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Commodity futures speculation
http://www.econbrowser.com/archives/2008/05/commodity_futur.html ^

Posted on 06/01/2008 11:44:31 PM PDT by newbie2008

More on the possible contribution of index fund investment to recent commodity price moves.

We and many others have been discussing whether the surge in investment fund purchases of long positions in commodity futures contracts may have been a factor contributing to the spot prices of those commodities beyond what would be warranted by considerations of physical supply and demand. John Mauldin shares an interesting graphic from Deutsche Bank researchers, showing that the prices of a number of commodities in which no futures market exists have increased even more dramatically than those traded on major exchanges.

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TOPICS: Business/Economy
KEYWORDS: commodities; commodity; economy; futures; speculation; themarket

1 posted on 06/01/2008 11:44:31 PM PDT by newbie2008
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To: newbie2008
Well, when I stop laughing, perhaps I'll have a comment.

??Ruthenium??

Nope. Not gonna say it, I'm simply NOT gonna say it.

2 posted on 06/01/2008 11:50:57 PM PDT by SAJ
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To: newbie2008
Oh, by the way, rice is traded on three different exchanges, CBT, Tokyo, and Shanghai. SIMEX are thinking about listing a rice contract.

Where DO you get this stuff? (Don't answer, please...)

3 posted on 06/01/2008 11:52:42 PM PDT by SAJ
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To: SAJ

Well I can see I will not need to ask your thoughts on THIS one.


4 posted on 06/02/2008 3:53:01 AM PDT by MNJohnnie (http://www.iraqvetsforcongress.com ---- Get involved, make a difference.)
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To: newbie2008

I can’t comment on some of their other non-traded commodities showing some manner of ‘proof’ or other, but I can comment on moly.

Moly is used in making steels, especially stainless and tool steels. Most moly in the world has been mined at copper mines, since moly often occurs near or coincident with copper deposits. As copper went up in price, some copper mines were mined out in the last several years and shut down, because without the copper “base” for the mine, the various other base metals they were mining in the area could not support to economics of the mine.

This has led to a small mining operation, General Moly (ticker GMO) putting a deposit in Eureka County, NV (Mt. Hope) into permitting for production. The Mt. Hope deposit has long been identified as a huge moly/zinc deposit, perhaps as much as 10% of the known world-wide reserves of moly. But until the recent price jump in moly caused by the shut-down of various copper mines that also produced moly, the start-up costs of a major mine (about $0.5 billion) were simply too high to pencil out.

Now GMO has put a plan in motion to start a major mine at Mt. Hope, and they’ve done this by selling 40% of the mine’s production at a forward contract price (the price/lb is undisclosed), 20% to Posco and 20% to Mittal, the #1 and #3 steel makers world-wide. Posco has also sunk $170 million of capital into the Mt. Hope operation. As soon as that mine comes online, you’ll see a sizable decline in moly prices. The mine is projected to be profitable down t $7/lb and produce moly for up to 44 years.


5 posted on 06/02/2008 5:00:19 AM PDT by NVDave
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