Our Magnificent Seven of Grains are perhaps not as exciting as those in the Seven Samurai or the cinematic classic The Magnificent Seven (Yul Brynner, 1960), but they are also essential to the survival of the world “village.” Without the Magnificent Seven of Grains hunger would be far more widespread in the wold. These seven nations provide 78% of the global course grain and wheat exports. They provide 13% of total world consumption of these grains.

Essentially, course grains and wheat are total grains minus corn and rice.

Gold drifted to a one-week low below $1,380 an ounce Tuesday morning, as silver dipped below $21.80 an ounce, with stocks and commodities broadly flat on the day ahead of tomorrow's U.S. Federal Reserve decision, with analysts speculating on whether the Fed will give details of when and how it might slow down its quantitative easing program.

"The outlook for the gold price remains negative from a technical perspective," says Karen Jones, head of FICC technical analysis at Commerzbank.

"Following the mid-April plunge, the market has consolidated tightly sideways in a converging range. We are viewing this as a potential symmetrical triangle. A close below $1,352 will complete the pattern and trigger another leg lower we suspect."

"We believe that the dramatic gold sell-off in April," adds a note from Societe Generale, "combined with the prospect of the Fed starting to taper its QE program before year-end, has resulted in a paradigm shift in many investors' attitude toward gold. This is likely to result in continued large-scale gold ETF selling this year and next."

The SPDR Gold Trust (ticker: GLD), the world's largest gold exchange traded fund (ETF), has seen outflows this year amounting to a quarter of the gold it held to back its shares at the start of January.

In Washington, the Federal Open Market Committee begins its latest two-day monetary policy meeting today, with a decision due tomorrow.

"[There is] much speculation as to whether [the FOMC] will detail an exit strategy [from QE]," says a note from Dutch bank ING.

"While there are views that the Fed will want to see bond yields lower, or certainly highlight that policy rates will not be raised for a significant period, we see merit in the view that transparency is the best policy choice – and it is time to more formally outline the normalization process."

ING also argues that Fed policy uncertainty "has seen soaring volatility destroy the carry trade", whereby investors could borrow cheaply in dollars to invest in emerging market assets.

Fed Chairman Ben Bernanke meantime has stayed in his job "longer than he wanted" and has "done an outstanding job", according to President Barack Obama, speaking in an interview broadcast Monday.

Over in the U.K., consumer price inflation rose to 2.7% last month, up from 2.4% a month earlier, figures published Tuesday show. Mervyn King steps down as Bank of England governor at the end of this month. For the 120 months of his tenure, inflation has been above the Bank's target in 84 of them.

Over in India, the world's biggest gold buying nation, the authorities "are not at the end of our wits as far as gold imports are concerned," Economic Affairs Secretary Arvind Mayaram said Monday. "If required, there are other measures that can be taken and they will be considered at the appropriate time."

India has raised import duties on gold twice this year — taking them to 8% — and has also restricted imports of gold on a credit basis to only those who will re-export it. Gold and silver was India's second biggest import item last year and has been cited as a major contributor to the country's current account deficit.

Over in China, the world's largest stock market-listed jewelry chain Chow Tai Fook today reported a 13% drop in profits for the year to March, a filing with Hong Kong's stock exchange shows. The company cited "declining confidence of domestic consumers" as a factor behind the fall in profits.

Sales of silver bullion American Eagle coins by the US Mint meantime are set to record their best first-half-of-a year since at least 1986 — the year from which U.S. Mint sales data start — with more than 24 million ounces sold so far this year.

CME Group's new 1,000 ounce silver futures contract saw 25 lots of the September contract traded in its first day of trading yesterday, with five lots of the December contract traded. By comparison, volume for the standard 5,000 contract was 11,028.

About the Author

Ben Traynor

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

In the world of investing, there’s a lot to be said for buying undervalued assets.

Occasionally the market provides some incredible opportunities to pick up high quality assets so cheap that, to paraphrase acclaimed investor Jim Rogers, all you have to do is walk over and pick up the money lying in the corner.

One of the benefits of traveling the world so extensively is that I’m constantly exposed to these sorts of opportunities. And occasionally surprised when I’m not.

When visiting Bangladesh a few weeks ago, for example, I was surprised that asset prices were so expensive. The Dhaka stock market index was trading at nearly 20x earnings… hardly a bargain.

This only further solidified my view that Quantitative Easing in the West (specifically in the United States) has really taken a toll around the world in creating spectacular asset bubbles. But that’s a different story.

Here in Chile, there’s a number of asset classes that are undervalued. I’ve been very vocal over the last year or two that farmland prices in Chile are some of the most attractive in the world.

For example, farmland with ultra-high quality soil can be had for $4,000 to 6,000 per acre or less. In the US and Europe, it can be 2-3 times that cost.

Not to mention, the taxes, labor costs, regulatory costs, and overall operating costs are much lower here.

Now, there are places in the world where farmland is cheaper. Africa. Argentina. Bolivia. But you’re taking a lot more political risk. And in most of those cases, you’re not going to find the same rich, volcanic soil and temperate Mediterranean weather.

As I’m heavily involved in agriculture operations here, I’ve made the apples-to-apples comparison (and blueberries-to-blueberries comparison as well). And I’ve found that the profit per acre here is multiples higher than in the US or Western Europe.

It’s possible, for example, to generate 40% to 50% unleveraged returns from high value perennials… and 15% to 20% on seasonal crops like corn.

Given that farmland yields in much of the developed world are more like 2% to 4% (or less), it’s obvious that farmland in Chile is deeply undervalued… and that farmland in the developed world is likewise overvalued.

Now, I really don’t recommend that people try to rush down here and buy farmland. In fact, I strongly recommend against it. Most people are going to be taken to the cleaners.

The hard truth is that it’s -very- difficult to buy property here… and the due diligence requirements can be exhaustive. I spent 9-months conducting due diligence before I closed on my first property in Chile. And there are few credible experts here whose opinions can be trusted.

The market here is very insular. It’s not like being in North America or Europe where you can ask Google to serve up the answers on a neatly organized web page. It takes a LOT of boots on the ground effort.

Not to mention, there are numerous pitfalls for an absentee foreign owner of agriculture property in a country where s/he doesn’t speak the language. And if it goes south, it can be a multi-million dollar mistake.

So as grand as the opportunity in Chilean farmland may be, the challenges are very real.

But there’s something else down here that I think is an even bigger opportunity. It’s easy to purchase, easy to own, and there’s very little maintenance involved. And it’s, by far, one of the most deeply undervalued assets I’ve ever seen.

I’ll tell you all about it tomorrow–

 
Simon Black 
Senior Editor, SovereignMan.com

G8 Going to Hunt Down ALL Capital

These people cannot understand what they are doing to the world economy or even grasp why the liquidity has shrunk by about 50%. People do not believe the rise in the Dow claiming it is on low volume. They fail to grasp that everywhere we look, there is a massive contraction in global liquidity. As the VELOCITY of money declines, so does economic growth and that results in rising unemployment.

Sorry, there is no HYPERINFLATION. I have stated before, there will come the day you will PRAY forHYPERINFLATION for what we are headed into a black hole beyond anything historically within the global economy. This is getting worse week by week and in all honesty, the collapse in the VELOCITY of global investment is very, very serious. When this turns down from 2015.75, it will be far worse than what we saw with the 2007.15 turning point. They can control the press to hide the truth, but that will not prevent the demise. In fact, all the loss of the free press will accomplish is total shock and that will result only in a much more pronounced panic in the future.

It is the Guardian in Britain that is becoming the leading newspaper to read:

G8 countries agree to tackle tax evasion

Joint declaration by leaders at Northern Ireland summit falls short of demands by tax campaigners

.....read HERE