megiddo666

Unlearning the Psychology of Markets

After carefully following global agriculture and geo-politics for the last few years, I would suggest that gold may be driven up as a haven against instability created by massive change in global economic systems.

For example, global grain shortfalls are a significant factor in government planning and action across Asia and Africa, where governments are attempting to minimize social instability due to real or perceived shortages and agriculturally driven inflation.

Hard asset acquisition in relation to this instability is high in Asia. An example is Pakistan's current situation, not just its political instability the West reads about, but its current economic disruption due to grain shortages, etc, that is a driver for gold purchase, since gold is seen keeping up with the inflationary spiral for core goods, such as fertilizer.

It seems that local economic factors regarding change are driving gold purchases across larger geographic areas, not just in response to inflation, but local market disruptions, against which gold is an economic hedge as much as a status symbol.

$100 Oil By Monday (Read: The Lebanon Crisis)

Not exactly, but that might be a result. The market is pricing a certain amount of risk into oil prices in regard to global crisis i.e. Iran, etc.

My point is that the Lebanon crisis risk that has not been fully priced in, and that events in Lebanon may be enough to shift the focus from a slowdown in the US economy to one that prices a crisis in a very sensitive locale in global relations, and results in prices over $100/bl, in conjunction with other market forces, such as the continued decline in the USD, etc.