SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: ild who wrote (58488)4/17/2006 5:38:41 PM
From: bond_bubble  Read Replies (1) of 110194
 
when you are saying, there is speculation in copper, gold etc., you are also assuming that people dont necessarily have to hoard. They just have to buy the contracts at high price and sell at higher price!! This is what people do with oil as well.
Real Hedging provides price stability (i.e people buying oil hedge stable price with oil driller and oil driller hedges with service companies and service company hedges with commodity like metals miners and metal miners hedge with oil companies for power!! - the hedge loop is closed). Thus hedging provides very high price stability. Now, the credit inflation is breaking this stability. Today, business people are signing higher prices, dollar devaluation into the hedging activity and there has to be some mispricing getting into this hedging process. That is how I believe speculation gets into the hedging. This speculation is now becoming more and more predominant i.e if oil/copper/zinc demand goes up 0.1%, prices go up 10%!!! Between, 1990s and 2005, house ownership went up less than 10% (I mean primary residences only - not vacation homes), but prices went up 200% or more. Inspite of house supply going up enormously, the prices soared. This is why I think there is speculation in commodities similar to housing!! GDP is a real indicator of consumption. world GDP is not growing more than 4% - which could mean the commodity demand is of the same order as GDP growth - but prices are rising way over that rate...
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News