LOL ... So much for the "eliminate futures markets and price will go down"( the dumbest )and "eliminate futures market and volatility will go down" crowds. http://ftalphaville.ft.com/blog/2011/05/09/563616/onions-vs-speculators/
That article proves nothing Ban the futures and options and oil will go down to $10/barrel The volatility may stay but prices will go down to cost of extraction because there is too much production compared to demand. Just look at the stocks in Cushing, OK.
I wonder what the onion graph would look like if it were adjusted for seasonality. It appears onions spike around the same time every year. I'd guess the price of onions is flat when seasonality is considered. It doesn't surprise me Perry wouldn't consider this, he wrote an article in Dec. 2007 declaring that there would be no recession in 2008. General rule, disregard conservative economists, especially those who happen to work in departments that have been bought by the Koch brothers.
LOL!!! "Oil would be 10$ a barrell if we eliminate speculators" This is the funniest Attack on speculators i have heard.
Banning commodity futures outright would do a lot more harm than good. What you need to do is eliminate pure speculation by requiring that some percentage of contracts written or purchased are tied to the actual delivery of goods. Since futures typically requires 10% margin I'd say a good start would be one contract delivered for ten that are written or purchased.
here is my logic If you take out all the non physical demand, then only physical demand stays. If there is only physical demand in the market and no futures no options no hedges no short sale, no speculators, the only way the price can go up is when demand exceeds supply AFAIK there has never been an instance where PHYSICAL demand exceeded supply in the history. With all the excess supply in the market, prices will come down very close to cost of extraction.
this is so true- i mean there has never been a drought or anything like that ever before in the history of mankind. but you are right if you were saying that if you don't speculate in the physical commodity it is mathematically impossible for you to manipulate the spot price of said commodity up by buying the backmonths. if you refuse to take delivery, it means you have to sell the front month to avoid taking delivery- even if you are long every other month out there- it means you have a concentrated sell on the front month, which would hint that all those damn speculators in commodities (even if the outlying months are inflated) pressure the font months down incredibly (assuming they are "manipulating" the price up in the outlying months and not net short)
Umm... seasonality is one of the core purposes of having a futures market. You probably should not invest your own money.