“A prominent indicator of international food prices hit a record high in December, sounding a warning about looming threats to the world’s poor and to global growth.
“The longer [food prices] remain high, the longer there is a possibility of a repeat,” said Abdolreza Abbassian, secretary of the FAO’s intergovernmental group on grains.
The trade-weighted FAO index monitors the monthly change in a basket of 55 commodities, including meat, dairy, cereals, oils and sugar. Some of those categories are actually lower than they were in June 2008. But others are substantially higher.
Source: Wall Street Journal
My Comments: The food price is pressing many governments. China had to hike interest rates a few times last year to tackle inflation. Riots and Strikes have already occurred in some third world countries. Even in Singapore, the government has to allow Singapore Dollar to appreciate to cushion the impact.
However, investors should recognize that they are not helpless.
In Sep 2009, I was advocating investment in Gold when the Gold price was still at US$1,000/oz.
In Sep 2010, I have highlighted investors should have diversified the portfolio and start to look at agriculture commodities.
If you followed my blog, you may also notice that Oil and Stock Prices correlation has diverged and investors should start paying attention to hard commodities.
However, while commodities prices have rocketed high, investors should not take it for granted and expected it will rise forever and be complacent of your own investment . A recent example is that when Gold price starts to fall recently, some investments start to turn sour.
Ultimately, as I frequently advice my clients, investors should flow with the tide and always be vigilant about all the investment decisions.
Wish you all a prosperous year ahead.
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