Food Crisis of 2021 in Europe

Armstrong Economics Blog/Agriculture Re-Posted Apr 1, 2021 by Martin Armstrong

We are staring in the face of a serious food crisis in Europe as food prices rise continuously, and with further draconian COVID measures within the EU, they are bringing the food supply chains to a standstill. Our models have been warned that this 8.6-year cyclical wave into 2024 will be one of commodity inflation due to SHORTAGES rather than speculative demand. All the indications that the world is heading for a serious food price crisis are in play. The Food Price Index (FFPI) of the Food and Agriculture Organization of the United Nations (FAO) averaged 107.5 points in December 2020, an increase of 2.3 points (2.2%) compared to November 2020, which represents an increase for the seventh consecutive month.

With the exception of sugar, all sub-indices of the FFPI recorded slight gains in December, with the sub-index for vegetable oil again rising the most, followed by that for dairy products, meat, and cereals. For 2020 as a whole, the FFPI averaged 97.9 points, a three-year high, 2.9 points (3.1%) higher than in 2019, but still well below its 2011 high of 131.9 points. It is also interesting that the FFPI in 2002 was still 53.1 points. It only increased significantly from the financial crisis of 2007/08, only to then level off in the 90-point range. Since May 2020 it has increased by 18%.

Our models project that the upward trend in the FFPI will intensify going into 2024. With the coronavirus mutating, as we warned ALL viruses do, as such, we have these various strains from Africa, Brazil, UK, and even California, are inspiring politicians to use this as an opportunity to restrict the population even further. These corona measures have extended to the food supply chains, disrupting them just as we see in electronics. For example, the German Fruit Trade Association sees the supply of fruit and vegetables from abroad is at a substantial risk whereby imports are suspended. The reason is the tightening of the corona entry regulation by the federal government. The tightening of the lockdown in Europe is beginning to restrict the supply chains reducing the food supply

Collectibles Going Crazy?

Armstrong Economics Blog/Collectibles Re-Posted Apr 1, 2021 by Martin Armstrong

This June, Sotheby’s will be auctioning off three of the greatest rarities in the stamp and coin field. The 1933 Double Eagle $20 gold coin, the unique British Guiana One-Cent Black on Magenta, and the unique Inverted Jenny 1918 Plate Block. This is truly an incredible offering from a single collector to have captured three of the rarest and most unique collectibles in history.

It is a bit unusual that a unique stamp from a less than the mainstream region has emerged as the rarest and sole-surviving example of the British Guiana One-Cent Magenta from 1856. It was last sold in 2014 at Sotheby’s for $9.48 million. While it was rediscovered by a 12-year-old schoolboy living in South America in 1873, perhaps due to fantastic marketing, it has emerged as one of the most important stamps in famous collections that have ever assembled. In 1873 L. Vernon Vaughan, a 12-year-old schoolboy living with his family in British Guiana found the stamp among a group of family papers bearing many British Guiana issues. The young philatelist would later sell the stamp for several shillings to another local collector. The British Guiana then entered the UK in 1878, and shortly after, it was purchased in Paris by Count Philippe la Renotière von Ferrary who many considered to be perhaps the greatest stamp collector in history. Then following the war, France seized Ferrary’s collection, which had been donated to the Postmuseum in Berlin, as part of war reparations due from Germany following World War I. The stamp was then sold in 1922 at auction when it was purchased by Arthur Hind, a textile magnate from New York, for its first auction-record price of $35,000. The stamp changed hands moving from the collections of the Australian engineer Frederick T. Small; then a consortium headed by Irwin Weinberg; then by John du Pont of the famous chemical company. Du Pont paid $935,000 for the stamp in a 1980 auction, before it was last sold at auction to Weitzman for the record-setting price of $9.48 million.

Interestingly, a tradition emerged where previous owners of the British Guiana signed the back of the stamp. Weitzman added his own personal mark to the reverse of the stamp inscribing his initials “SW” along with a line drawing of a stiletto shoe as a nod to his legacy in fashion.

This 1933 Double Eagle ($20 gold coin) is the only example that may be legally owned by an individual. It was the coin acquired by King Farouk of Egypt. Stuart Weitzman purchased the coin at a Sotheby’s/Stack’s auction in 2002 for a world record price of US$7.59 million, nearly doubling the previous record. The Director of the United States Mint signed a Certificate of Monetization that, in return for twenty dollars, authorized the issuance of this single example.

In August 2005, the US Mint announced the recovery of ten additional stolen 1933 double eagle gold coins from the family of Philadelphia jeweler/coin dealer Israel Switt, who was the illicit coin dealer identified by the Secret Service as a party to the theft who admitted selling the first nine double eagles that were recovered. Israel Switt had many contacts and friends within the Philadelphia Mint. As the story goes, the Secret Service found that only one man, George McCann, had access to the coins at the time and served prison time for similar embezzlement in 1940. Israel Switt somehow obtained the stolen 1933 double eagles. One theory is that McCann swapped the previous year’s Double Eagles for the 1933 specimens prior to melting, thereby making sure the count was correct. The US mint began striking Double Eagles on March 15, 1933. Roosevelt’s executive order to ban gold was not finalized until April 5. Therefore, on March 6, 1933, the Secretary of the Treasury ordered the Director of the Mint to pay gold only under a license issued by the Secretary, and the United States Mint cashier’s daily statements do not reflect that any 1933 Double Eagles were paid out.

In September 2004, the claimed owner, Joan Switt Langbord, heir to Israel Swift, tried to sell the 10 coins and they had to be surrendered to the Secret Service. In July 2005, the coins were authenticated by the United States Mint after working with the Smithsonian Institution, as being genuine 1933 double eagles. Joan Switt Langbord claimed to have found them in a box and she went to court to have them returned. On October 28, 2010, US court ruled and the issue went to trial in July 2011. On July 20, 2011, after a ten-day trial, a jury ruled unanimously in favor of the United States government and Lanford appealed. At first, the Court of Appeals overruled the jury, but then it went En Banc and the Court of Appeals ruled in favor of the government. The Langbords appealed to the U.S. Supreme Court, which on April 17th, 2017 denied certiorari.

Hetty Green’s son, Edward Howland Robinson Green (1868-1936), was not so frugal and spent $3  million on coins and stamps. He was an avid collector and bought the famous sheet of 100 inverted airmail stamps in 1918, paying $20,000. The last time this Plate Block appeared on the market was 16 years ago when it sold at auction for $2.97 million.

Meanwhile, the classic Ferraris from the 1980s have nearly doubled in price over the past year.

GameStop Update

Armstrong Economics Blog/Stock Indicies Re-Posted Mar 15, 2021 by Martin Armstrong

Gamestop has rallied back during the week of March 8th after all the hoopla. Cyclically, it was 13 years down and it was due for a bounce. Even our pattern recognition models picked up the rally starting in August 2020. Quite frankly, this has all the hallmarks of manipulation, but not what you may think. The classic manipulation is to pump up a market touting some player but the pros have already been in the market. This is how the Buffet manipulation of silver was done in 1998 and even the entire Hunt Brothers silver rally back in 1980.

I knew the Hunt Brothers were buying silver from the early 1970s. At the end, their name was attached to silver and the claim was they were taking it to $100. At that time, the exchange pulled the same maneuver and made it a fraction in margin to go short but 10x that to go long. The Hunts were trapped and could not sell anything without everyone jumping in front of them,

Melvin Capital, which was a small hedge fund lost 53% of its capital in January on GameStop. Not sure how that was possible unless the bet was purely a gut-trade rather than quantitative. The four largest asset managers in the world together own 39 percent of GameStop shares, according to regulatory filings. Those stakes, which are mostly held for years in passive index funds, have collectively gained roughly $1 billion in value since the beginning of this year. The hype of a huge short-squeeze seems to be exaggerated. One hedge fund, Senvest Management, recently boasted to clients that it made more than $700 million from a bet on GameStop in September, the Wall Street Journal reported. Certainly, our model was long, not short and I cannot see even a trend-following-model that would have been short. Melvin Capital to lose 53% does not seem to be very professional to lost that much on a single stock. The long-term is not over in this stock.