Preparing for the Coming Scarcity

By Kelvin McElroy

NEW YORK ( TheStreet) - In yesterday's edition of the Resource Prospector , I discussed a few things I'm doing to protect myself from the increasing likelihood of food shortages and general fallout from the effects of currency depreciation and energy cost increases.

And I received some excellent additional advice from some readers.

Laura wrote in to say: "Hi Kevin, Good to see someone from the investing world talking about the real dangers to middle America. Mainstream media will never touch on this topic for fear of creating panic. So by the time we have double digit food inflation it will be too late for many families who live on the edge to prepare.

The main thing to tell people is not just to buy metals on the dips, but to buy food on the dips too. Here's what I mean. Yesterday I went for regular grocery shopping. The store was having buy 10 for $10 deals on many of the items I regularly purchase. So I took advantage of that, and placed half in storage. When buying food for storage, buy what you normally eat, as long as it can be stored a long time.

Then in addition to that, buy things that are trade-able -- I mean extra cans of coffee, tea, cocoa, chocolate bars, laundry detergent, etc. When you see a breakdown in restocking store shelves because retailers can't figure out how to stay ahead of inflation, you'll be glad to have a little extra set aside, and to have something to trade for items you are missing.

But the biggest piece of advice in metals is to purchase a bag of small denomination silver -- like a bag of dimes. You can't go wrong here."

That's excellent advice Laura. Thanks for the input.

Matthew wrote in to tell me about another commodity that most people don't think of: "Take a closer look at "water. There will be, sometime in the next couple of years, problems with our domestic and global water supply, be it natural catastrophe (drought), terrorism or man-made blunders that threaten our drinking water supply. This will cause rises in the stocks of companies that produce and supply us with drinking water. Just another suggestion in relation to your Food Riot article. I believe that the importance of water will eclipse that of oil in the 21st Century.

I have already stashed away large amounts of water (in the big plastic water cooler jugs) that will stay fresh and last a long time.

I can suggest good companies to own, but I am sure you know them already. They are categorized by Supply (Culligan, Deer Park), Equipment (Mitsubishi, ITT, Danaher) and Utilities (Veolia, United Utilities, Suez)).

Definitely some good ideas there. I'll have to do a full issue on how to invest in water sometime soon. Thanks.

Then Scott wrote to bring up a topic that I'm sure will irritate some folks:

"Desperate people do evil things. Your readership should also be armed (and familiar/proficient with their chosen tools) because -- unfortunately in a world with a shortage of just about everything anything can happen." They should be armed to some degree and able to defend their homes from uninvited guests. I know this makes us sound like right wing nuts (I'm not for what it's worth) but I'd rather be "talked about than talked over" if you know what I mean. Keep up the good work."

I have written about gun ownership before. I personally own a Ruger Blackhawk revolver in .357 magnum. I don't consider myself a wing-nut either, but like Scott, I'd rather have a gun and not need it than need it and not have it.

I also received more than a couple of requests for information on how to buy gold and silver. Reader Michael wrote:

"I have been reading for some time about the need to buy "physical gold and silver" as opposed to ETFs like GLD or mining stocks. I do not know how to go about this without getting taken for a ride. I see the ads all the time but remain skeptical.

Can you give me the name of a couple of "honest" and reasonable names from whom I can buy physical gold in relatively small quantities (maybe $5,000 at a time)? A second question is how and where do I store it once I have made the buy? Thanks."

For Michael and everyone else who wants to start buying physical gold and silver, I certainly believe that there's still time to do so. I've written extensively on this subject, and I'm actually currently in the process of turning my many articles on "how to buy" into a paid special report.

But for the time-being, you can read the following links to three pieces on exactly how, what, when and why to buy gold and silver, all for free.

http://www.wyattresearch.com/article/a-gold-and-silver-buyers-guide/22573

http://www.wyattresearch.com/article/a-gold-and-silver-buyers-guide-part-ii/22574

http://www.wyattresearch.com/article/notes-on-how-to-buy-gold-and-silver/22577

If you have any additional questions or suggestions, please keep them coming: editorial@resourceprospector.com.

Good investing,

Kevin McElroy, editor of Resource Prospector

Wyatt Investment Research, founded in 2001 as a publisher of newsletters, offers independent investment research of financial markets, stocks, bonds, ETFs and mutual funds to about 250,000 individual investors. The company is led by founder Ian Wyatt, who serves as publisher and chief investment strategist.

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