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Farmland: Gold or Silver With Yield
publication date: Apr 21, 2011
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author/source: Chris Prang
Over the years I have read numerous "financial experts" discount land as
a good investment. There are challenges with land as with any
investment, but done right, land is a great investment.
Here are the challenges of investing in land:
With land, even a little bit of land, you can produce an income stream or a yield. Land, gold and silver can all go up and down in value and all are an inflation hedge. But only land can produce a yield. When Jamestown was founded, the English were looking for gold. While there are gold deposits in Virginia, it was not what the King had hoped for. But then a man named John Rolfe planted some Spanish tobacco seeds in the fertile soil of Virginia's tidewater and all of a sudden, Virginia was producing what they called "Green Gold." It turned out that the land the English had acquired (stolen, bought, confiscasted) from Powhatan, produced far more wealth in the form of a tobacco yield than what they had ever hoped when first sought for gold. My suggestion for most people is start off by buying a home with some land that you can farm. Grow some crops, get chickens for eggs and meat, cows for milk and meat, goats for milk and whatever else you can think of. You don't need a lot of land to produce a good yield and another income stream. Don't waste your money on a home that has no land...foolish for most...especially if you have chldren that can work the land. Below is s a good article from Simon Black a.k.a. Sovereign Man on farmland. Date: April
20, 2011
Reporting From: Asuncion, Paraguay My friend Arthur Tyde in the Philippines once quipped over dinner, "Manila is what Hong Kong would look like if it were turned over to the Mexicans..." I've always chuckle when I think about that. If I may impose on the analogy, I would describe Paraguay as what Arkansas would look like if it were turned over to the Philippines: part tax haven, part agricultural powerhouse, in a better fiscal position than its peers, slightly underdeveloped, cheap, and lots of potential. Nobody really knows anything about Paraguay. Ask your neighbors, they'll probably think it's in Africa. The first thing you should know about Paraguay is that the country is the size of California. It looks tiny on a map-- probably because it's surrounded by Bolivia (the size of Alaska), Argentina (the size of Mexico and Central America), and Brazil (the size of the United States)-- but there is a LOT of land here. That is exactly what's attracting companies like Monsanto, Philip Morris, Cargill, etc... cheap farmland. Staple exports from Paraguay include cotton, soy, tobacco, coffee, sugarcane, corn, beans, peanuts... you name it. In northwestern Paraguay is the 'Chaco' region. It's no man's land. You might get water, you might not. You might get roads, you might not. You might get title, you might not. But boy is it cheap... You can pick up hundreds of acres for just a few thousand dollars, and they're happy to take US dollars. (as an aside, I find this incredible because Paraguay's currency, the guarani, has appreciated 25% against the dollar over the course of the year... and it's data points like this that make me believe that the financial system as we know it absolutely has to reset...) Chaco property is typically used for cattle operations, though there are now several fuel crop candidates like Jatropha (used in producing biodiesel) that are showing tremendous resilience. The other interesting thing about the Chaco is that Paraguay actually fought a war with Bolivia over the region. Early in the 20th century, locals were convinced that there was oil underneath the brush land. There wasn't. 100,000 people died fighting for grazing land. The valuable agricultural land in Paraguay is in the east of the country. Why? Because that's where the water is. The Guarani Aquifer is among the largest underground water resources in the world with roughly 10 QUADRILLION gallons (10 million billion) under the earth. The aquifer supplies Paraguay, Brazil, Argentina, and Uruguay with the most vital of all natural resources. By comparison, however, land in Eastern Paraguay is much cheaper than its regional neighbors. It's expensive by local standards, but I have yet to see anything for more than $1 per square meter (roughly $4,000 per acre), and most of what I've looked at is in the neighborhood of $0.15 to $.40 per square meter ($600 to $1600 per acre). This is an opportunity. Farmland is an inflation hedge
that is often described as 'gold (or silver) with yield'; its prices tend to
mirror agricultural commodities, and it generates income from the crops that it
produces. Relative to its peers, though, Paraguayan farmland is substantially cheaper. In one extreme example, a piece of land in Brazil right on the border with Paraguay was selling for roughly $2.50 per square meter. Just over the Parana River in Paraguay, the same type of land was selling for just $0.80 per square meter. Those unfamiliar with the region may cite political differences, currency fluctuations, or cultural norms. They might even start quoting efficient market hypothesis, claiming that something must surely be wrong with the Paraguayan property. Tell that to the Brazilians and Argentines who are buying property in Paraguay. Or to the multinationals. Paraguay is where the value is. As an inflation hedge, this is like buying silver for $15 instead of $45. Sure, Paraguayan farmland might be more like the lesser-known 3-ruble Saint George the Victorious silver coin from Russia, instead of the more famous American $1 Silver Eagle, but the bullion value is just the same. I'll have a lot more information in an upcoming Sovereign Man: Confidential about how to make lucrative agriculture investments in Paraguay-- effectively, how you can buy silver for $15/ounce. Until tomorrow,  Simon Black Senior Editor, SovereignMan.com Did you receive this email from a friend? Sign Up to receive Notes From The Field.  Christian Economics, Christian Finances, Christian Money, Christian Wealth, Christian Mortgage, Christian Mortgage Advice, Christian Mortgage Counsel, Christian Mortgage Consulting, Christian Investing, Biblical Economics, Biblical Finances, Biblical Money, Biblical Wealth, Biblical Mortgage, Biblical Mortgage Advice, Biblical Mortgage Counsel, Biblical Mortgage Consulting, Biblical Investing, Creating Wealth, Mortgages For Christians |
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