On 09/03/2012 11:36 AM, Paul Hovnanian P.E. wrote:
Simple solution: End users can write off the cost of raw materials against
their income for tax purposes.

Speculators are trading in contracts. Contracts are private negotiations
between two parties, Why then should the IRS allow the cost of said
contract (commodities futures, for example) be written off against the
eventual capital gain realized by its sale? With physical goods, it can be
demonstrated that the inputs were necessary to generate the outputs sold.

I mean, for all I know, the initial payment was for hookers and blow. The
latter sale is 100% profit. The two transactions have nothing to do with
each other and the second should be taxed as pure profit.

Now, if you still want to trade commodities, go for it.

You are clueless, you pay taxes on only the net gains after expenses.

Futures markets are necessary, no one is a forced participant. It is a
way for a producer to lock in a profit for their product before they
invest in seed, machinery or whatever. If a commodity has a contract at
say $12 a unit, the producer might have a $9 cost to produce the unit,
if providing a $12 futures contract the $3 profit.

This way if the price drops to $8/unit, the producer can still make a
profit on the commodity option strike price of $12. Essentially
guaranteeing a producer a price. But if the price goes up to $15 then
the producer gets $12 and the contract purchaser makes $3 on each.

Has a place to stabilize prices and reduce risk for producers.


--
Corrupt USA, Euro Bank and Military Regime, funding both sides of
terrorism for profit and debt-tax slavery.