Although not directly related to gold, silver and other precious metals, no doubt you’ve heard about the mass protests occurring across the Arab world…Egypt being the largest one thus far.
Mass protests and nonviolent civil disobedience – mainly driven by that nation’s youth – culminated with the end of President Hosni Mubarak’s 30-year reign.
While many problems from lack of human rights and decades of authoritarian rule have bubbled underneath the surface for a long time, many agree the spark that lit the fuse for Egypt’s revolution has to do with inflation and high food prices.
We’ve spent time on our blog and precious metals knowledge center discussing inflation and how to protect your wealth from it through investing in gold, silver or other metals.
Price inflation can have a bigger impact on necessities for everyday life – food being the prime one.
This price inflation has been especially profound in Egypt. Food prices rose 20% just in 2010 alone. And to add insult to injury, the land of pharaohs and pyramids has to import over 60% of its wheat. Depending on how it’s measured, the wheat price jumped anywhere from 50 to 70 percent in the last year.
(Some of the increase in wheat prices can be attributed to severe droughts in Russia and Europe, the main exporters of wheat to Egypt. Over 40% of Russia’s wheat crop was destroyed in last year’s drought)
Price increases like these combined with the fact that most Egyptians live on about $2 a day are no doubt a recipe for chaos.
Skyrocketing wheat prices prompted similar protests in Egypt in 2008. The government responded by increasing subsidies to try and stabilize prices. But with food and commodity prices back on the rise, it was only a matter of time before the protesters returned.
This time, the combination of this and other factors ultimately led to the ouster of that country’s leader.
While it isn’t a complete revolution in the sense the Egyptian Army now controls the country, it’s certainly interesting to see how something as simple – but necessary – as food can be the final nail in the coffin for a country’s regime.
Inflation is one of many reasons why we think buying gold coins or bars (…and silver, platinum and palladium too) is a wise financial move. Everyday staples like wheat, milk and eggs are experiencing price increases worldwide, including the U.S.
It will be interesting to see how this inflation affects worldwide stability in the coming years.
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