Posted on 08/22/2009 9:43:31 AM PDT by Cheap_Hessian
CHICAGO (Reuters) - Exchange-traded funds or ETFs have become a top target in U.S. regulators' efforts to rein in excessive speculation in oil and other commodity markets, The Wall Street Journal reported on Saturday.
Commodity ETFs, which came into existence in 2003, offer one of the few avenues for small investors to gain direct exposure to commodity markets. The funds pool money from investors to make one-way bets, usually on rising prices.
Some say this causes excessive buying that artificially inflates prices for oil, natural gas and gold.
Commodity ETFs have ballooned to hold $59.3 billion in assets as of July, according to the National Stock Exchange, which tracks ETF data.
(Excerpt) Read more at reuters.com ...
When will they regulate the hedge funds that own Congress?
I won’t hold my breath.
Unreal. What they don’t understand is that the excessive printing of fiat currency is a major driver of the price of oil, gold, silver and commodities in general.
The powers that be bomb the commodities by way of the ETF’s.
They’re losing grip and need a new way to slow down the train.
Another case of, “We’re from the government and we’re here to help”.
People are just looking for alternatives to the dollar. They have every right in the world to invest in commodities.
Any limitation of people’s right to invest is effectively a confiscation of assets.
Even tho I have used these ETF’s, I’m now of a mind that they should be banned. Their positions in commodity futures are huge and market-warping.
Take the natural gas ETF - UNG. It is the single biggest holder of near-term contracts and it is so large that it has to take two days (and perhaps longer in the near future) to roll their position forward. It’s absurd.
I think the proper position of the CFTC should be: “If you want to trade commodities, open a futures account and trade commodities.”
(but you conservatives already know that)
“Any limitation of people’s right to invest is effectively a confiscation of assets.”
What is taxation? What are taxpayer bailouts? What is inflation? What is changing the rules in the middle of a game?
If the holdings in UNG are so market spoiling, how come UNG is at extremely low prices? Evidently the hoarding on gas has not driven up the prices.
I like these ETF’s, it is one way that the small inwestor can play the market safely and in a way that he can understand.
The GLD etf has also not managed to drive up the price of gold in the last year or so..in spite of lots and lots of celebrity advertising.
There is a bigger problem of selling inverse index ETF’s to the public. I understand that some brokers will not longer do this in managed accounts.
Just heard that last night from Wells Fargo wealth management people who hosted us at their box for the Padres win over ST. Louis. Great way to see baseball.
All of the 1930s legislation regulating securities firms required a constitutional basis. That constitutional basis is the interstate commerce clause. To get it to apply, the statutes were all written to require various standards and disclosures of anyone advertising any issue of securities. The regulations were all tied to talking to the public about what you are doing.
If a firm does not advertise to the public, and solicits no investment, then none of the regulations apply to it. A hedge fund is precisely an investment pool to which none of the regulations apply, because it refrains from any of the activities that trigger those regulations.
I overlook the snarky side of your comment.
San Diegan, are you? Great Money Manager down there - Jim Puplava.
Hallelujah! ‘Bout time. Hopefully they will go further and put position limits on the speculators.
parsy, who hopes they can end the oil speculation rises.
EFT’s,...great way to short the market in your 401K
In most cases, excessive is that part of risk (or speculation) that is above the author's assumption --- quite narrow meaning and devoid of policy implications.
Here we have government acting on something that does not exist --- like gouging. Beware, soon any profit-seeking will be declared gouging and fought against.
If they can limit the price of “things”, they can continue to pound the table and claim that, “There is no inflation, just look at the price of oil and Gold”.
Just more good tidings from the Management of Perspective Economics...
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