Tuesday, May 31, 2011

Quick Note: Agricultural Chemistry & Gold

Over the past decade fertilizer prices have generally increased when priced in dollars as can be seen in Figure 1.
Figure 1: USDA fertilizer prices in US dollars from 1995-2011. 
If you price fertilizer, an essential resource, in gold (real money) you come to a different conclusion as can be seen in Figure 2. 
Figure 2: USDA fertilizer prices in ounces of gold from 1995-2011. It is assumed that the 2011 average gold price is $1600/oz.
When priced in gold, fertilizer has not been increasing. It has oscillated somewhat, but over the past decade and a half it has generally been dropping when priced in gold. Note that the spike in 2001 was due to gold reaching a multidecade low as economies faltered and central banks sold gold into the market (which was obviously a blunder). The point should be quite obvious: The price of an essential resource (fertilizer) is not increasing when priced in gold, rather, the value of the US dollar is decreasing!

2 comments:

  1. That why agricultural land can be replace to gold.

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  2. Every strategy might be a breathtaking decision for some shareholders yet a major mix up for others. Brilliant speculators will look at all of the data and reports accessible with respect to the state of the gold market just before settling on any last venture choice.
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