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-- Posted Monday, 5 January 2009 | Digg This Article | | Source: GoldSeek.com
Strangely economic commentators have missed the most obvious impact of the tragic Gaza War on the global economy: oil prices are going to rise, and will go sharply higher if the war widens into a regional conflict, so too will precious metal prices. Perhaps this perception will change now that a serious ground offensive has started. Higher oil prices will be the death knell for the recent modest rally in global stock markets and the impact of higher energy costs on a weakened world economy would be nasty. This is back to 1973 and the oil embargo years, and the horrendous stock market slump of 1974. Some might argue that with the S&P down 38 per cent last year, stocks have seen their annus horribilis. But sadly stocks are still over-valued in historic terms and not near to the level required for a stock market bottom; on the Q-formula they still have a 55 per cent downside. Oil price shockRising oil prices are just the kind of shock the global economy and stock markets could do without now as they struggle to rally. There does not seem the political will among Arab leaders for an oil boycott like in 1973 but the popular feeling against Israel’s disproportionate response to rockets fired from Gaza is mounting. Dubai, Jordan, Syria and Egypt cancelled their New Year’s celebrations as a mark of solidarity with the people of Gaza, although political support for Hamas is another matter. Regional war threatThe more likely threat to oil prices comes from a widening of the Israeli offensive to include another incursion in to Lebanon to fight a re-armed Hezbollah, although their last attempt in 2006 is widely perceived as having failed in its objectives. On the other hand, what began as a series of air raids with hundreds of civilian deaths is clearly developing into something more on the lines of the Lebanon War of 2006, and the implications for the oil price this week are obvious. Gold, silver and the US dollar are likely to gain in value in a flight to safety but this is negative for most other asset classes.
-- Posted Monday, 5 January 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Gaza War Set to Hike Oil and Gold Prices
