Currently, a future contract of $110,000 in oil can be purchased with as little as $7,700. Investing on oil futures is one thing. Using a 10 percent margin is gambling. Forget regulation, just make this 50% of the investment and the speculation problem will go away.
“Barclays Capital, noted that index investing represented no more than 2 percent of the worldwide energy market. And most of the new money flowing in this year went into various types of funds that were as likely to sell commodities as buy them.”
http://www.nytimes.com/2008/06/21/business/21oil.html?_r=2&oref=slogin&ref=business&pagewanted=print
So? What's wrong with that?
Speculators are betting on price increases at the expense of consumers and stories of how they are laughing all the way to the bank are plentiful
Yes, I've seen lots of people make this claim. Unfortuantely, there is no evidence of it.
Currently, a future contract of $110,000 in oil can be purchased with as little as $7,700.
So? The purchaser is still liable for the remaining 93,300 should the price of the contract go down.
Investing on oil futures is one thing. Using a 10 percent margin is gambling.
Only institutions with good credit and a solid balance sheet can do this. Why do you have a problem with lenders extending credit to credit-worthy borrowers?
Forget regulation, just make this 50% of the investment and the speculation problem will go away.
You have yet to demonstrate that there is a problem in the first place.