Skjellifetti

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  • Two Moves to Make as the Fed Inflates the Commodities Bubble
    "It’s fairly clear to me that concerted speculation by hedge funds and pension funds is what’s been pushing up oil prices."

    Then perhaps you would be kind enough to explain the mechanism that is making this happen. If there is a bubble, this implies that current supply is greater than current demand at the current spot price and therefore someone must be buying and storing the excess supply. Show me who is buying the excess supply and where they are storing it.

    On the other side of the coin, there are a number of factors that have reduced the supplies of many commodities (problems in the Nigerian oilfields, lack of investment in Venezuelan and Mexican fields, power shortages in Chile and South Africa, etc.). At the same time, demand is not falling.

    Commodity prices are not being driven by speculators. Simple supply and demand is fully capable of explaining the current high prices. Claims that speculators are driving the prices is a classic example of a wishful thinking logical fallacy. Gosh, if we could just make those evil speculators go away, we could be back in 25 cents per gallon heaven just like in my youth. Better learn to deal with reality, because high prices are going to be around until we can develop alternatives.
    Jul 02 12:56 pm |Rating: 0 0 |Link to Comment |View article

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