Profit from the Hunt for "Blue Gold"

If you live in California, the best investment you can make right now is a forked stick.

As the Golden State enters its third year of drought conditions, drillers are working around the clock to help desperate farmers find water to keep their crops and orchards alive.

“It’s officially getting crazy,” one driller told National Public Radio yesterday. “We go and we go, but it just seems like we can’t go fast enough.”

But of course, tapping the states shrinking aquifers is just a temporary solution to a much bigger problem. Water scarcity is a theme we’ve covered for years. Now, we’re once again seeing headlines almost every week on the international devastation water shortages can cause.

Capital & Crisis editor Chris Mayer is no stranger when it comes to the business of water. In fact, he’s been on the hunt for water-related investments since 2006 when he released a special report on water titled Blue Gold. It included a mini-portfolio of five stocks — three of which went on to more than double within 18 months.

Chris shared with me a recent Wall Street Journal article that caught his eye. Not only are depleted aquifers a major concern in California. The cost of water is also reaching new heights.

An acre-foot of water can cost up to $1,300, Chris noted. That’s up from $40 a few years ago.

“That is a Bitcoin-like move,” Chris says. “And the cost of water has led many growers to leave tens of thousands of acres fallow. This year, a half a million additional acres will sit idle. That’s acreage that would have gone toward growing melons, bell peppers, tomatoes, broccoli, cabbage and lettuce.”

Water shortage issues aren’t just confined to the U.S. it’s a global issue that isn’t about to disappear with a couple of well-placed rainstorms…

Water Stress By Country

We’re already seeing the powerful effects of these water shortages in several stocks and commodities. Rising coffee prices this year due to dry weather in South America is just one example that’s hitting you right in the wallet. Your morning latte costs a little extra this month—not to mention the fact that coffee is one of the best performing assets so far this year. Even if you don’t live anywhere near some of the places dealing with drought, you certainly pay for it one way or another…

If you’re paying, you might as well bank some gains along the way.


Greg Guenthner
for The Daily Reckoning

P.S. There are plenty of “backdoor” water investments out there. Major companies that make filtration equipment, pumps, and drilling rigs all have some exposure to our water theme. Sign up for the Rude Awakening for FREE today to see how you can trade these trends for huge gains…

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