Printing Money = High Commodities Prices: Analyst
Commodities will benefit the most from the coordinated bailouts because the plans are sowing the seeds of future poverty, fuelling an already raging inflationary fire, analyst Puru Saxena, CEO at Puru Saxena told CNBC on Tuesday.
"All this money-printing which is going on all over the world" will bring "tradable rallies" until the first, second quarter of next year, but afterwards economic woes will intensify, Saxena said.
In a research note, he compared the bailouts with shots of heroin to fix the problem of an addict and said they were poison for the long term.
"It's very good to prop up the asset markets … but many, many other countries have tried to print themselves out of trouble and the end result has been a total collapse of the economy as well as the currency," Saxena warned.
"What this is going to cause is sky-high commodity prices in the next few years and a general deterioration of the standard of living and sharply rising consumer prices and a huge contraction in the purchasing power of money," he added.
Demand for oil is still rising despite the threat of global recession, while supply is tight and US gasoline stocks are at the lowest levels since 1969. The last big discovery of oil was in 2000 in the Caspian Sea but "even now there isn't a drop of oil from this field on the market," Saxena said.
Grain inventories are at their lowest level in past 30 to 35 years, and metal stockpiles are also low, he added. Gold is being snapped up as fears of inflation are rising.
"Already we are seeing shortages of physical gold bullion and hoarding of gold going on all over the world," Saxena said.