The degree to which commodities are rising in Euros is no where near the degree in which they are rising in dollars. In fact, I'd go one step further and say that the degree that commodities are rising in euros is probably closer to the real supply/demand problem. When you look at the rise in dollars, it's more evident of speculation/hedging.
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The Truth About Commodities, including Oil - Complete Speculation
- Thread starter ByLoSellHi
- Start date
The degree to which commodities are rising in Euros is no where near the degree in which they are rising in dollars. In fact, I'd go one step further and say that the degree that commodities are rising in euros is probably closer to the real supply/demand problem. When you look at the rise in dollars, it's more evident of speculation/hedging.
if that's true, there must be one hell of an arb play going on or setting up for one, short euro, short ags,long dollarQuote from Ivanovich:
The degree to which commodities are rising in Euros is no where near the degree in which they are rising in dollars. In fact, I'd go one step further and say that the degree that commodities are rising in euros is probably closer to the real supply/demand problem. When you look at the rise in dollars, it's more evident of speculation/hedging.
as a matter of psuedo fact, the boys are probably already short these euros,ags and long dollars and this report was released just to grease the wheels a littleQuote from ammo:
if that's true, there must be one hell of an arb play going on or setting up for one, short euro, short ags,long dollar
Quote from LT701:
did you get caught way short or something?
you've been in a total freakout panic over this?
No, I don't trade commodities at all.
Anyone who believes that oil prices are higher than what they would be (maybe much, much higher) based on current supply/demand, and this inflationary pressure is crushing equity markets in a myriad of ways (less discretionary dollars, corporate margins being squeezed, finished goods input costs rising), should be concerned.
I've always believed that the simplest explanation for any observation is most often the correct one. The fact is we are in and moving deeper into an inflationary period that will last at the minimum for several years.
In times of inflation investors want to have their money in hard assets, as these prove to be hedges against inflation. For smart investors, commodities have always been a refuge in times of inflation. So it is little wonder that we see commodity prices rising. Naturally, speculation is part and parcel of this trend. It could also be true that there is a confluence of a particularly lax regulatory environment under the present US administration and dispersion of commodity trading among wider ranging markets than in the past. All of this together, coupled with some increase in commodity consumption nicely explains what we are seeing as an increase in commodity demand. It is difficult to accurately break out all of these demand components, but surely that portion attributable to the threat of inflation is major.
P.S. Note: some in this forum are using the word "demand" to mean consumption, whereas in the markets consumption is only one component of demand.
If you are a long-term investor, in my opinion you should be holding commodities as a hedge against inflation and should be expecting the current inflationary period to continue for a minimum of several years, and possibly a decade or more.
In times of inflation investors want to have their money in hard assets, as these prove to be hedges against inflation. For smart investors, commodities have always been a refuge in times of inflation. So it is little wonder that we see commodity prices rising. Naturally, speculation is part and parcel of this trend. It could also be true that there is a confluence of a particularly lax regulatory environment under the present US administration and dispersion of commodity trading among wider ranging markets than in the past. All of this together, coupled with some increase in commodity consumption nicely explains what we are seeing as an increase in commodity demand. It is difficult to accurately break out all of these demand components, but surely that portion attributable to the threat of inflation is major.
P.S. Note: some in this forum are using the word "demand" to mean consumption, whereas in the markets consumption is only one component of demand.
If you are a long-term investor, in my opinion you should be holding commodities as a hedge against inflation and should be expecting the current inflationary period to continue for a minimum of several years, and possibly a decade or more.
with all due respect pizo,the definition of inflation and recession are widely argued and there is nothing simple about it,forecasting more than 15 minutes in advance can result in losses, i didnt go back and check the date but i think this change in investment strategy started in 03,the dow and spus have rallied substantially since then, if this speculative buying artificially increases value of assets to the point of causing widespread poverty ,the lawmakers will make changes that best serve all of "we the people",i know that may take a while but the prices of these commodities will come down when it happens and gas and food will come down with it which will not be inflationary
Quote from sprstpd:
All interest rates are underreporting inflation in all currencies.
Dollar inflation has not been 30% per annum, which it would need to be just to match the runup in crude.
Admit it - oil would have been up lots in the last 5 years even with 0% inflation and a stable dollar. For example, oil is up a lot in Yen terms - Japan has had minimal inflation, and a flat/rising currency.
Quote from Shagi:
Now that wheat is tanking fast, so where is the credit to those powerful traders helping mankind with cheap wheat? oooh no its rogue traders taking a hammering
Lol, too true. I wonder how many wheat shorts will get credit in the media for helping to cap the price advance a couple of months ago, and cutting one element of food bills by 40% in a few weeks.
After all, if speculators are driving up the price of oil, then they must have driven down the price of wheat. You can't complain about the former and stay silent on the latter.
Not that this will matter to the socialist dunceheads on this thread.