| From resourceinvestor.com: Although oil prices, the major catalyst for the recent storm of controversy surrounding speculation in commodity markets, have slipped back to around US$120 a barrel at the time of writing, the critics of purely speculative participation in oil and other commodity markets have not fallen silent.
Nor will they; high commodity (particularly oil) prices are still a real threat to economic growth in most of the world, and especially in the engine room of the global economy, the industrialised nations.
Has speculation really increased the prices of some commodities to artificially high levels? Well, it will suffice to say that many column inches in numerous publications have been devoted to both sides of the argument.
However, it would be rash to discount the idea at a time when many commodity prices are relatively strong anyway because of the underlying demand growth/supply constraint picture. Taking oil as an example, supply is constrained by politics and project development bottlenecks, among other things; meanwhile demand has grown, even if it is largely in countries that subsidise prices at the pump......Full Article Source |