Gambling WIth Commodities -- Have We Lost Our Minds?

Good evening ATS.

I've wanted to have a chat about something for a while now and finally I have some time to sit down and really complain.

Speculation in the market. Specifically in commodities markets. What is a commodity? Well let's look.

In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs.[1] Economic commodities comprise goods and services.[2]

In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soybeans, aluminum, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.

en.wikipedia.org...

So we know what commodities are. What kinds of commodities am I talking about? Essential ones.

Wheat, iron, rice and the ones that are actually a requirement for humans in order to live stable and proper lives.

Back in the day, we use to hang speculators. If you bought up a bunch of a comodity and then sat on it, until the suply dwindled and then tried to sell it at 40x the cost, we would just come over, and hang you and then sell your product at the proper rate.

Now I'm not advocating we hang speculators, but I am advocating that we make it illegal for you to trade on the futures of any commodity that is a staple. Luxuries, you can speculate about all you want, whatever.

But wheat and corn? You should NOT be able to make a bet on how good or bad production will be in any given year. Which then effects the price, regardless of what happens. The financial system we use to determine the prices of comodities in this 21st century is insanity and the only people benefiting are the thieves and businessmen who profit from misfortune.

SO my question to you ATS is: Do you think that derivitive trading and futures trading on comodities is a good idea? What good things does it bring?

~Tenth

reply to post by tothetenthpower


Connect the dots!!! It isn't very hard to figure it out......It's all part of the plan for the NWO and those who run the show to become "Gods amongst men!". At least in their psychopathic minds.........

reply to post by tothetenthpower


It just comes down to Corporate Greed as per usual. I say people's need over corporate greed.

Correct me if I'm wrong here...but isn't this just the same kind of trading that ruined the economy in 2008?
The housing crunch specifically?
Ruined Iceland's economy?

And now they want to do it with corn and pork bellies?

I'm disgusted.

We need Brooksley Born.
en.wikipedia.org...

reply to post by DontTreadOnMe


Yes, speculation and derivitive sales are exactly what caused the crash back in 2008.

Effectively, we are a society of gamblers. And money lenders and changers LOVE when you default on agreement. They'd rather you default actually, every time.

~Tenth

reply to post by tothetenthpower


They do prefer that you default on an agreement because they can then add all sorts of charges and interest and they know a court will award them the money. The only way to avoid this is bankrupsy. My creditors didn't count on me exercising my right to remain silent when I was summond to court for forced questioning on why I had not paid my bills. As I have not broken any laws and I have remained silent, there is pretty much nothing they can do to me.

I think this is definitely the Elephant in the broom closet no one on either side wants to touch. Someone might want to point out that not enough wealth exists quite literally on this planet to stand for even a small fraction of.....This:

the 9 top banks and derivatives

And people thought the US national debt was a whopper? Oh, the news does get worse. You hit right on it.

reply to post by tothetenthpower


The problem with derivatives is that the banks are placing bets with money they don't have!!! For the banks, it is a win win situation! As long as they have the US government to bail them out, (of course it is the tax payers who end up paying, not the government) they win either way! Try doing that in Vegas!

Then again, Vegas doesn't have idiots like the US government creating their margins, otherwise, Vegas wouldn't exist!

reply to post by Wrabbit2000


The only option soon to be remaining will be to hit the big old reset button but the rich stand to lose too much so they will never allow it to happen.

reply to post by Wrabbit2000


It's ironic that at the bottom of that page, I got an add for a bank

Yes, the unregulated and most likely ILLEGAL derivitives market is..well just too much.

~Tenth

reply to post by tothetenthpower

Perhaps that explains the need to master capturing asteroids in near earth passes, eh? They'll need one floating by and made of gold to cash the checks.

reply to post by Wrabbit2000


Honestly, if our government was worth anything they would seize the entire market and divide it equally among all citizens of nations involved.

Instand economy fix.

~Tenth

reply to post by tothetenthpower


The Financial Terrorist's on Wall Street made a good run on the housing mortgage scams and now that it is coming to a close, and everyone has less money, they are coming for all that is left and in demand. Your food.

They have to keep the million dollar bonuses and money flowing somehow, and soft commodities will always be in demand.

Let everyone eat dirt is their motto.
Your are not entitled to food!

If only the story was as nice as the OP suggested. It's actually a lot worse. Let me introduce you to the MF Global case. This is complicated financial stuff, but if you are born with a bit of smartness you'll call it something else. I'll first let you have a run up about how the market is supposed to work. Because there is a need for a future commodity market.

When you trade commodities you trade ahead in time. Let's look at two situations why this is useful. Because it is useful. Let's say you want to deliver a contract of some food. You need raw materials, but the food has not been produced yet. Let's say you want to deliver some cereal. Then you could reduce the risk of that product by buying future commodities of for example grain. In that way you could deliver a product in the future with a price that is fixed if you manage to hold most other expenses fixed. For the farmer delivering ahead of time he makes sure that he sold most of his crop before he harvests. In that way he makes sure that he will get some income after he harvested his crop. This is why we have commodity exchanges. Because we got many small producers and farms that need this market to survive.

There is another technical detail you need to be aware of and that is how the money flows in the real world. The farmer will get payed when he delivers the goods. The people who buy future will pay ahead of time. This is the thing that's called buying a "future". This system needs a safety-mechanism to work. The money has to be in an untouched account between the time of the future being sold until the commodity is delivered. The technical term for this is "segregated account". This is another word for an account that is illegal for the companies who trade to touch.

Now, let's talk about the MF Global case. This was a bankruptcy. The thing was that the money that was supposed to be in the segregated account was long gone when the company went bankrupt. This was a big disaster. Because the farmers didn't get payed and the producers didn't get their resources. If everybody followed the law the segregated accounts would have been protected. They wouldn't even enter the estate of the bankrupt entity. But, you know how this work by now. There has been little aftermath in this case. The trail leads to a politician called Corizine and the funding of the Obama campaign. Now, the confidence of those markets have been reduced. Justice has not been served. If international investors really loose confidence in USA markets, it would be catastrophic. This is what is currently happening. USA needs to continue in its role as a financial hub in order to make money. This is getting harder and harder.

Originally posted by nidstav

Now, let's talk about the MF Global case. This was a bankruptcy. The thing was that the money that was supposed to be in the segregated account was long gone when the company went bankrupt. This was a big disaster. Because the farmers didn't get payed and the producers didn't get their resources. If everybody followed the law the segregated accounts would have been protected. They wouldn't even enter the estate of the bankrupt entity. But, you know how this work by now. There has been little aftermath in this case. The trail leads to a politician called Corizine and the funding of the Obama campaign. Now, the confidence of those markets have been reduced. Justice has not been served. If international investors really loose confidence in USA markets, it would be catastrophic. This is what is currently happening. USA needs to continue in its role as a financial hub in order to make money. This is getting harder and harder.

The money was stolen in the segregated accounts, justice has not been served and the crooks are still in charge.
That about sums it up I suppose.

So it is getting harder and harder for these financial terrorists to keep the game going. As much pain as there might be, perhaps an utter collapse of the financial markets would be the best thing to happen. Perhaps it is what they have planned all along.

I was a professional trader for a number of years. It is important for speculators be in the markets because they add liquidity. I held positions for a few seconds to a few minutes. The more people that are trading the market, the more accurate the price is at any given moment.

Originally posted by BeenieWeenie
I was a professional trader for a number of years. It is important for speculators be in the markets because they add liquidity. I held positions for a few seconds to a few minutes. The more people that are trading the market, the more accurate the price is at any given moment.

Why would anyone in their right mind want to trade in the markets anymore when it is rigged by the Big Giants.
High Frequency Trading comes to mind as one gimmick where they steal a little here and there.
That does not even start to address the connections the Big Banks like Goldman Sachs and others have to our government where they circle jerk each other.

reply to post by BeenieWeenie


Comodities should not be listed on a minute to minute basis. The price should only change daily. Speculators are a poison to our economic system.

It is not about having the most 'accurate' price, it's about having a price that is NOT inflated by imaginary factors.

They artificially create the idea of supply and demand.

Like I said, luxuries you can do all the financial games you want. Rig it however you please. But the stuff that I need to live and that EVERYBODY needs to live, should not be at the whim of people's fears.

~Tenth

Yes, we have lost our minds. Commodity futures were supposed to be for the purpose of creating a stable price for farmers. That way a farmer would know how much he was going to receive when he harvested or sold his products. The futures market was never supposed to be a casino for traders.

That is why so many people are starving.

In 2007, massive impromptu street protests threatened the popularity of Mexican President Felipe Calderón. But it was not drug violence or kidnappings that prompted the outcry. It was the price of corn tortillas.

Earlier this month, tortilla makers said that prices could rise by 50 percent. An increase of the same amount led to the so-called “tortilla riots” of 2007. At that time, the Monitor attended marches with protesters angrily gripping onto cobs of corn and chanting, “Without corn, we aren’t a country.

Link

T rading In Death

Commodity trading is causing people to die, both of starvation and of violence. When people do not have food, they riot because they are desperate. I have no idea why we allow this. Traders may call it creating liquidity, and I have no problem with trading, and people making money, but people should not get rich because they are causing other to starve. Food is a basic necessity, and we should not gamble with it.

reply to post by tothetenthpower

The problem with Speculation is not leveraged trades on commodities (agricultural, energy, metals and even financial instruments) per se it is Excessive Speculation (ie. "cornering the market") that is the issue. We already have position limits for speculators (altho not obviously for collectively). One has to understand the rationale for the futures trading before making statements like it should be banned. The economic theory is that speculators assume the risk that the producers and commercial users wish to offset in the marketplace. Examples are a farmer who wants to lock in the price of his crop before it goes down at harvest or a commercial buyer of copper who wishes to hedge against future price increases by buying a futures contract before he negotiates for the actual). It can be stated that futures trading is the "last bastion of capitalism".....