Is Speculation Driving Commodity Prices? 6 comments
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I certainly believe speculation is driving commodity prices to some extent. For example, ETF demand for gold represented 10% in the first quarter, up from 0% at the beginning of the decade. However, I just don't know by how much.
What is fascinating, however, is that non-traded commodities have generally outperformed traded commodities.
From Econbrowser:
Those arguing that rising prices are not driven by speculation, point to supply and demand fundamentals of the producing and consuming entities themselves. However, this ignores the fact that some commodity companies may themselves be speculating in their own products.
For example, many gold companies did not and still do not hedge their production specifically because they believe that gold prices are going higher. When Rob McEwen, CEO of US Gold (UXG), was CEO of Goldcorp (GG), he floated a secondary and used some of the proceeds to buy physical gold!
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This article has 6 comments:
It's about seeing the truth of the dollars value and parking it in something with "real intrinsic" value under it, not "faith".
And while you're at it why not some leverage?, if you truly believe.