I think it is also a choice of the admistration. It has been said that by many gold bugs that gold was kept artifically low by collusion between greenspan, rubin and some of the major banks to hide inflation while Clinton was in office. A strong dollar is said to be good for bankers. Then we have a new president with a desire for a softer dollar to help out exporters. So, he lets gold go, lets the dollar get weaker and thereby causes oil to rise, then oil profits go into gold. Perhaps those conspiracy guys were correct in their reading of the markets. Now assuming the gold conspiracy guys were right about the policy choice. It seems that all these markets could be manipulated.
Trading volume may not equal real-life importance. I imagine that actual commercial sellers and users negotiate mostly the long dated futures and options. A utility or industrial consumer wants stable prices, a producer wants to sell capacity at guaranteed prices above production cost. So they buy and sell a long future and that's it. Not a lot of volume necessary, but significant economic activity nonetheless. And I suspect most transactions are OTC only 'based' on NG futures indicative prices. Because of physical considerations---pipeline capacity etc, natural gas is not a single unified product but thousands of local products related in some way. In a share of stock, it all is the "same thing" going through a central system. Think about another light market which is still very important: municipal bonds. They're all different and each one doesn't trade much: they are buy and hold for most. But the overall economic significance is substantial.
Good sir, can I pretty please get one of your after the fact Elliot Wave prognostications? You know the ones that call for new highs at the top and new lows at the bottom?
silk-- A few weeks ago there was a multi-dollar spread between cash nat gas and nearby futures contract. Why didnt you step in buy the cash,sell the future and pocket the spread? Or didnt you know that? As for the gold bugs whining endlessly about market manipulation between the Fed, White House and major dealers, can you please point me to the Treasury's balance sheet which shows large outflows of gold? Or is that balance sheet also a sham?
I do not think you needed to point to the balance sheet. The gold conspiracy guys were pointing out that the Fed is owned by the member banks and that the member banks were selling gold short for years. Since it is all play money all the Fed would have to do is say we are your insurance. Sell the hell out of gold. Now I am not saying this is what happened. But I do remember , one of the major wall street firms being rumored to be in a world of hurt. I think it was Morgan Stanley. Which ever bank it was I remember it going down sharply just as some of the gold writers forecasted when gold started moving up towards 300.
Certainly not all futures traded commodity markets have been bulled up. Grains trade big volume and yet corn languishes on multi decade lows. Sugar, OJ....... I do believe the proliferation of hedge funds and CTA's has exasperated certain trends. Fund buying can now easily overwhelm commercial short hedgers. The bottom line on energy prices is for too long prices were undervalued. Everyone thinks it's conspired collusion that causes gasoline to make the nervy leap from 50 cents a gallon to 2 dollars over a period of just twenty seven years. Wasn't that two dollar hamburger two bits? Or the Sunday paper? Or a subway token? Some newly expensive products have found their true value. We all complain about entertainment costs. Yet I remember noticing about ten years ago that baseball tickets were often cheaper than a seat in a movie theatre. Shouldn't seeing Barry Bonds in person cost 3x Gigli? If oil was 15-30 in the late seventies than 50-70 now seems right. Funny how Cattle has doubled in two years and no one talks about it. Steak is a luxury these days.....