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Politics : Politics for Pros- moderated
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To: LindyBill who wrote (256104)6/29/2008 7:15:41 PM
From: skinowski  Read Replies (1) of 793896
 
These extra funds might drive up prices if they were invested in stocks or real estate. But commodity investing is different. Investors generally don't buy the physical goods, whether oil or corn. Instead, they trade "futures contracts," which are bets on future prices in, say, six months. For every trader betting on higher prices, another is betting on lower. These trades are matched. In the stock market, all investors (buyers and sellers) can profit in a rising market and all can lose in a falling market. In futures markets, one trader's gain is another's loss. ..... But all the frantic trading doesn't directly affect the physical supplies of raw materials.

The key word here is "bets". This commentator "gets it". I was making a similar argument - I think I posted it here once.

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