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Interesting article on commodity manipulation

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Interesting article on commodity manipulation

Old 03-08-2012, 08:44 PM
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Default Interesting article on commodity manipulation

Hate the Huff Post but found this without having to go there.

http://www.huffingtonpost.com/raymon...b_1320628.html
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Old 03-09-2012, 08:54 AM
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Read the article, but, disappointed that it did not go into detail describing how the market is manipulated. If someone can explain how that is done, it would be interesting to know.
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Old 03-09-2012, 10:19 AM
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It is pretty simple really. Deregulation of the CTFC in the 80's allowed institutional investors to speculate on the commodity markets in unlimited amounts. Here is a very basic way of looking at it. Cargill and ADM and the like have limits on how many corn futures they can buy and sell because they are 1 entity. There are rules in place to keep 1 entity from "cornering the market". Now, an institutional investor is investing on behalf of many people. Hence, that investor doesn't face the same restriction on quantities that it can buy/sell. Meaning they can pretty much control the market.

I am not against speculators (they are needed), however, something needs to be done about the institutional investors and the amounts they can trade. The ag futures markets are broken and no longer operate based on the principles that the markets were founded on.
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Old 03-09-2012, 10:25 AM
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If they simply required you to take physical possession of oil that would stop the problem and put the oil market back in the hands of those in the market.
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Old 03-09-2012, 01:55 PM
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Actually some firms have taken possession, goldman sachs has some tankers full of oil
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Old 03-09-2012, 02:00 PM
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Originally Posted by bellsisland View Post
Actually some firms have taken possession, goldman sachs has some tankers full of oil
Yep, making that a requirement is not the solution. Regulating the amounts the institutional guys can buy and sell is the solution. Heck go back to the way the system worked from the 1800's to the 1980's is the answer and a pretty simple one.
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Old 03-10-2012, 05:18 AM
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The amount of money these firms have amassed is huge. They can buy physical gold, oil tankers, now they are buying foreclosed houses 1000 at a clip.
There is a good point in there, if you have a lot of cash you can take advantage of siutations, if you have a bunch of debt you can't.
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Old 03-11-2012, 08:41 AM
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Originally Posted by bellsisland View Post
The amount of money these firms have amassed is huge. They can buy physical gold, oil tankers, now they are buying foreclosed houses 1000 at a clip.
There is a good point in there, if you have a lot of cash you can take advantage of siutations, if you have a bunch of debt you can't.
Yep, one hedge fund manager, Dwight Anderson, actually bought Conagra's trading floor and renamed it "Gavilon". Taking delivery is not a concern.
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Old 03-11-2012, 08:54 AM
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The Hunt brothers were a perfect example of market manipulation in the 80's silver market. They controlled so many futures contracts and physical hoardes that they were actually able to slightly manipulate for a short while. However, being a true free market, their influence only lasted a short while.In these days of global markets you would be hard pressed to get enough investors to agree on anything long enough to manipulate for any real length of time.
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Old 03-11-2012, 12:16 PM
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PIMCO I believe is a big holder of commodity swaps. Swaps are hedged in the futures market.
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Old 03-11-2012, 07:08 PM
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and I'll add to it .......


http://www.martinarmstrong.org/files...02-04-2012.pdf
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