Monday, October 6, 2008

A lot of the demand for commodities has been speculation

Commodities R.I.P. as Leverage Vanishes, Growth Slows (Update2)

Oct. 6 (Bloomberg) -- Commodities markets are heading for the biggest annual decline since 2001 as investors exit leveraged bets and slowing economic growth erodes demand for raw materials. The same credit-market seizure that led to last month's bankruptcy of New York-based Lehman Brothers Holdings Inc. and the forced sale of Merrill Lynch & Co. is squeezing speculators who drove commodities to record highs. Slower expansion in the U.S., China and India is also undermining prices of crude oil, which fell 39 percent, and corn, down 46 percent. ``The day of steadily rising commodity prices is over,'' said Chris Rupkey, the New York-based chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. ``A lot of the demand for commodities has been speculation,

Posted by malct @ 04:15 PM (1066 views)
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15 thoughts on “A lot of the demand for commodities has been speculation

  • planning4acrash says:

    Central bank liquidity causes inflation. Speculators work hard, with what they are given 2 protect YOUR wealth against manipulations. Short and long sellers provide equilibrium by going counter trend on investments. Speculators are your friend banks aint!

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  • planning4acrash says:

    Of course, normal banks that provide essential deposit and payroll services are your friend. I meant to say that central banks manipulating liquidity and investment banks committing fraud with derivatives are not your friends. Its time2 draw line in sand!

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  • planning4acrash says:

    Sorry, but, speculators try 2 run a free market 4 mutual benefit, & the sheople get sold on statist solutions to statist problems. Its a simple question folks. Do you want freedom or tyranny and serfdom? If you want freedom you need to fight4it with truth

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  • Commodity based collective funds are being hammered – I have just looked at a few including the popular JPM Nat resources and they do not make pleasent reading if you are an investor.

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  • little professor says:

    This surprised me. Where is the money going then, if it’s not going into stocks, oil or commodities??? Is everyone just hoarding cash? If so, which currency?

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  • LP – and on topic for once

    one things for sure, they’re not buying houses! lol

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  • mountain goat says:

    There is a cash call due to CDS market. Fannie and Freddie payouts amount to $50 billion and need to be paid today 6 October. Lehman amounts to $400 billion and needs to be paid 10 October. Everyone is affected because of the network of counterparties. Funds have to sell and meet calls for cash so are selling assets and deleveraging. Even gold is being sold by funds and so it is surprising that gold actually went up a bit in the past couple of weeks. Malct it is pointless to say commodities were “driven by speculation”. You could say this about any assets these funds have invested in. Almost everything you can put a value on has been sold in the past few weeks because of this deleveraging. In this selling climate you have no idea what the “real” value is of anything. When the CDS market deadlines end this month we will see where all these commodities end up price wise. But this sell-off has nothing to do with China demand recession blah blah blah

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  • ZEITGEIST: ADDENDUM released 2/10/08:

    http://video.google.com/videoplay?docid=7065205277695921912
    Well found shipbuilder – agree, fantastic stuff! A must watch.

    When the whole thing falls apart we’re going to need radical solutions. Any thoughts on this?
    http://www.thevenusproject.com/intro_main/whatis_tvp.htm

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  • Interesting to see that the AUD$ is being hammered more than the pound. No bank rescues were needed in OZ. The Oz recent resurgence was based purely on commodity prices.

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  • The biggest lie ever told is that things actually “have” a “real” value. They have a value from the perspective of each person and it changes from person to person from second to second. For example – the value of metallic gold per cm^3 to /me/ is somewhere a bit less than that of stainless steel which is currently somewhere a bit less than that of socks.

    The reason is that the only use to which I could currently put gold is cutlery (it doesn’t oxidise and has very little taste) but it is uglier for that purpose that stainless steel due to its ugly yellow colour, so its value is lower than stainless steel by volume. Since I already have ample cutlery but need socks, I value stainless steel less than those.

    So, are there any hedge funds buying a 50/50 lycra/lambs-wool mix right now?

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  • LP
    My thoughts exactly, the funny money has been on the currency market but where is it now?

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  • is it the deleverging ?
    is it just disappearing like what it appeared?
    no – ok

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  • mountain goat says:

    I suppose that is what deflation is, disappearing value?

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  • somewhere in the last couple of days I read

    “the world is deleveredging” not sure of the spelling.
    but if they meant fractional reserve banking is stuffed
    I don’t think it matters how you spell it.

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  • planning4acrash says:

    Oz has lost more manufacturing than uk. Population more dumbed down, more debt, has 2 be bought lower than uk, coz NWO wants it even par with other asian cuntries 4 a pacific union, wheRe china will pimp its resources like spain steals british cod stocks

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