The key question for this company is will the decline in oil be long-term. He doesn’t think so. We are seeing a lot of positive things in the oil structures. One of them is the political reality of the Middle East. Because of this, he believes the correction on this company has been overdone. This offers a pretty good entry point right now. 6.3% dividend yield.
He is starting to look and add a little bit of oil at this time. He feels that inventory levels should start to level off because wells right now are not even generating the cost of drilling the well. Because of this there is a massive shutdown of well production. Although he doesn’t own this, he does like it and his company has a target of $4.50.
(A Top Pick April 3/14. Down 12%.) A fully integrated agricultural company with a railroad to their elevators along with production of legumes and wheat. Thinks it should deliver quite nicely this summer because of what is going on in California. Feels drought is going to haunt us from a food inflation perspective.
This is the one oil company that he added to during the decline. It is a royalty model, and management has quite a bit of cash to add more properties along the way. He likes the properties and the areas. Almost 60% of production was hedged at about $100 out to December. Good management. 12% dividend yield.
Global Economy. There are 2 ways the monetary shift, that is occurring, is going to play out. Either through the IMF SDRs (Special Drawing Rights), or the structure that the Chinese and the new nations are creating. Are they going to go independent on their own or are we going to play along through the SDRs? SDRs are a basket of different currencies, out of which you are going to have the 7 main currencies, something like the euro. However, the Chinese are saying that without a governor we are back to the euro, so what is the point in participating? They would like gold as part of that basket. The Chinese keep storing physical gold. Whether the new structure will have some kind of a physical backing of real money, versus the game that we have with the paper money, he thinks it is clear that the basket is going to be part of the equation. This means that the countries with the most gold will have the greatest purchasing power. We are witnessing a deflationary storm that they are trying to control, and something has to give.