Fellow Resource Prospector,

There's an Egyptian proverb that says, "The mouth of a perfectly happy man is filled with beer."

And if you're like me, you spent many days and nights of your youth as a perfectly happy man.

*****Okay, so beer technically isn't a commodity. It's a product - technically any good that's manufactured - but there are some investment implications that relate directly to the prices of certain commodities. Could they be the best "commodities?" I guess that's a matter of opinion...

There are many commodities that go into making beer - the most important being water, but also barley and hops.

To back up for a second: the thesis of this letter, one that I'm constantly re-checking and analyzing for cracks and leaks, is that commodity prices will advance while the broad market in stocks continues to waver, and world currencies suffer from inflation.

So, in order to make profitable investments in beer, it's important to find a company that is able to gain a competitive pricing advantage against its rivals. I believe that commodities will rise in price, but I'm also equally certain that people (such as myself) will continue to drink beer even in the worst case scenarios imaginable.

*****If I were to design the world's most perfect beer company from the ground up, I'd want it to be completely vertically integrated, with control over every aspect of its production, distribution, and marketing.

It should have its own barley and hop farms, so that it wouldn't have to bid for these commodities on the open market.

Those two crops have experienced massive price swings over the past 5 years. Poor hop-crop yields in 2007 and 2006 spurred prices to rise ten-fold in 2008.

Barley prices also jumped: more than 200% between 2005 and 2008, from about $88 a metric tonne to over $241.

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If it's not too much to ask, it would be great if this brewery had instant global brand awareness synonymous with quality, drinkability and consistency.