the Federal Funds rate. Both are part and parcel of inflation.

Unfortunately for all the starving folks abroad, these rate reductions are highly inflationary. They continue to force the greenback ever lower, while at the same time boosting the price of dollar-denominated commodities such as oil.

The answer is a growing global interest in agriculture, both planting more crops and devising heartier, disease-resistant crops through the use of biotechnology.

Long-term, that global “Ag Boom” is the answer to the current food crisis. It’s also how you can offset the rising costs on the consumer side of your personal ledger by ramping up profits from this very same trend on the investment side of your own ledger.

To invest in the commodities boom, look at these two exchange-traded funds (ETFs):

• Van Eck recently launched its Market Vectors Agribusiness ETF (MOO), a fund that really reflects the breadth of the agriculture sector, apportioning its holdings across such sectors as chemicals (34%), agri-product operations (33%), equipment (24%), livestock operations (6%), and ethanol/bio-diesel (2%).

• The Deutsche Bank AG (DB) managed Power Shares Agricultural Fund (DBA) is intended to reflect the performance of commodities in the agricultural sector – soybeans (31%), wheat (28%), corn (23%), and sugar (16%).

Or if you believe that biofuels – and other forms of alternative energy sources – will be an inevitable part of the global future, consider the following “green” ETF: The PowerShares WilderHill Clean Energy (PBW), one of the better-quality funds that focus on “clean” technology as determined by the WilderHill Clean Energy Index.

Source: U.N. Calls for Increased Cooperation to Fight Growing Global Food Crisis

Despite that fact, the debates rage over Peak Oil, Peak Food and peak everything else. It’s about as sensible as rearranging deck chairs on the Titanic. So the “experts” continue to debate whether or not resources are running low. But the evidence is pretty clear, at least to this trader.

In the past year, we have seen the oil and agriculture markets explode. And this could be just the beginning of the rally, not the end, as some would have you believe. Personally, I think we are about halfway to the new top for many commodities. That means $200 oil (easily) and gold at $1,500-2,000. The agriculture markets have even further to go, in my opinion.

Key commodities are becoming more and more scarce. So we can expect to see more suffering in the poorest countries first. Then the economic impact will work its way up the food chain (no pun intended).

The facts are fairly grim if we look at them closely. There is going to be less of everything. Yet there will be more people who want those things. Let’s face it – wars have been fought over far less.

In her famous book, On Death and Dying , Elisabeth Kubler-Ross describes the stages of grief:

· Denial: “It can’t be happening”
· Anger: “Why me? It’s not fair”
· Bargaining: “Just let me live to see my children graduate”
· Depression: “I’m so sad, why bother with anything?”
· Acceptance: “It’s going to be OK.”

In my opinion, the American public is going through the stages of grief right now. Rising prices are just a market-based signal that we are losing our economic and resource abundance. As the American dream fades away, it’s like a death in the family.

Right now, I think we are between the stages of denial and anger. Ask yourself these questions: What do you think when you pull up to the fuel pump and have to pay $4 for a gallon of regular gas, or nearly $5 for a gallon of diesel? Or how about when you go to the supermarket and have to pay $4 for a gallon of “store brand” milk, or the same price for a loaf of “store brand” bread? Are your emotions between disbelief and anger? Are you saying to yourself, “Hey, what the heck is going on?” (I’m cleaning it up a bit because this is a family-friendly publication.)

I think folks mistakenly thought prosperity would go on forever.

Dinner is always fun until the waiter brings the check. Or as my colleague Byron King once said, “It’s easy to look rich as long as you don’t ever pay the bills.”

No sector has recently hit Americans in the wallet harder than energy. But even with those dramatic price increases, major changes are still not happening. We have seen a very small decrease in gasoline usage – only about 1% or so.

But while some travel may be down as costs have gone up, the numbers are not really dramatic. No, I am not pointing fingers. I live here too. If I looked at my own lifestyle, I couldn’t say that I am making radical adjustments, either.

We still like to drive our big SUVs. We still drive alone to work. Most people rarely take public transportation (if there is any). And we love to run our air conditioners full blast while watching the documentaries on global warming and dying polar bears on our 62-inch plasma TVs.

Yes, we like to grumble when we fill up those big SUVs, mostly because it’s easier to complain than make the tough changes that are needed. We feel entitled to keep living as we do. Hey, after all, we’ve earned it. Right?

Rather than make difficult choices, we are in that denial stage and buy the line from the government and media that all is well.

The facts and the fiction often get mixed up when discussing the issue of “Peak Everything.” Take the surging price of crude oil. Some people (including a lot of politicians) want to blame the traders and speculators. Other people blame farmers and corn-based ethanol. A lot of people blame OPEC. The list of culprits goes on ad infinitum.

The fact remains that it’s not just one reason or another that we are in this energy disaster; it’s actually all of these reasons and others. It’s a culmination of many years of poor energy policy, shortsighted planning (if you can even call it planning) and an overdose of arrogance that only superpowers can have.

It’s like a football team saying, “We’re No. 1 and will always be that way.” So the team stops training hard. Players quit working out and coming to practice. The coaches just relax and forget about recruiting or developing new talent. Nobody designs new plays or bothers to scout the opponents to see what they are up to. And then the team expects to go out into the world and bring home the trophy every year. “Hey, we deserve it. Right?”

Or go back to the analogy of the Titanic. The ship was state-of-the art. It was not “supposed” to be able to sink. But now as the water rushes in and the ship is dropping lower and lower into the sea, the cold water is hitting us all in the face. Now our lawmakers are scrambling to plug the holes, and it’s not working. The smart people (or maybe they were just lucky) are already in the lifeboats.

Only time will tell if the United States can actually move into the acceptance stage. But in the meantime, commodities will continue to dwindle.

Regards,

Kevin Kerr
for The Daily Reckoning

P.S. As the price of commodities contains to rise, there will be incredible opportunities to profit as investors. These opportunities will abound, as they always do when stupid decisions are being made…and you can bet that Bryon King and myself will alert our Outstanding Investments readers to where this opportunities for profit are hiding. If you aren’t yet a subscriber, there’s never been a better time to discover the world of natural resources. Click here for all the details .

“The richest investment opportunities can be found in the fast-emerging alternative energy sector,” says Mike Burnick in The Offshore A-Letter.

“That’s where oilman T. Boone Pickens is putting his money – his company Mesa Power just placed an order for US$2 billion in wind turbines. And there’s much more profit potential in other parts of the alternative energy sector too – especially alternative fuel.

“The market for ALL alternative energy sources grew 40% last year alone to US$77.3 billion and will explode into a US$250 billion industry within 10 years.

“Bio-fuel grew to a US$25.4 billion market last with more than 15 billion gallons of ethanol and biodiesel produced globally – more than double the output of just four years ago. The worldwide Bio-fuel industry will continue to enjoy explosive growth for years to come – expanding into a US$81 billion business within the next 10-years!”