James Seaberg

Why Commodities Are Likely to Struggle in 2008

Why are only long positions deleveraged with margin calls, not short positions? The execution of the shorts makes the commodities rise faster than physical demand would have pressured their prices up. The shorts like J.P.Morgan Bank with its outsized gold short position has to buy the contracts back. This rises the prices of the commodity. It is not the winners which are deleveraged by margin calls, it’s the loosers. The commodity bugs are the winners. My advice: Stay with the winners then you will not encounter margin calls.