Posted on 05/15/2006 5:34:22 AM PDT by Perdogg
LONDON (Reuters) - Oil and gold fell more than two percent and copper dropped nearly nine percent on Monday as investors feared a rally that has taken many commodities to or near record highs may slow economic growth.
(Excerpt) Read more at biz.yahoo.com ...
At the bottom of this is that the speculators are bailing and there will be a gnashing of the teeth by the little guy.
Reading articles like this makes me wish you had. 8^)
...rally that has taken many commodities to or near record highs...
IOW, profit-taking.
Your point that the speculators "are bailing" is to the point. After driving commodities prices up, hedge fund managers and individuals are taking profits.
Dare I suggest that the booming economy might have created better places for their money than in commodities (which, if I'm not mistaken, are often used as a hedge against a slow economy)?
People are taking profits right now. I am.
So, you all can blame this horrible, terrible, no good, we're all gonna die, doom and gloom economy on me. :)
My guess is that people are realizing that the run-up in commodities prices were being done by hedge funds with close ties to people like George Soros, Warren Buffett, Peter Lewis and Steve Bing--all of which want to use the high commodity prices to damage President Bush. If the price of commodities crashes hard that could have some very interesting political effects, to say the least.
Speculators aren't bailing. Profit taking, maybe. Oil might drop to the high 60s, but it won't go lower until we replace it or build infrastructure. Or until people riot and stop buying.
Wowee. I'm glad he was there to explain that complex bit of economics to me.
I'm still making more money off the gas I buy at the pump than I spend in buying it, based on what I use it for.
Everybody is always worried about the economy. Perhaps commodities are down today in anticipation of a shortage of lettice pickers brought on by the new Federal program to control illegal alien access to the labor market.
Why is it that people think that "speculators" win when they buy, and also win when they sell? Just last week, people said "Oil is at $75 because speculators are buying"; Today, they say "Oil is at $70 because speculators are selling"
So, what happens to the speculators who bought at $75 and sold at $70? Just like anybody else, sometimes "speculators" win, and sometimes they lose. Remember the Hunt Brothers and silver around 1980, where they bought right up to $50/oz, and ultimately had to sell at a fraction of that.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.