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 30-year mortgage rates saw their biggest one-week rise in over three years. A bump of 20 basis points in less than a week brought the average U.S. 30-year to 6.74% today -- a one-year high. As if the subprime sector weren’t in enough trouble already. Repo men everywhere are lacing up their boots.
 “Investors who bought bonds and bond funds for income and safety of principal are going to be surprised when they open their statements this month and find that they're down 6% or more,” reported Jeff Clark in The Growth Stock Wire this morning.
He’s right… bonds haven’t been themselves lately. Here’s a popular ETF… the Lehman 20+ year Treasury Bond Fund:
“It's a common misconception that bonds are safer and less volatile than stocks,” said Jeff. “If you take another look at the chart above, you'll likely agree that TLT is at least as volatile as any stock you own.”
“The best time to own bonds is when interest rates are high and are moving lower. As interest rates drop, bond prices go up and investors capture capital gains along with their high interest payments. It's the best of both worlds.”
 “Gold prices will rise to $750 by the end of the year,” Pierre Lassonde, the vice chairman of Newmont Mining, predicted yesterday. Higher interest rates are “bullish for gold.” Gold is up 2.3% this year.
“Think the commodities boom is over?” Kevin Kerr remarked. “Think again… the fat lady is just clearing her throat.”
 “Core” inflation gained a wee 0.2% in May. Of course, core inflation doesn’t take into account food or energy… the two things we write about every day… because they’re going up!
“You have to just laugh at this stuff sometimes or it will just drive you mad,” said Chris Mayer. “As investors, it’s better to ignore this junk. Seek out alternative measures of inflation. Also, don’t discount your own experience. Most people grasp that the price of most things is going up. That’s a far better picture than what you’ll get out of the government-approved numbers. Tangible assets are where you want to be. Own real things and sell paper.”
 As ifit were intentionally trying to embarrass the government, wheat prices hit an 11-year high yesterday.
"The world is approaching quite a precarious situation as far as global agriculture is concerned,” commented the Financial Times’ Gavin Macquairie. “Demand for all agricultural staples has been rising consistently due to global economic and population growth and developments in the food-for-fuel sector."
“Low grain stocks across the board mean two things,” continues Chris. “Higher prices and more aggressive planting.” Demand for things like fertilizer, agricultural equipment, diesel are going up.
 “The Zimbabwe ZSE industrials are up 4,500% since December 2006,” reported Free Market Investor’s Christopher Hancock. “And it's made that movement despite carrying the world's greatest inflation rate.”
Consumer prices in Zimbabwe rose 55% last month alone, according to the Financial Times. Zimbabwe and Argentina may be the only two governments printing money faster than the U.S.
“The year-on-year inflation rate is 4,350%, so the index is keeping up with inflation,” said Mr. Hancock. “But all bubbles come to an end... and when this one does, the domestic devastation that will ensue at the hands of Robert Mugabe will take years to heal.”
 “One of the world's most authoritative sources for oil industry data is confirming what many others, both inside and outside the oil industry, have long suspected,” our energy guru Byron King responds to BP’s Statistical Review of World Energy report released yesterday. “Mankind is at or near (if not already past) the era of cheap oil.”
BP announced that global oil reserves are in decline, and that, at best, we’ve got 40 more years of oil consumption at current levels.
“For the past 150 years or so, long-term extraction of petroleum from the ground could always be counted upon to increase over time,” continued Byron. “For the past seven generations, energy and useful hydrocarbon molecules, derived from crude oil, were continuously available to meet world needs. But no longer. The resource base is starting to reveal its limits. Mankind's limited ability to exploit that resource base will follow in turn. The future begins today.”
If you missed it, you can read more from Byron in today’s Rude Awakening, free with your subscription.
 “We just drove our annual dodge-’em car trip from FL to ME,” wrote a well-traveled reader, “and every roadside field, no matter how large or small, in every state, was planted with corn. Raccoons will prosper and multiply. Never seen anything like it. No more cotton plants. No more other veggies. They've gone nutz with this stuff.
“My husband read recently that ethanol fuel alcohols are eating fiberglass fuel tanks and any plastic bearings or parts in boats, etc. If the fiberglass is replaced with aluminum, it starts working on that, as well. If it's true -- what a boondoggle!”
 “Kevin Kerr’s comments on E85,” a reader writes, “that one needs to consume three times as much to be on par with regular gasoline is absolutely ridiculous. Does anyone ‘knowledgeable’ fact check his comments? I cancelled my subscription to RTA because of this error.”
That’s too bad. The comments you’re referring to were made by “farmers and car dealers” Kevin spoke to while traveling through the Midwest looking for trading ideas. Yesterday, he sold one of his corn trades for a 160% gain in 10 months.
“Whether it's three times less efficient or only 10% less efficient,” Kevin laughs, “is an argument I will leave for others, as it's a waste of another valuable resource:
my time.
"Ethanol, in general, is a flashpoint issue. Like bringing up religion or politics at the dinner table. If you really want to debate this issue, that’s fine. We need to seek out all kinds of alternative energy and conservation. Expecting so much ‘fuel’ from our food supply is detrimental to everyone. I'm not for or against ethanol. I'm for energy security. I would just like to see a rational, honest debate about how valuable ethanol really is, without the hyperbole.”
“The technology does exist to improve gas mileage using these engines. But right now, after all is said and done, the cost of moving from planting to harvest to refinery to fuel tank is a long, costly road… and when you add in the costs of production, fuel and water, not to mention the impact on agriculture prices in general, ethanol is not worth it.”
 “I thoroughly enjoy your erudite newsletters,” one reader flattered us. “I'd like to comment, though, on the article highlighting the investment opportunity [in recycled computers]. It should be tempered with an awareness of the horrors that surround this activity. The people who do the filthy work of 'smelting' printed circuit boards (to recover gold) are hovered without any protection over makeshift vats giving off highly toxic fumes. They're paid about $150 per month if they're lucky.
“That's not to even mention the damage that mountains of junk PCs and other electronic gear are doing to the Chinese land. I have always felt that Agora Financial has some kind of social awareness, as do many of your readers, so that aspect is worth a mention.”
Social awareness? Maybe. Thanks for the comment.
 A few businesses in the good ol’ USA get this work done with a bit
more tact:
“Nigeria and China and India are hot zones right now…lots of bad practices being employed,” writes in Brad Wiggin, who also commented on this story yesterday. “A lot of ‘entrepreneurs’ do not dispose of waste properly, whatsoever. They have people in fields breaking the e-waste up all over the grounds, and once they have taken the commodities from the material they leave it there. That’s very dangerous to the people who are lured into doing the work, and for the environment. Rightfully, there are lots of environmental groups that are watching those areas intently.
“The scrap that we process stays here in the US and is processed down to the commodity level with environmentally sound practices. There is money to be made…if you do it the right way.”
Best regards,
Addison Wiggin
The 5-Min. Forecast
P.S. Yesterday was a good day for Agora Financial portfolios, at least. Apart from Kevin’s 160% corn trade, Chris Mayer banked 75% gains on Ameriprise Financial. And Steve Sarnoff’s Schlumberger oil services play is up nearly 114% since the price “triggered” 11 days ago.
You can meet hear all these guys in person in Vancouver next month. We’ve got over 600 people signed up already. The speakers come from four continents and attendees from over 22 countries. This year’s event is going to rock. Details here:
The Rim of Fire: AF’s 8th Annual Investment Symposium
Don’t forget, if you’re a Reserve member, you get into Vancouver free. If you’re not already a member, you can get all our advice for one solid discount price, plus our newest service and the conference for free. Don’t miss our membership offering this month. We’re closing the door again on July 5: Agora Financial Reserve
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