From Arab states falling to Twitter revolutions, to U.S. states finally owning up to their own fiscal shortfalls, to natural disasters in New Zealand, Australia and now Japan, stock markets around the world have been swinging up and down in manic runs from hope to despair.

And one other thing is true: The markets hate uncertainty. That means, in our current circumstances, smart investors are looking for real assets — tangible commodities and resources that the world has to have to survive or hedge against uncertainty.  In 2010, I picked silver miner Silver Wheaton (NYSE: SLW) as my top stock for the year. It doesn’t get much more tangible than silver, and with the metal’s run higher, the stock was up more than 150%.

[ad#Google Adsense]This year, I’ve found a couple more standouts in the real asset sector.

This duo is a real asset play on the same megatrend that’s been building since the dawn of man: The world’s need for food…

Agricultural demand is growing
China, for instance, has a lot of mouths to feed — 1.3 billion at last count, or 15-20% of the world’s population. Unfortunately, it only has 7% of the planet’s arable land (and most of that is relatively unproductive).

On a per-capita basis, China has just a fraction of the available farmland as most other countries. And the gap is getting wider. Population is growing by around 10 million per year, while millions of acres of prime agricultural land are lost to soil erosion, urban construction, and heavy metals pollution.

This dire situation presents ongoing challenges for farmers — but unique opportunities for companies whose products can boost crop yields.

That’s where Yongye (Nasdaq: YONG) comes in. The firm is an emerging leader in the “green” agriculture movement, specializing in organic crop nutrients and animal feed supplements. The company has several advantages over the competition.

First, its chief marketing officer literally wrote the book on reaching out to rural farmers.

Second, its Shengmingsu brand’s liquid nutrient has proven to increase output by 22% and reduce harvest time by up to two weeks.

Finally, Yongye has been negotiating with independently owned supply stores to prominently display (and push) the Shengmingsu brand. The company has a year-end goal of 30,000 stores selling its product.

Ordinarily, you’d have to pay a rich premium for all this — but Yongye is trading at just five times forward earnings, a sharp discount to its expected 40%-plus growth rate. This stock could double in the next 12 months.

Prices for agricultural staples are rising
The bureaucrats can say all they want about benign inflation. Apparently, they haven’t been to a grocery store lately.

And prices are still rising at the wholesale level, which means more retail markups in the weeks and months ahead. According to the U.S. Department of Agriculture, producers fetched higher prices for corn, soybeans, eggs, milk and apples last month.

Some of the blame (or credit, depending on your perspective) belongs to the Fed’s dollar debasement policies. By definition, a depreciating dollar boosts the prices of dollar-denominated agricultural commodities.

But old-fashioned supply/demand imbalances are also playing a major role. A bad Russian winter wheat harvest and subsequent export ban sent prices skyrocketing. Here in the United States, torrential rains in the Corn Belt have left supplies at the lowest levels in 15 years.

[ad#article-bottom]Growing demand and shrinking supplies intersect at rising prices. Corn futures have spiked more than 70% since June. Wheat prices have spiked 35% so far this year. Soybeans and sugar are the same story.

And, because beef, pork and dairy producers have to buy mountains of feed for their livestock, rising grain prices will likely spill into the meat aisle as well (there’s typically a six-month lag).

With all this in mind, I strongly recommend readers fight back against the relentless price hikes by converting a few dollars into bacon and cereal — or at least pork bellies and corn.

Action to Take –> The best way to do that is with PowerShares DB Agriculture (NYSE: DBA). Based on the Deutsche Bank Agriculture Index, the fund gives investors direct exposure to a basket of different farm products. Half of the portfolio is invested equally among corn, soybeans, wheat and sugar futures. The other half is split between cocoa, coffee, cattle and hogs.

— Nathan Slaughter

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Source:  StreetAuthority