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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: skinowski who wrote (102905)	6/15/2008 6:26:11 PM
From: Paul Kern	Read Replies (2) \| Respond to of 206176

Commodities are different from stocks - every time a long position is opened, someone else MUST agree to take a short position to offset the long Then, what happens if more long players want to buy positions than there are shorts willing to sell them? Do the long players bid up the limited number of available short positions? Now, say you own an oil well and when futures prices are high you sell future short positions to lock in profits. But suddenly, the value of short positions is going up parabolically. Will you then withhold short positions because you want to wait for the price to go higher?

To: skinowski who wrote (102905)	6/15/2008 6:56:47 PM
From: Ken Robbins	Read Replies (1) \| Respond to of 206176

One of the clearest analysis of the "bubble vs. supply and demand" debate that I have read. Thanks.

To: skinowski who wrote (102905)	6/15/2008 10:42:41 PM
From: gregor_us	Read Replies (1) \| Respond to of 206176

Those are good points. The Futures market is actually alot like an Options market and very unlike the equity market. New demand does not "hit" supply in the Futures market the way it does in an equity market. This is because supply in the Futures market is potentially infinite. Futures contracts are created at will. They are "opened" between a willing buyer and seller. New and relentless investment demand for industrial equities will "hit" supply for GE, CAT, and HON pretty hard, if it goes on long enough. Not so in the futures market. Again, most of the points in your post covered this. The futures market is a beautiful thing, it's an amazing human invention and of course was created thousands of years ago. I believe some of the earliest examples relate to olives, olive oil, and olive processing capacity in Roman or pre-Roman times. (oops, there's that word "oil" again.) If speculative demand to invest in Oil in 2010 is running high this Summer, and Oil Clowns like John Hoffmeister of Shell USA and Rex Tillerson of XOM really believe all those investment funds are idiots--well, Oil Clowns, go ahead and sell to them. You can deliver happily on June 2010 oil two years from now at 136.00 as "oil crashes back" to it's "true value" around 45.00 a bbl. Go for it, I say. But as I wrote in a previous post, if you listen to the conference calls of the E+P's, they are increasingly dialing back on their hedges. So many of the people in the industry are becoming increasingly "reluctant" to sell oil for delivery in 2010--even at the price of 135.00 Huh. I wonder why? :-) Gregor