Let me preface this by saying that I feel for those who are experiencing financial difficulty due to this credit crisis but for those of us who are lucky enough by circumstance or age to be able to buy in for the long term at current prices we are truely fortunate. I started buying in to the ag complex last month and will continue to do so for at least the next year first ags, next will be energy, and eventually I will also buy base metals. I say fortunate because I feel that this is an opportunity akin to being around in the early 1930's and having had the opportunity to buy in at multidecade lows.
you have a lot of limiting beliefs in there. the two main ones are that inefficiencies in a retail market are rare and unbelievable, and the second that the only way to source large quantities of metal is to take delivery of a futures contract. since you called bullshit, maybe you should be the one to do the research as to why those beliefs might be flawed and why they really provide no support for a shortage argument.
I thought there was no commodity bubble, that prices were going to continue higher due to global demand. How could anyone possibly think that commodities were going even higher, oil continues to fall, my new target is $30. Could see go even lower than that.
To me it seems price finding is a mix of available money, psychology and supply and demand fundamentals. Available money looks like the dominant factor at this time. When money is tight prices have a hard timet rising and when money is needed badly prices fall be other fundamentals what they may. Isn't it beautiful how the markets can surprise? To me it demonstrates why it is right to let price behaviour be the final determinant of positions taken. Should price behaviour not confirm fundamentals then I'd wait and if they are clearly opposed then going with price and against the fundamentals is indicated. Cotton this year is a good example. After the tides have turned there will be plenty of time to get long again.
as bill gross said recently, past ways to analyze equities are out the window because we were living in a levereged world. i think inflation ramps up and commodities rally over the next couple years until the bond market takes control of interest rates and punishes government spending/corporate welfare.
Leverage, Almost all of those funds are leveraged so when there is a correction, they have to sell for liquidity reasons. That's opportunity and the intention of the temporary credit contraction.
Are you allowing for inflation and increased world wide demand? They obviously were to high but another 30% drop still? I like Rio Tinto puts here, to sell that is. You can get around 16.00 for the April 60's. Those, if exercised, will get me in around 92% below the peak price. I'm OK with that. RTP is currently Paying about 6.5%.