Links May 10: Commodity bounce

David Llewellyn-Smith


  1. Commodity Bounce – Rally – Fall. Maybe I’m missing something here?

    Philosophically, what’s been hard for me to accept is commodities being traded on the stock market when realistically they are a function of physical buying and selling. In other words, rather than having ‘bets’ placed on whether a commodity’s price goes up or down and affecting its market price – shouldn’t that value be determined between physical buyers and sellers in the world market?

    I understand this accepted share market practice has been in for eons, but it strikes me as odd because to buy and own a share doesn’t necessarily mean you have bought the physical product. The Comex is one example where the paper certificate ratio to the physical product is around 100 to 1 and used to suppress, and with other mechanisms, manipulate gold’s value. The nefarious side to this form of trading is that price distortion in foods can lead to people starving and in turn evoking rebellious uprisings.

    But, investing in a business means you buy into that business because you believe in its philosophy, management structure, products, future growth etc by providing that business with a source of funding. The same can’t be said about commodities.

    Maybe someone can help here?

    • Lighter Fluid

      This is just another example of how the Finance industry has taken over to the detriment of the real economy.

      If there’s money to be made in creating derivative bits of paper to allow ‘things’ to be traded (without actually having a need or use for these things), it will continue, be it oil, corn, gold, energy certificates, water rights, CO2 credits…

      Innovation and creativity are the ultimate driving forces for progress, and capitalism has done a good job of promoting these attributes. But somewhere we took a wrong path. Now, within the swirling world of meta-money (as SON described so well recently) innovation and creativity are applied to gain money out of money rather than to improving humanities lot.

      Just think what the world could have been like if the sharpest minds had been applied to the real world and not the intangible constructs of money…