Wheat Is Cheap, Measured By Gold And The Dow Ratio

Priced in gold and stocks, wheat is near multi-decade lows. That may not last.

Measuring the cost of anything in currency can be misleading. As we know, inflation can be gamed by authorities to appear low, and supposedly low inflation is actually high inflation if wages are declining while prices rise.

Longtime correspondent Harun I. has often recommended in these pages that we look to other yardsticks to get a more realistic assessment of price and value.

For example, what is the cost of wheat when priced in gold rather than dollars? Harun has graciously provided a chart of the wheat/gold ratio, which I marked up to identify when gold was expensive and wheat was cheap, and vice versa.

Priced in gold, wheat is at multi-decade lows; technically, this long downtrend appears to have reversed into an uptrend. If this is so, the only direction in the price of wheat (priced in gold) is up.

Here is wheat priced in the Dow Jones Industrial Average (DJIA). In essence, how many bushels of wheat can be purchased with one share of the Dow index?

In 1975, at the nadir of the stagflation-ridden stock market, wheat was expensive and the Dow cheap--once again, this is pricing wheat in the Dow, not the dollar.

At the top of the stock market bubble in 2000, the Dow was expensive and wheat was cheap.

When the Dow hit bottom in March 2009, wheat went up when priced in stock market shares.

Despite some impressive volatility since 2000, the trend in the price of wheat (when priced in stocks) is clearly up. Once again, it seems a long-term downtrend in the price of wheat has reversed and is now an uptrend.

The only way for wheat to regain its previous trading range is for gold and the Dow to both plummet or for wheat to rise in cost, i.e. it takes more gold or shares of the Dow to buy a bushel of wheat.

Priced in gold and stocks, wheat is near multi-decade lows. That may not last.Technically the trend has reversed, suggesting much higher prices--in dollars, gold or stocks--for wheat and indeed, by extension, for all food.

We may be tasting the first minimal increases in food prices that could soar to unimagined heights in the years ahead.

Ukraine Gives Russia 48-Hr Ultimatum Or "We Will Fight"

Ukraine's foreign ministry has given Russia a 48-hour ultimatum to explain its military exercises near the nation's border; or, as foreign minister Andriy Deshschytisa warns "we will now fight with Russia troops."

As AP reports,

Ukraine's foreign minister has blasted the Russian decision to start military maneuvers along Ukraine's border and said his country will fight any invading troops.

Andriy Deshchytisa said Russia's decision Thursday to launch the military exercises "very much escalates the situation in the region."

Talking to The Associated Press in Prague, Deshchytisa says his country has been taught a lesson by Russia's annexation of Ukraine's Crimean Peninsula. He says "having this experience, we will now fight with Russian troops if ... they invade Ukraine."

He says "Ukrainian people and Ukrainian army are ready to do this."

Deshchytisa says the new Russian military exercises are taking place "even closer to the Ukrainian border than it was planned earlier" and demanded the withdrawal of Russian troops.

It seems the red-line is about to be crossed by both sides... though as long as Putin does not hold an emergency press conference, it seems BTF WWIII is back on.

INFOGRAPHIC: Quick primer on cobalt and batteries

Fortune Minerals is advancing a gold-cobalt-bismuth-copper mine in Northwest Territories, Canada and readying a metals processing plant in Saskatchewan. 

The London, Ontario-based junior has put together this infographic on the use of cobalt in rechargeable battery technologies which is set to rocket in coming years.

The REAL Reasons We’re Drifting Towards World War III

War: The Big Picture

All of the talk of war in the Ukraine and Syria is confusing … so here’s an executive summary:

• War is horrible for the economy, and makes the American people poorer

• The American people are overwhelmingly opposed to more war in Ukraine, Syria, Iran and elsewhere

• But you don’t have any say in issues of war or peace. The U.S. is an oligarchy … not a democracy or a republic

• Indeed, opposing war may get you labeled as a terrorist (background)

• War makes a handful in the military-industrial complex and big banks rich

• So endless war is a feature – not a bug – of U.S. policy

• Moreover, empires usually launch wars against up-and-coming rivals, and so the U.S. is headed on acollision course with China

• And the powers-that-be are desperate to ramp up war to distract the population from our economic problems

• The neoconservatives planned regime change in  Syria and other countries 20 years ago, and Obama is implementing the same plan.  Indeed, not only are the Neocons back … they never actually left

• But it’s not a party thing.  The Dems have been on board for many years as well.  For example, Jimmy Carter and Barack Obama’s foreign policy guru said in 1997 that the U.S. had to gain control of Ukraine

• The U.S. and NATO will carry out false flag after false flag until they can create a “justification” for war which will people believe

• They will support Al Qaeda terrorists in the Middle East, neo-Nazis in Ukraine and other bad guys to promote their military objectives

• The American media – including the big “alternative” sites – are always pro-war – and coverage of Ukraine and Syria is arguably even worse than in the run up to the Iraq war – so the American people are not hearing the real story

• Even supposedly “open voting” sites like Reddit routinely censor stories which challenge the status quo in any fundamental way.   For example, Reddit’s front page has consistently carried anti-Russian stories on Ukraine

• Stories which give balance or a broader perspective  are stopped before they get traction

That’s why we’re drifting towards WWIII …

Russia Warns West "Remove Forces"; Begins Military Exercise On Ukraine Border

UPDATE: Dutch fighter jets were scrambled after Russian bombers approached Dutch airspace; the Russian planes turned away

With both sides appearing to have entirely un-de-escalated and the truce deal now a thing of the past (besides a few hundred Dow points), the Russians are speaking up today - and are not happy:

• RUSSIA IS EXTREMELY SURPRISED BY KIEV AND WASHINGTON'S "DISTORTED" INTERPRETATION OF AGREEMENT REACHED IN GENEVA LAST WEEK ON DE-ESCALATION OF UKRAINE CRISIS - FOREIGN MINISTRY
• RUSSIAN FOREIGN MINISTRY SAYS KIEV AND WASHINGTON "CLOSING THEIR EYES" TO PROVOCATIVE ACTIONS BY NATIONALIST FORCES IN UKRAINE

And, on the heels of Turchynov's official restart of the so-called anti-terrorist operation, Russia is calling on Ukraine to pull back military from Ukraine's southeast... and rattles its sabre by undertaking a military exercise on the border.

Bloomberg reports,

Russia is surprised by distorted interpretation of Geneva accord from govts of Ukraine, U.S., RIA Novosti reports, citing Russia’s Foreign Ministry.

*RUSSIA CALLS ON UKRAINE TO REMOVE MILITARY FROM SOUTHEAST: RIA

Russia says Ukraine, U.S. closing eyes to provocations by right-wing extremists: RIA

Russia still believes partners are serious about resolving crisis in Ukraine: RIA

and in addition

• RUSSIAN MILITARY CONDUCTS MILITARY EXERCISE IN ROSTOV REGION, BORDERING UKRAINE - DEFENCE MINISTRY OFFICIAL

All of this sets the scene for an important set of meetings next week...

Russia ready to host EU, Ukraine energy officials in Moscow or consider other cities for talks, Russian Energy Ministry spokeswoman Olga Golant says by phone.

Golant confirms EU Energy Commissioner Guenther Oettinger invited Russia to gas talks

Slovakia planning talks on use of gas pipeline in reverse to supply Ukraine on Apr. 28 in Bratislava, Eustream pipeline operator spokesman Vahram Chuguryan says by phone

So to sum it all up:

1. The truce deal is dead
2. Russia blames Ukraine/West for breaking deal and misunderstanding it
3. Ukraine/West blame Russia for not unilaterally pulling back its forces
4. Russia is warning Ukraine to pullback military from Russia-held southeast Ukraine ("or there will be retaliation")
5. Russia is rattling its sabre by military exercises on the Ukraine border (after US sends another warship into the Black Sea)
6. Against all this tension, gas pipeline talks are set to begin shortly.

China state stockpiler buys bonded copper stocks -sources

(Reuters) - China's state stockpiler has bought at least 200,000 tonnes of imported copper stored in bonded warehouses after global copper prices dived to multi-year lows in March, said four sources with knowledge of the matter.

Further purchases by China's State Reserves Bureau (SRB) could help absorb the small surplus forecast to weigh on the global refined copper market this year and help support prices that have already dropped nearly 10 percent so far this year.

Benchmark three-month copper contract on the London Metal Exchange fell to $6,321 per tonne on March 19, the lowest since mid-2010, making imports attractive. Copper prices have since rebounded, trading around $6,640 on Wednesday.

Adding to the allure was the fall in copper premiums to a one-year low below $100 a tonne in March. Buyers pay premiums on top of cash LME copper prices to secure physical metal.

"Thousands of tonnes (bonded stocks) have already been moved into (SRB) warehouses," said the first source, who was aware of the progress of the bureau's purchases.

The SRB bought around 200,000 tonnes bonded stocks between March and April and will move all the stocks to state warehouses by the end of June, two sources said.

A third source, who has links to the central government, said the stockpiler had secured up to 350,000 tonnes of bonded copper. Most of the stocks were sold by banks that had taken over the stocks after financing deals ended.

The stockpiler had set a target to buy copper at prices below $7,000 and to purchase large amounts should prices fall below $6,600, the third source said.

China usually does not announce imports for strategic stockpiling or the quantity of state stocks. An official at the State Reserves Bureau on Wednesday would not comment on the agency's stockpiling plans.

Two of the sources said State Reserves Bureau was considering bringing forward its 2015 stockpiling plan due to the current low copper prices.

BUILDING INVENTORIES

The March-April buying was in addition to SRB's plan - completed in January - to import 300,000 tonnes of copper in 2014.

The January bookings would be priced on the average of LME copper on the delivery month plus premiums of more than $110, according to the three veteran industry sources.

Following the purchases made in January and March-April, the SRB has bought up to 500,000 tonnes of refined copper from the global market so far this year, sources said.

The third source added that the SRB also plans to sell about 200,000 tonnes of old copper stocks in the domestic market in 2014 for stock rotation. He estimated the SRB would hold about 1.4 million-1.5 million tonnes of copper stocks by end-2014.

The buying plans are part of an ongoing program to build copper stocks to 2 million tonnes by end-2015, said the source.

Lower availability after the SRB buys, coupled with seasonal demand from end-users, have pushed up premiums for bonded stocks more than 20 percent to about $110-$130 per tonne this week, from about $70-$90 in end-March, traders in Shanghai said.

Bonded copper stocks in Shanghai stand at about 650,000-700,000 tonnes currently, down from 700,000-800,000 tonnes at end-March, three traders estimated.

The stocks are typically estimated by traders as Beijing does not release the figure.

Supplies in the domestic market have fallen, forcing end-users this week to pay premiums of about 600-800 yuan per tonne to the price of the front-month copper contract on the Shanghai Futures Exchange to get a hold of physical metal, traders said.

Congo State Miner Decides to Increase Copper Production by 45%

Congo’s state mining company Gecamines decided to increase the output of copper mining by 45 percent this year itself because the company itself seeking funds for new projects. A part of production comes from the world’s second largest mineral trader, Trafigura Beheer BV in order to process a copper tailings stock at Lupoto mine of Gecamines. The preparations are still going on and once it gets finished the state mine start the production which has the capacity of 3000 metric tons per month.

Once in 1986 Gecamines was one of the world’s largest copper mines. But, due to some mismanagement and Congo war completely destructed the company. This year, they are setting it to give a production rate of about 60,000 tons of copper which is higher than the earlier production. However, this will cause a great challenge to the state due to large power problems.