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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (52628)	2/4/2006 3:23:00 PM
From: Lance_Lewis	Read Replies (2) \| Respond to of 110194

I don't normally post on these boards, but a reader was kind enough to email your post to me. And I simply can't help but respond to this, both because of it's inaccuracy and the gross mischaracterization of what I have said. Ever heard of the OTC market? That's where most of the commodity trading is done these days, especially in oil. The COT is totally useless as an indication of anything and has been for some time for most commodities. You'd know that if you actually traded crude or any other commodity in any size. And I have never blamed the rise in crude on specs. Crude has obviously risen since 1998 on an increase in global demand, but all markets change character after many years of a bull market as more and more new players enter it. What I have said is that there is probably a $10 or so premium (sometimes larger) in oil due to "investment" demand (and that premium could become even larger given the continued flow of investment money into the commodity sector). This is not just me saying this. I rely on others much more knowledgeable about the subject than me. This premium is beyond dispute. Everyone from oil execs to analysts know it's there. Some have even begun to call oil a new "investment asset class" because of the large amounts of money that keep pouring in and driving oil to a steep contango. Given as many dollars as there floating around out there, it may keep coming in too. Thank the recklessness of Uncle Al and the Fed for that. Ever wondered why the spot market has not been driving the price of oil higher over the past couple years, like it normally does when real world demand outstrips supply and creates a shortage, and why it's the forward market that is driving up prices? Do you really think that $900 billion can flow into commodity derivatives in the first 9 months of 2005 alone and not affect the prices of commodity markets??? Don't be naive. If you think real world demand is the ONLY thing that has driven oil prices and other commodities to where they are, you are grossly misinformed. I suggest you do a little research. It will pay off later when the investment flows inevitably subside. As for when that day is? I have no idea, and nobody else does either. But one needs to know the difference between a "bull market" and "brains". Lance Lewis Lewis Capital