If there was ever a maxim that lived throughout the ages of investing, sticking with “what everyone needs” certainly rings true today as it did 1000 years ago. That is, what “everyone needs” is basic necessities such as housing, food, clothing, healthcare products, and such items that people cannot live without for more than a few days. In economics we call this kind of item “demand inelastic,” which means that the demand for these kinds of items remains relatively the same as income decreases or increases compared to other items like cars, computers, and other luxury items like televisions and so on.

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The problem the US and Canada are facing is that a large portion of their manufacturing base has been off shored or sent to other countries in the past 20 to 30 years as so called trade agreements such as NAFTA, World Trade Organization, and other so called free trade instruments have been established which gave companies incentive to send middle class jobs to other countries which effectively stripped the parent coutnries of their bread and butter jobs, which eliminated or significantly reduced the spending power of the middle class.

Countries like Japan have, since the 70s to 1980s, pegged their currency to the dollar to take advantage of the manufacturing sector which gave incentive to US and Canadian producers to relocate to Japan or to allow more imports from Japan to be dumped into the US. Now we have a different problem: China, Mexico, Thailand, and Vietnam, but mainly China and its huge population base, extremely low standards, and manipulated currency.

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Since it is predicted that a large portion of the manfuacturing industry we have offshored in the past 20-30 years will return probable best way to attack this is to go back to Standard &Poor’s sector data for the time. However, it won’t be a very fine analysis as it would likely miss emerging industries. It is known that electronics were hot investments as the 1930s wore on– particularly radio, which was state-of-the-art at the time. Zenith Radio emerged as a leading producer: its stock languished until 1935 when it went from the range of 2-2 5/8 at the beginning of the year to 13 1/2 at the end of the year.

Many items, including stocks, reached a historic low in the early 30s.
Some never recovered, but others doubled from their low before the end of the thirties. Therefore we could be in a good buying position later this year, but it is assumed that large increases are unlikely from today’s position. Selling short would be smart before a crash later this year, but there is a fair chance weak prosparity will continue several more years, resulting in large losses for short sellers. So many things have changed since the 30s, and it is thought we won’t learn much, except that a disasterous crash is possible.

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Precious metals are where you can never go wrong since Canada has a large reserve of natural minerals, metals, elements such as uranium and paladium used in nuclear reactors and catalytic converts, respectively (not to mention other uses). Specifically, food and food production is pegged to become the next “big thing” in the United States as the world’s producer of food, or so the prediction goes.

In mainstream economics, the theory is that the primary sector is agriculture from where the development cycle begins for any country. After that comes the secondary sector (manufacturing) and then the tertiary one (services). USA is now sitting at the tertiary sector at the top of this value chain and China seems to be enjoying its manufacturing status. India just jumped from primary to tertiary because of its’ hopping on the information technology bandwagon.

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All one has to do is look at Canada and see fields of gold for there is tremendous potential in the prairies and the agricultural areas of the country including areas like Southwestern Ontario where there are areas full of tomatoe and other plant growing regions such as Leamington. In areas like this you will find millionaires already reaping the rewards of demand for quality produce that Canadian health standards enforce. It would be wise to agree with Mr. Roger’s views that farmers will become the next millionaires because as the previous paragraph explores, the economic theory is that the US and Canada are poised to shift back to an agricultural demand driven economy.

In addition to investing in commodities such as those found in the agricultural industry, the best additional bets would be to invest in essential metals like gold, silver, copper, and paladium because these metals will always be in need and will likely raise in price as the world consumes more of the latter two metals. Indeed, copper and paladium are increasingly being used in electronics and other modern applications.

Written by EconoChristian.com