"What investors need to bear in mind is that the effect of the ultra-loose monetary policy the Fed is still pursuing has ramifications that manifest themselves in ways that may not be immediately apparent. The price of food has rocketed and while in this part of the world, we can absorb costs without too much effort, in the troubled regions, it can mean the difference between a family eating this week but not next," said a
"Lantau International" source.
Gold has reached $1430 an ounce on safe-haven buying as investors expect the turmoil to continue but some commentators attribute its gains to the uprisings reasoning that if the governments of Tunisia, Egypt and now Libya had not come under pressure, gold would be less expensive than it is now.
"That's nonsense on so many levels," said Mirek Nemacek, Senior Vice President at "Lantau International". "Those governments came under pressure because the quantitative easing policies of the Fed and other central banks have made paper money worth less so people need more paper in order to buy food and pay for services. With many Mideast countries suffering just as much if not more than the West during the recession, many have no jobs and little money and this has been a major driver of the unrest."
A mere two words - "strong vigilance" - used by Mr. Trichet resulted in a sharp surge in the euro's value against that of the US dollar. A 2.4% rate of inflation prompted the more hawkish tone from the ECB President. "This must be rather galling for the Bank of England which held rates steady even though the UK's inflation rate hit 4%," added the "Lantau International" economist.