Quote:
Originally Posted by Butterfly  Quote: |
Originally Posted by lannarebirth The fact is that's illegal if that causes you to have a too great a position in the market. | not sure if it's illegal, they could buy contracts and short them at the same time, for different maturity, as a technique to limit their exposure to risk
don't think short selling is against the laws for the majority of these speculative funds, they might misrepresent the risks to their clients, but that's about it
now that the cat is out of the bag about speculation and the "imaginary" demand driving those prices, things will be back to normal, and the oil industry will be miserable again |
well, I'm not sure speculation is the right word. it's speculation in as much that buying anything is speculation. In fact it is not speculation when the amount of money moving in that will always buy at any price moves the market in only one way...up. Unfortunately they had to take position sizes (and continue to) that are illegal.
Here's a good explanation of what I'm talking about
:
Written testimony of Mr Michael Masters
and the subsequent legislation:
Commodities Now - New CFTC Powers In Farm Bill To Close 'Enron Loophole'
These are giants barging there way into a midget sized market that was created solely for producers and hedgers. they sold it to the public as a "new asset class", which is pure bullshit.
Nothing wrong with speculation, but what is happening in commodities markets is not mere speculation it is fraudulant.