TRUTH about Commodity Rally

Discussion in 'Trading' started by jaytrader100, May 22, 2008.

  1. Yep, just what we need, more government intrusion into the last bastion of free market action. It is curious that the 24/7 printing of paper currency [by the same shmucks that want to regulate who can trade] is not mentioned as a possible reason for commodity price inflation!
  2. achilles28


    Draw a chart - gold versus oil.

    See what you get.

    Wheres the 300% increase?

    The commodity boom is fueled mainly by inflation, fundamentals and to a lesser extent, speculative excesses.

    Congress wants a fall guy, and thats us - speculators - who contribute only moderately to the boom.

    Regulation will do nothing but export financials overseas to other money centers.

    But it'll make Congress look like a hero to the drooling sheep.
  3. mangudai


  4. achilles28


  5. piezoe


    That is certainly true, and i have always thought that, and even posted on ET to that effect. Obviously if production exceeds demand then someone has to be storing oil. However, if there is price collusion, then the price could go up even if production does not exceed demand. Perhaps in the present case we have both production exceeding demand, and therefore storage, and also price collusion.

    Normally the sale and purchase of a forward contract would result in oil being stored for sale later at a higher price. Thus demand for oil futures might contribute to rising price. But how much storage is available worldwide? Logically it would seem that the world would eventually run out of readily available storage, and then prices would be expected to come down. This, of course, assumes normal market forces are at work, and unfortunately, that may not be true.
  6. RhinoGG

    RhinoGG Guest

    Aww fuck it, next time I'm taking delivery of the physical. Yup, 23,000 gallons of Light Sweet to be deliver to my "pipeline" ahem.
  7. This statistic (if it is any reliable) only shows that there is a huge increase in speculative money supply, and it very well can be the most important source of driving oil prices up. Note that while M1 hasn't changed for years, thus showing that there is no more cash in circulation than a few years ago. Since M2 and M3 rose like hell, there is evidently an explosion in available credit = highway to speculation and asset bubbles.
  8. achilles28


    Thats the point.

    Congress is looking to blame the END PRODUCT of their wild-eyed money printing.

    When the FED prints M3 into the stratosphere, yes, that makes cheap money available to all. Economic boom, then speculative excesses follow.

    You can't have one without the other.

    Thats why Congress is stupid for yielding an ear to this little tattle-tale Hedgie thats sold us speculators down the river as the next Enron or Worldcom.

    Its total bullshit. I bet that dudes on the Congressional payroll.
  9. Yeah, I agree. My point above, albeit vague, was that it is BIG institutional speculators that are to blame for the asset bubble and not retail specs. (And even if one's account is called 'institutional' he's still retail for these purposes. Big institution is Goldman.) That's what's shown in the divergence between M2 and M3.

    Now that I think about it, since the Fed accepts papers that are saved from the shredder as collateral, these papers count as M0 (cash deposited in a CB), right? Since these came out of M3 and right into M0, the (real) divergence is even more severe than on that graph. I have to revise my earlier views: Ben is not stupid. Or the people who order him are not stupid. OK, I knew this before. Correction: Still, Ben is simple as a brick.
    #10     May 23, 2008