Gold & Silver Forum - Start stocking up if you haven't already!!

Quote:

Originally Posted by Farmgal (Post 573176)

No, the problem is, no one is willing to pay them to keep farming!
We heard of a dairy farmer whose milk check was $100,000, but his hay bill was $140,000. Hard to keep going that way.

Yup, food prices have been artificially suppressed for a long time. In another thread I did basically a historical analysis on the price of a gallon of milk in 1941 versus what that value would be in 2006 dollars. The result indicated that milk was underpriced by 53%-89% depending on New York or Alabama market. That means your dairy farmer's milk check ought to have looked more like $153,000-$189,000. Interestingly enough a median value of $171,000 minus $140,000 would leave $31,000. Hardly a fortune but enough to live especially if he ate some dairy, beef, chicken vegetables and such that he grew on his farm.

Here is a repost of my other post since it is relevant.

Quote:

Actually we are already in a recession of food prices. It is one of the top factors contributing to the collapse of our civilization. Civilization as we know it is an agricultural product, our agricultural system is horribly broken and as a result our civilization is failing.

Because food is so horribly undervalued it is more and more difficult for real farmers to make a living trying to grow any. As they go out of business and more people seek a recession in grocery store prices the food factories come online. The problem is they don't really make the same product the farmer did, the food from the factories is loaded with toxins, pathogens, lacks taste and very likely lacks nutritional value as crops are raised on overworked soils and fed only the nutrients the plants needs to grow so they don't have a chance to absorb other nutrients that you need. These depressed food prices are not only making people sick, but artificially low food prices require workers earning artificially low salaries at every step of the operation from the factory to your mouth. In addition to bidding down the wages of all workers in general it also creates an incentive to attempt to recruit illegal aliens who will work off the books for pennies on the dollar. Incentive to hire illegals = incentive for illegals to cross the border en masse, bringing with them a whole host of problems which we are all generally aware of.

It doesn't end there, though. Because of suppressed food prices our economy is so sick it doesn't function right, leaving many people exposed to great risk of not being able to make a living wage. As a bandaid on this gaping wound our politicians long ago established wellfare and entitlement programs and because of the nature of our system many of these programs are exploited by illegal immigrants who will never pay in what they take out. The emergency room at a hospital standing in for the family doctor is a perfect example.

It goes on and on, I could fill your screen with further examples and I'm not even anywhere close to the best educated individual on the subject but no, low food prices are a terrible thing for our nation. The great majority of the people will suffer the consequences but never know the cause.

I'll leave you with this quick analysis of food prices based on Electric Amish's post.

Quote:
<TABLE cellSpacing=0 cellPadding=6 width="100%" border=0><TBODY><TR><TD class=alt2 style="BORDER-RIGHT: 1px inset; BORDER-TOP: 1px inset; BORDER-LEFT: 1px inset; BORDER-BOTTOM: 1px inset">Stats from 1941

Gallon of Milk $0.34
Loaf of Braed $0.08
New Car $925.00
New Home $6954.00

E-A </TD></TR></TBODY></TABLE>
Okay, 1941 we were still using PM's as money so we can use an inflation calculator to see what the relative value of a silver dollar was back then, roughly $13.89.

34 cents is just about 1/3 of a dollar, so if we divide $13.89 by 3 we get $4.63. Looking back to the article on Juliani's idea of what food costs we see

Quote:
<TABLE cellSpacing=0 cellPadding=6 width="100%" border=0><TBODY><TR><TD class=alt2 style="BORDER-RIGHT: 1px inset; BORDER-TOP: 1px inset; BORDER-LEFT: 1px inset; BORDER-BOTTOM: 1px inset">But when asked about more mundane matters�like the price of some basic staples�Giuliani had trouble with a reporter's question. "A gallon of milk is probably about a $1.50, a loaf of bread about a $1.25, $1.30," he said. A check of the Web site for D'Agostino supermarket on Manhattan's Upper East Side showed a gallon of milk priced at $4.19 and a loaf of white bread at $2.99 to $3.39. In Montgomery, Ala., a gallon of milk goes for about $3.39 and bread is about $2. </TD></TR></TBODY></TABLE>
We know that the adjusted 1941 price for milk was already low because almost all our dairymen went of out business but compare that $4.63 price to the $4.19 NY high and the $3.39 Alabama low and you see a product that has decreased in value by 10.5% to as much as 36%.

But wait! There's more!

Going back to the silver dollar worth $13.89 in today money we notice two things,

1) current silver spot price is only $13.82
2) a silver dollar isn't a full ounce of silver

The ASW of a silver dollar is .77 troy ounces so in terms of purchasing power one could reckon a spot price of $17 (1 - .77 = .23, $13.89 x 1.23 = $17.08). This suggests silver is undervalued by at least 23%. That's not all either, because it fails to take into account two other conditions

1) these figures are based on officially reported inflation rates, which are grossly understated
2) the silver supply/demand picture is much different now than it was in 1941

All this suggests even $4.63/gallon is well under value for milk so let's look at it from a gold perspective. In 1941 a dollar was 1/35 an ounce of gold. Current spot price for gold is $676.00 and since we were technically on a gold standard at that time we might consider that a purchasing power of $19.31 in current dollars is closer to accurate. That would suggest that a gallon of milk should be worth something closer to $6.43 today. That would mean milk is under priced by anywhere from 53% in New York to 89% in Alabama!

You aren't getting that milk for free, either. You're paying for it in terms of quality, your personal health and the health of your civilization. Think about it, if it was profitable to farm again many more people would, just as they used to. This would move us away from a service based shell game economy and back into a solid agricultural/manufacturing base. One of these economies has a future, the other does not.

But hey! We aren't here at GIM to fix what's broken, we're here to make a buck through prudent investments so look at it this way, if milk is undervalued by maybe as much as 90% what does that say about gold? Hard to know for sure the way the markets are made but you can bet there's plenty of room to the upside left.