"Canuck57" wrote in message
news:LBIZi.199547$Da.7070@pd7urf1no...
"JoeSpareBedroom" wrote in message
...
"Wayne.B" wrote in message
...
On Sun, 11 Nov 2007 14:46:45 GMT, "JoeSpareBedroom"
wrote:
All true, but I stand by my original comment. Oil is one commodity which
should be untouchable by recreational speculators. I'm talking illegal,
go
to jail, that sort of thing. You know I'm right.
There are no "recreational speculators". Everyone who trades
commodity futures is doing it for business reasons of one sort or
another. You may not agree that all of their reasons are valid but
the commodity futures market is absolutely essential both to the
producers and consumers of any given commodity. The markets
themselves help to dampen out large daily price swings by evening out
supply and demand over time, and so called speculators are part of
that process - just like the stock market. It would be more accurate
to call them short term investors.
Sorry, Wayne, but in fact, there are recreational spectators. A mutual
fund investing in the oil futures market - the manager (and the fund's
customers) are all recreational spectators. About a year ago, a Barron's
article mentioned that on some days, players (let's use that shorter
description from now on) place more trades than oil companies who are
legitimately trying to hedge on behalf of their firms.
Not necessarily speculation, maybe for some. The fact of the mater is our
currencies are not stable (and devaluate/inflation) and neither are most
businesses. Those that bought oil futures, gold and items of a constant
value of aquisition were in fact hedging againt a dollar decline. Good
investment move maintaining value for their investors.
Same reason you buy a home. Once purchased, 30 years later it might be
worth 5-10 times what you paid for it. Is this speculation?
The markets will always weed out blind speculators in time.
However, you're right about "business reasons of one sort or another".
The problem is that "one sort" hurts you and I. No matter who plays in
these markets and whether they win or lose, there's someone who makes out
like a bandit: The clearinghouses.
This is a fact. We all hurt, even though I owned a barrel or two of oil,
it isn't good to make 30% when the currency devalues 30%. In a long term
perspective, while hedged on the devaluation I didn't get value.
But I think that is the whole point of this video:
http://video.google.ca/videoplay?doc...ch&pli ndex=1
Even if, in a perfect world, there were no currency fluctuations, oil prices
would be bounced around by investors who haven't got a clue about the
physical realities of the oil markets. "Oil jumped a dollar a barrel today
in trading, on fears of renewed violence in Baghdad". Excuse me? Violence in
Baghdad, in a country which statistically speaking provides little or no
oil?
This is the same reason tech stocks all take a dive when one of them
announces low earnings. It's bull****. "on fears of"