From Heinz:
well, i agree with him that most commodity markets sport 'investment flow premia' at the moment. no-one can say how big the effect is, but it no doubt exists.
as for the CoT report, it may not be as useful as it once was, but i still think it has its place as a snapshot of sentiment. even if it is only a small slice of the total market, i still regard it as statistically significant in sentiment analysis, just as i find the Rydex fund information useful in that sense, even though it is an even smaller slice of the markets it represents.
one only needs to consider how statistical analysis works. for instance, in a political poll, you randomly phone 1 or 2000 people - and presto, you have an accurate representation of what millions of people think, with a relatively small margin of error. the same holds for the CoT report imo.
of course Lance is correct that at some stage, investment flows will reverse again, especially if the economic slowdown gathers pace. some of these hot commodity charts are vertigo-inducing by now - not a sustainable situation.
also, the IS a lot of 'real world' demand, mostly from China at the margin, but this depends on the global credit bubble's continued expansion. at some point the malinvestment orgy will end (and probably not with a whimper). |
