Recent flows of investment money into commodities reflect a desire to hedge against inflation. The huge amounts of liquidity being injected into the economy through the monetization of government debt has naturally raised concerns that inflation will start to rise. Central bank policy is firmly bent on maintaining low interest rates for a sustained period as rises in interest rates would be seen as a premature stifling of recovery. There is also the suspicion that central banks will tolerate higher levels of inflation precisely to inflate governments out of the huge debt hole they have created.
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