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Commodity ETFs, Dadly, Toxic and Evil

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4 Replies
Palouser
Senior Contributor

A lot of questions here

And a lot of hyperboly. Im terms of future ag land in Africa and aluminum - and grains - I think this guy is over his head. The idea of dealing with warlords in Africa to gain control of potential commodity raising acres that are now a wasteland is full of moral hazards. But, guess what, that's what the westward expansion in our copuntry was more or less about. Luckily we were a democracy that could lose faith and patience in SOME of the excesses. If land is going to be THAT important in the near future for food then a land grab will focus attention, and maybe resources. And maybe that land will grow needed food. As for warehouses of aluminum? You can't eat aluminium. The Hunt brothers met their end trying to control markets.

 

I do think there needs to be transparency in trading. That's where we went wrong in the current economic troubles. But if some want to make a grab for aluminum, one of the most abundant minerals on the planet, I say let them. Same with grain. I don't think they can create any physical shortages. As they say, 'wheat mostly grows'. If you can find some kernals almost anyone can start growing wheat and become a farmer.

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Re: Commodity ETFs, Dadly, Toxic and Evil

Wouldn't the re-establishment of a delivery mechanism take care of some of this wild speculation.  If those Wall Street types had their heads handed to them a few times I think they would scurry back over to the stock market to play their games and leave the commodities to to someone with more hard assets than a computer and telephone.

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Re: A lot of questions here

Hi P,

 

I agree- it is interesting to see non-ag financial types tackle this stuff and also common that they tend to smell a rat but don't get it quite right either.

 

I've always had an intuitive sense that all the financialization odf commodities is a two-edged sword for ag. Not sure that I've gotten it exactly right either but I think as right as those who thought that it was only good that mad money wants to bid prices higher.

 

Best, h

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4wd
Senior Contributor

Re: A lot of questions here

Leverage, that is what attracts investors to commodities. Good way to lever into many contracts of a commodity and make astonishingly fast big money with the positive moves in the commodity. No one ever thinks about the down side of leverage when a commod loses.. 

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