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Gambling With Commodities Is Fleecing Our Society

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posted on Mar, 21 2008 @ 08:19 AM
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Obviously our economy is in complete chaos - the market will go up 300 points one day and down 200 the next. Rampant and uncontrolled speculation is the root cause. My friends and I have been debating the pros and cons of unchecked Capitalism for a while now but I have never been able to fully articulate the concept of what I felt was wrong with it. I had an idea in my head but couldn't put it in words - until now.

The thesis below fully characterizes the problem of speculation and in our market today. I would love to know what ATS members think about the premise. I think the author is dead on but I fear the pervasive greed that exists in our society will never allow a correction of this fatal flaw.

Cryptogon


If I buy a wheat contract, I should have to take delivery of the physical wheat at the specified date. If I sell a wheat contract, I should have to deliver the physical wheat at the specified date. I should not be allowed to buy or sell those leveraged contracts without having to take delivery, or deliver, physical goods. I shouldn’t be allowed to close my position without an exchange of goods.

The same should hold true for gold, coffee, palladium or any other commodity.

It is absolute madness that commodities are bought and sold using leveraged vehicles in markets that allow participation by speculators; individuals and organizations who have no interest or connection to the underlying physical commodity.

Guys, I know! I can hear you groaning. Several of you trade the gold futures. I made money on DBA, which is made up of futures contracts on wheat, corn, soybeans and sugar. I, just now, recommended gold mini futures contracts to a reader who’s using his BullionVault account for active trading—I mean, why not use the leverage that a futures account provides to trade and save money on commissions?

No sane person wants to wind up in a gun battle, but when you find yourself in the middle of one, you do what has to be done. As trader Dagobaz wrote, “If u r any good at all at timing overbought / oversold conditions, you will be in the very rare position of being able to make money faster than even bernanke can devalue it.” She’s right.
But think about what leveraged trading in real goods does!

Leverage is undead money. It’s zombie money. It can be conjured up and sent out to do the bidding of its master. What happens when infinite zombie money, in the form of leverage, enters markets where finite resources are traded?

Volatility increases and prices distort to the point where the underlying value of a thing gets lost in all the noise. This isn’t a free market; it’s a black magic trick, involving supercomputers, psychological operations and lots and lots of leverage.

Why is it allowed?

The Black Box people don’t make the big money in stable markets that are constrained by reality. They want to get in and out; fast. The more volatility, the more potential there is to pull money out of the chaos. What institutions need is a way to be upwind when they start a fire. LEVERAGE ALLOWS INSTITUTIONS TO CREATE VOLATILITY FOR EXTREMELY SHORT TERM GAINS. Participants who are trying to use the futures market in a legitimate manner, to secure supplies of goods, or to sell goods, at agreed upon prices in the future, are getting wiped out because the price action has little to do with the underlying supply and demand of the commodity!


Forbes: Wheat Market Volatility

I am sure there are members who will flame on and call me everything from a Socialist to a Marxist but I am not. I want to make a buck as much as anybody but not at the expense of my fellow citizens - at least some functions of our society should be maintained for the greater good of us all, rich and poor alike.

It just seems to me that in our 24/7 world of news, analysis and constant info-bombs that certain members of our society have figured out a way to feed off of our weaknesses and manipulate profits. Speculators are not much more than parasites. Surely Capitialism is strong enough to handle a bit of tweaking.




posted on Mar, 21 2008 @ 08:30 AM
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I absolutely agree. It is the most evil anti-social form of Capitalism.

It's about doing nothing more than fund a transaction and clipping the ticket for the use of your money.

Great if you've got money.

A parasitic nightmare for we mortals who have to foot ever spiralling food and commodity prices.

It isn't even about the law of supply and demand. It is about speculating on supply and demand and commodity prices get overheated just like share prices do.




posted on Mar, 21 2008 @ 08:34 AM
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In addition there is the "Infinite Growth" model that most Corporations operate by. Well guess what...we don't have infinite commodities so somebody is going to have to take a hit when the values, driven by speculation, are hyper-inflated or crash to the ground.



posted on Mar, 21 2008 @ 01:45 PM
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Here is further explanation, it sucks:

www.money-rx.com...


...the situation in the oil market today has nothing to do with evil capitalists. But it does have a lot to do with the evils of capitalism. For investors, there are two places to invest in - The stock market and commodities (gold, oil, agriculture, etc.). Now how, when and why prices go up and down in either of these markets should be looked at from two angles - First is the market, i.e. supply and demand and conditions on the ground, and second is the mindset of the investors and market movers.

As far as oil is concerned, the situation on the ground is that demand, or at least the rate of growth of demand, is going down, not only in the US, but also globally. It's simple logic. Consumers in the US are spending less, businesses are spending less, and so local demand is going down. Since the US is buying less, the countries who are exporting goods to the US, like China, will also face a business slowdown, thus dampening their demand for oil. Simply put, the price of oil should go down. In addition, the dollar should go up due to trade deficit rebalancing, thus making it easier to buy more oil for less, further easing the pressure on oil prices. That's the way the oil market works on a demand and supply level.

But...there's a small problem with this scenario. The stock markets and the commodity markets are linked to each other in reverse. Generally speaking on a macro level, when one goes down, the other goes up. The situation in the stock markets is that investors are looking at both short-term and long-term problems. For the short term, every day is another new crisis - Subprime writedowns, more foreclosures, Countrywide Corp, Carlyle Capital, Bear Stearns - And this list is bound to get bigger and bigger. For the long-term, there's tremendous downward pressure on the markets and the economy due to a lot of factors, including the housing downturn, irresponsible behavior by Wall Street, job losses, trade deficits, a do-nothing congress and the balooning costs of the wars in Iraq and Afghanistan. Let's just say the near future looks bleak, and the period after that terrifying. Which means that investors are looking to get out, and stay out, of the stock markets.

And they're heading straight for commodity markets, where they see an unprecedented boom. Oil, food grains, gold, dairy products - Everything is in huge demand and supply is falling behind this demand. An increasing global population is hungry for anything and everything that producers all over the world can supply. So the stock markets are in deep doo-doo, and investors have no other place to park their money other than commodities, which anyway are in for an extended bull market due to conditions on the ground. And this investor demand is what is driving the prices higher...



posted on Mar, 21 2008 @ 04:48 PM
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Originally posted by kosmicjack


If I buy a wheat contract, I should have to take delivery of the physical wheat at the specified date. If I sell a wheat contract, I should have to deliver the physical wheat at the specified date. I should not be allowed to buy or sell those leveraged contracts without having to take...





If the trade/investment system was along the lines of your thinking
then a purchaser of wheat would need to have a grain storage silo,
or else a super-safe vault with guards to hold their bullion ingots...

and all that would both change the status-quo and add mucho bucks to the investors costs.... which very much lessens the field of potential buyers..
in-other-words,,,, only the well heeled and rich would even be able to bid on these items, as the storage and handling of these commodities would
prohibit the common man from chancing/speculating and IF they were correct--- then enjoying a handsome profit.


your idea is shrouded in elitiest doubletalk....
imho



posted on Mar, 21 2008 @ 06:14 PM
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...only the well heeled and rich would even be able to bid on these items, as the storage and handling of these commodities would
prohibit the common man from chancing/speculating and IF they were correct--- then enjoying a handsome profit.


The US economic model for food distribution is not the only one and certainly not the only one which works. Indeed one would have to say at the moment commodity trading is not working in the best interests of society, but rather in the interests of a few with capital.

What you need is a system that keeps down prices.

Where I live large supermarket chains compete for custom. They drive hard bargains for suppliers and they create the supply chain.

If the price of a particular food commodity becomes to low to justify farmers growing it then they vote with their feet and switch crops. the supermarket chains are then forced to up the price to restore profitability.

I much prefer that than turning my food and fuel supplies into a gambling casino for the rich.




posted on Mar, 21 2008 @ 07:15 PM
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reply to post by St Udio
 


Call me a simpleton, but I honestly don't see how it is elitist. IMO it is more elitist to allow a select few with the necessary capital to gamble on the world's precious commodities just to make a few percentage points more on their already absurdly huge profits. In the meantime, actual human beings, without the luxury to invest in regular stocks or speculation, are subject to the manipulation and whims of profiteers -gambling on hypotheticals - who drive prices up.



posted on Mar, 22 2008 @ 03:47 PM
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Kosmick you invited me to post here, but in all honesty I never trade the actual commodity. I have no problems with the current system in place. I trade the companies involved in it and use the commodity fluctuations to determine my own ideas, and trade off that. With the current turn in the economy we are going to see a rising dollar, declining commodity prices, declining gold and oil prices. We are going to continue to export our recession, but very soon we stop importing inflation. We will still continue to produce our own inflation here, but as things begin to worsen overseas, they will no longer be exporting inflation. The US will once again be the safe haven for investing. The dollar will continue to rise and things will be fine. I am very much invested to take advantage of this scenario and after being short for 11 months, am very glad to finally be long stocks again.

Good luck with all your trading.



posted on Mar, 22 2008 @ 04:30 PM
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I've traded commodities, you just need to do your home work and have the time.

The way it is no the agricultural producer may hedge his crops to offset loss.

Who wouldn't be hedging his wheat crop at 11 bucks?

Roper



posted on Mar, 23 2008 @ 07:05 PM
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Here are some thoughts that might help ATS members wake up and decide that it's tme to do everything we can to bring about fundamental change in our society:

www.unknownnews.org...


If of course we are quite content to see the sweat of our hard earned work stolen by the wealthy Capitalist parasites, having to tighten our belts while Wall Street and their co-conspirators in Washington become swollen with the blood of our labor, than we should be satisfied with our lot.

However, if we reject the idea of being exploited by some Wall Street money-changer who compares our existence upon the face of this Earth to some commodity like toilet paper or garbage bags, then it is time to begin the process of removing their poison from our economic and our political body.



www.nwo101.com...


Western Medicine creates blood tests and identifies what are normal healthy values. Then Western Medicine creates drugs to alter our blood test readings to make us think that we are healthy again without actually identifying what is causing the problem. The end result is the consumer must pour more money into maintaining the illusion of health by taking drugs which results in big profits for the drug companies and less health for the consumer which is called sickness.

Western Financial Markets create a list of economic indicators which tell us how well our economy is doing. If the numbers change to levels the markets declare are unacceptable, the government manipulates the market to get the readings it desires without actually solving the problem. The end result is the investor pours more money into the market thinking he will make more money which results in more profits for the investment banks and brokers and less value for the consumers money which is called inflation.



posted on Mar, 23 2008 @ 07:09 PM
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reply to post by kosmicjack
 


I disagree with governmental manipulation of the markets, but what does that have to do with commodities trading?



posted on Mar, 23 2008 @ 07:17 PM
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reply to post by chromatico
 


I see we are fiesty this evening... My larger point is that it is all just manipulation, smoke and mirrors for a profit and we are all just taking the bait - hook, line and sinker. I am trying to open some eyes and wake people up. Are you the snooze button or the alarm clock? Part of the problem or part of the solution. Because, honestly, I often can't tell by your posts. Half the time I'll give you a star and the other half I want to smash my computer.



posted on Mar, 23 2008 @ 07:20 PM
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reply to post by kosmicjack
 


Manipulation? No, sir, this is the markets at work! Do you suggest we forbid certain people from buying certain things?



posted on Mar, 23 2008 @ 07:24 PM
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I am posting a link to Rockpuck's very excellent thread so members can read one of the best posts ever, posted by member Ianr5741:

Debt Crisis

It's not specifically about commodities but it does pertain to usury and financial fraud in general.



posted on Mar, 23 2008 @ 07:29 PM
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Did you read the OP?

The external content in the OP states my position very plainly. If a party does not take possesion of the commodity (or otherwise have a vested interest in it) they should not be allowed to trade for profit on its value. It only serves as a negative influence on the final market price for consumers.

Nice, shiny, new avatar BTW.



posted on Mar, 23 2008 @ 07:31 PM
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reply to post by kosmicjack
 


Haha, thanks, got tired of seeing nothing there. Well...value is something that, in my opinion, can only be determined by the buyer and the seller. How do you define it?



posted on Mar, 23 2008 @ 07:40 PM
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Originally posted by kosmicjack
Here are some thoughts that might help ATS members wake up and decide that it's tme to do everything we can to bring about fundamental change in our society:

www.unknownnews.org...


If of course we are quite content to see the sweat of our hard earned work stolen by the wealthy Capitalist parasites, having to tighten our belts while Wall Street and their co-conspirators in Washington become swollen with the blood of our labor, than we should be satisfied with our lot.




[



Some of this reads very Marxist to me.

You do know that the whole world is trading these commodities? If you want to see manipulation of the MKTs check into what Communists China does.

The Reds will sell a lot of a commodity on the board only to force the price down so they can buy. They have done the reverse also.

I know, they were doing this at the time I was trading.


Roper

[edit on 23-3-2008 by Roper]



posted on Mar, 23 2008 @ 07:49 PM
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reply to post by chromatico
 


Well... it is tricky and I don't disagree with your definition but I would also say that the greater good and benefit of society at large also has value. So if not jacking up the prices of natural resources adds to it, then I am all for it.

[edit on 23/3/08 by kosmicjack]



posted on Mar, 23 2008 @ 07:49 PM
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The free market cannot be constrained. It is the ultimate form of fairness in the long run.

Those who complain are merely those who do not understand the intricacies of the marketplace.

You proposal for needing physical delivery is ridiculous and would result in only increased shipping and storage costs, not to mention the additional pollution this brings.

How would you determine who is "eligible" to trade in these commodities? How would you stop massive speculators from influencing the markets? How would you stop bear and bull attacks?

There is a very good reason the free market exists, and that is because it lets anyone trade in commodities and other stocks. You cannot limit the access to the market! That would defeat the whole point of a commodity exchange.

And while we are at it, your food prices arent controlled by speculation. They are controlled by supply and demand. Thus your premise is entirely wrong anyway. A bad harvest results in higher prices. The only commodity to be affected by price speculation is oil.



posted on Mar, 23 2008 @ 08:02 PM
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reply to post by Roper
 


Well, as I stated in the OP, I think Capitalism could stand a bit of tweaking.


Marx had the good fortune, combined, of course, with the necessary genius, to create a method of inquiry that imposed his stamp indelibly on the world. We turn to Marx, therefore, not because he is infallible, but because he is inescapable. Everyone who wishes to pursue the kind of investigation that Marx opened up, finds Marx there ahead of him, and must thereafter agree with or confute, expand or discard, explain or explain away the ideas that are his legacy.

- Robert Heilbroner, Marxism: For and Against


Marx

I'm not saying he's right, but he's not entirely wrong. Clearly Capitalism in its current form has run amok through-out the globe - Yes it does bring opportunity but it's often accompanied with exploitation and sometimes casualties. Yes it also brings growth and economic developmet but it's often accompanied by pollution and environmental devastation. There has to be a balance that benefits everyone not just an elite few.

[edit on 23/3/08 by kosmicjack]




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