August 6, 2012

By Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors

Agrimoney reported that the Federal Reserve has warned, “The surge in U.S. farmland prices, which in parts of the Plains achieved their strongest run of growth on record, may be about to fade, sapped by the worsened outlook for agricultural profits.” Farmland values posted sharply higher gains in states around Kansas in the year to the start of last month, reflecting higher crop prices and an easing in the drought which has plagued much of the area since 2010. “Strong farm incomes continued to fuel demand for farmland,” the Federal Reserve System's Kansas City bank said, noting that values had now risen by more than 20.0% for two consecutive years for the first time since it began collecting data in the 1970s. Prices in Nebraska, which avoided drought, were particularly strong, with values of irrigated land soaring 41.0%.

Source: This was excerpted from U.S. Global Investors' Advisor Alert, May 18, 2012, www.usfunds.com.

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