Is the political unrest spurring commodity price inflation?
*Forbes, by Robert Lezner, February 21, 2011:
"The violent stand-off in Libya and elsewhere in the Middle East has
triggered renewed speculation in precious metals and crude oil prices.
The price of gold jumped $17.60 an ounce today to $1406 an ounce– much
nearer its previous peak over $1420. Silver, as well, jumped over $2.00
an ounce to $33.91, precisely the scenario to make silver traders
ecstatic. Meanwhile, crude oil, the commodity most directly affected by
the intense political unrest, ran up over 5% in price in London to
$107.60 a barrel. The last time oil sold at this level was in 2008,
just on the eve of an approaching bubble at the $148 a barrel level.
No doubt the pressure on oil prices was impacted by an oil workers
strike in the Libyan oil fields, the cessation in exploration by BP,
one of the major oil field operators there.
There were reports that some European oil producing companies like
Italy’s ENI, long a fixture in Libya, are thinking of evacuating their
expatriate oil workers.
Libya has the 9th largest amount of oil reserves in the world and is
one of the lowest cost producing areas. A continuation of the shutdown
in Libyan oil fields would mean a further spike in oil prices, and a
threat to the rate of economic growth in Europe if not the US.
In other words, political unrest is a boon to speculators like hedge
funds and wealthy investors betting the commodity prices are going
higher."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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