Why not?
Because the crude oil market is huge and oil is so vital to everyday life in every part of the world that has progressed beyond using draft animals. The market for crude oil is upwards of 90 million barrels a day, every day. A market that big does not turn on a dime. Once again, demand hasn't suddenly halved and supply hasn't suddenly doubled.
Psychological factors aren't involved in demand? Supply isn't just supply today, but also expected supply in the future. Demand isn't just demand today, but expected demand in the future.
With end users psychological factors are miniscule to non existent for a commodity like crude oil. Most people need gasoline every day and will need it in the future. They know this. How do they respond to this fact? Do they hedge their future needs in the commodities market? No. Do they store gasoline for future use. Maybe enough for the lawnmower. So how do psychological factors effect the end user, they don't.
Psychology does effect traders and speculators. That was my point. They speculate in the futures market and when their expectations turned the price went down, it had nothing to do with actual supply and demand for the physical product.
A 10% increase in supply doesn't mean a 10% drop in price.
Ok
Some gold advocates theorize that the TBTF banks are short physical and paper gold. Why would they be?
There are a few theories about that. They are based on the belief that the TBTF banks are basically criminal enterprises who have been given a license to steal. The fact is that they can do whatever they want in the paper markets and no one will be prosecuted and the bank will not fail. The theory is that they are speculating on the price on the down side.
Why wouldn't they be long gold?
If the TBTF banks started to play the futures on the long side, gold would skyrocket in price. If you are short physical gold, you don't want that to happen.
The same way they could drive housing higher, so we'd never have a crash in 2008?
Apples to elephants. The US housing market is huge. The banks were not short real estate. The world gold market is tiny.
That's funny. Why do you think that?
So how do psychological factors effect the end user, they don't.
Southwest Airlines has almost 46,000 employees. Do you think they worry about fuel prices?
Psychology does effect traders and speculators. That was my point.
And end users and producers. That was my point.
They are based on the belief that the TBTF banks are basically criminal enterprises who have been given a license to steal.
Lots of stupid people have lots of stupid ideas.
The theory is that they are speculating on the price on the down side.
Why would they care? Why only the down side?
If the TBTF banks started to play the futures on the long side, gold would skyrocket in price.
Maybe they made it spike over $1900?
If you are short physical gold, you don't want that to happen.
Sure, but how many people/organizations are short physical gold?