Commodities Index Funds?

[carlsbadworker]

I don’t care who says what. I care about their underlying data that supports their claim. From that point of view, I do believe Rogers has a point that the supply for commodity is very tight (e.g. agriculture) and current economy crisis is making the funds/investments very hard to come by for small farms around the world. Therefore, I don’t know about commodity such as gold (although I think it has bubble trademark all over it), but I do have longs in agriculture funds.
I believe most of the commodity does not necessarily outperform the market in the next few years. But because of the tight supply, they have the potential to go up much higher if the demand happens to be strong.

[Chris Scoreboard Johnston]

There is not a long term bull market in commodities. If you just look at monthly charts in commodities what you will find is that big runs both up and down get fully retraced, more like an EKG look that say a chart of the Dow since 1900. The commodity index funds being wonderfully misclassified by our good friends in the US Government and the CFTC is what allowed Large Speculators to bid the price of many of them up last year without the normal position size limits that have historically been there for speculators.

Only commercials are allowed unlimited position size because they are hedgers. When they allowed these funds last year to open accounts at GS as commercials, it essentially gave them the ability to use insane leverage to bid the prices up. This is why those of us who knew this was happening were calling the Crude $200 calls ridiculous, because we knew at some point when even the slightest retracement happened, it was going to be a race to the exits.

Now that Congress the worlds savior has had hearings and decried, well if we only knew this etc… Of course they did all along. An acquaintance of mine told them of this 3 years ago and was laughed out of their chamber.

Net, we will have volatility as we have seen, but there is not a long term uptrend. Rogers has made more money than I ever will, and I cannot represent that I am a better trader than he is. However, this is what I know to be true. I do not know where he gets his take on this. Don’t bet the farm on this.

[Chris Scoreboard Johnston]

There is not a long term bull market in commodities. If you just look at monthly charts in commodities what you will find is that big runs both up and down get fully retraced, more like an EKG look that say a chart of the Dow since 1900. The commodity index funds being wonderfully misclassified by our good friends in the US Government and the CFTC is what allowed Large Speculators to bid the price of many of them up last year without the normal position size limits that have historically been there for speculators.

Only commercials are allowed unlimited position size because they are hedgers. When they allowed these funds last year to open accounts at GS as commercials, it essentially gave them the ability to use insane leverage to bid the prices up. This is why those of us who knew this was happening were calling the Crude $200 calls ridiculous, because we knew at some point when even the slightest retracement happened, it was going to be a race to the exits.

Now that Congress the worlds savior has had hearings and decried, well if we only knew this etc… Of course they did all along. An acquaintance of mine told them of this 3 years ago and was laughed out of their chamber.

Net, we will have volatility as we have seen, but there is not a long term uptrend. Rogers has made more money than I ever will, and I cannot represent that I am a better trader than he is. However, this is what I know to be true. I do not know where he gets his take on this. Don’t bet the farm on this.

[Chris Scoreboard Johnston]

There is not a long term bull market in commodities. If you just look at monthly charts in commodities what you will find is that big runs both up and down get fully retraced, more like an EKG look that say a chart of the Dow since 1900. The commodity index funds being wonderfully misclassified by our good friends in the US Government and the CFTC is what allowed Large Speculators to bid the price of many of them up last year without the normal position size limits that have historically been there for speculators.

Only commercials are allowed unlimited position size because they are hedgers. When they allowed these funds last year to open accounts at GS as commercials, it essentially gave them the ability to use insane leverage to bid the prices up. This is why those of us who knew this was happening were calling the Crude $200 calls ridiculous, because we knew at some point when even the slightest retracement happened, it was going to be a race to the exits.

Now that Congress the worlds savior has had hearings and decried, well if we only knew this etc… Of course they did all along. An acquaintance of mine told them of this 3 years ago and was laughed out of their chamber.

Net, we will have volatility as we have seen, but there is not a long term uptrend. Rogers has made more money than I ever will, and I cannot represent that I am a better trader than he is. However, this is what I know to be true. I do not know where he gets his take on this. Don’t bet the farm on this.

[Chris Scoreboard Johnston]

There is not a long term bull market in commodities. If you just look at monthly charts in commodities what you will find is that big runs both up and down get fully retraced, more like an EKG look that say a chart of the Dow since 1900. The commodity index funds being wonderfully misclassified by our good friends in the US Government and the CFTC is what allowed Large Speculators to bid the price of many of them up last year without the normal position size limits that have historically been there for speculators.

Only commercials are allowed unlimited position size because they are hedgers. When they allowed these funds last year to open accounts at GS as commercials, it essentially gave them the ability to use insane leverage to bid the prices up. This is why those of us who knew this was happening were calling the Crude $200 calls ridiculous, because we knew at some point when even the slightest retracement happened, it was going to be a race to the exits.

Now that Congress the worlds savior has had hearings and decried, well if we only knew this etc… Of course they did all along. An acquaintance of mine told them of this 3 years ago and was laughed out of their chamber.

Net, we will have volatility as we have seen, but there is not a long term uptrend. Rogers has made more money than I ever will, and I cannot represent that I am a better trader than he is. However, this is what I know to be true. I do not know where he gets his take on this. Don’t bet the farm on this.

[Chris Scoreboard Johnston]

There is not a long term bull market in commodities. If you just look at monthly charts in commodities what you will find is that big runs both up and down get fully retraced, more like an EKG look that say a chart of the Dow since 1900. The commodity index funds being wonderfully misclassified by our good friends in the US Government and the CFTC is what allowed Large Speculators to bid the price of many of them up last year without the normal position size limits that have historically been there for speculators.

Only commercials are allowed unlimited position size because they are hedgers. When they allowed these funds last year to open accounts at GS as commercials, it essentially gave them the ability to use insane leverage to bid the prices up. This is why those of us who knew this was happening were calling the Crude $200 calls ridiculous, because we knew at some point when even the slightest retracement happened, it was going to be a race to the exits.

Now that Congress the worlds savior has had hearings and decried, well if we only knew this etc… Of course they did all along. An acquaintance of mine told them of this 3 years ago and was laughed out of their chamber.

Net, we will have volatility as we have seen, but there is not a long term uptrend. Rogers has made more money than I ever will, and I cannot represent that I am a better trader than he is. However, this is what I know to be true. I do not know where he gets his take on this. Don’t bet the farm on this.

[ctr70]

Thanks Chris for the response. I thought the fall in crude prices was more due to demand destruction from the sharp global recession, not speculators.

Rogers makes the case that is more about supply and demand balance with the commodities themselves. The world has not been investing in metal mines, oil wells, coffee trees, sugar, etc… for a long time. And it takes a lot of time to ramp up (build new mines, coffee trees take 3 years, etc…) commodities and bring on more supply. And of course that coupled with continued big demand from China and other emerging economies. Leeb makes a lot of the same points. And of course both authors lean towards the peak oil arguement.

The reason my interest in a commodities index fund was for looking for a place to put a small percentage of portfolio. The index fund seems like a way to have some money in commodities themselves without having to trade futures of individual commodities.

[ctr70]

Thanks Chris for the response. I thought the fall in crude prices was more due to demand destruction from the sharp global recession, not speculators.

Rogers makes the case that is more about supply and demand balance with the commodities themselves. The world has not been investing in metal mines, oil wells, coffee trees, sugar, etc… for a long time. And it takes a lot of time to ramp up (build new mines, coffee trees take 3 years, etc…) commodities and bring on more supply. And of course that coupled with continued big demand from China and other emerging economies. Leeb makes a lot of the same points. And of course both authors lean towards the peak oil arguement.

The reason my interest in a commodities index fund was for looking for a place to put a small percentage of portfolio. The index fund seems like a way to have some money in commodities themselves without having to trade futures of individual commodities.

[ctr70]

Thanks Chris for the response. I thought the fall in crude prices was more due to demand destruction from the sharp global recession, not speculators.

Rogers makes the case that is more about supply and demand balance with the commodities themselves. The world has not been investing in metal mines, oil wells, coffee trees, sugar, etc… for a long time. And it takes a lot of time to ramp up (build new mines, coffee trees take 3 years, etc…) commodities and bring on more supply. And of course that coupled with continued big demand from China and other emerging economies. Leeb makes a lot of the same points. And of course both authors lean towards the peak oil arguement.

The reason my interest in a commodities index fund was for looking for a place to put a small percentage of portfolio. The index fund seems like a way to have some money in commodities themselves without having to trade futures of individual commodities.

[ctr70]

Thanks Chris for the response. I thought the fall in crude prices was more due to demand destruction from the sharp global recession, not speculators.

Rogers makes the case that is more about supply and demand balance with the commodities themselves. The world has not been investing in metal mines, oil wells, coffee trees, sugar, etc… for a long time. And it takes a lot of time to ramp up (build new mines, coffee trees take 3 years, etc…) commodities and bring on more supply. And of course that coupled with continued big demand from China and other emerging economies. Leeb makes a lot of the same points. And of course both authors lean towards the peak oil arguement.

The reason my interest in a commodities index fund was for looking for a place to put a small percentage of portfolio. The index fund seems like a way to have some money in commodities themselves without having to trade futures of individual commodities.

[ctr70]

Thanks Chris for the response. I thought the fall in crude prices was more due to demand destruction from the sharp global recession, not speculators.

Rogers makes the case that is more about supply and demand balance with the commodities themselves. The world has not been investing in metal mines, oil wells, coffee trees, sugar, etc… for a long time. And it takes a lot of time to ramp up (build new mines, coffee trees take 3 years, etc…) commodities and bring on more supply. And of course that coupled with continued big demand from China and other emerging economies. Leeb makes a lot of the same points. And of course both authors lean towards the peak oil arguement.

The reason my interest in a commodities index fund was for looking for a place to put a small percentage of portfolio. The index fund seems like a way to have some money in commodities themselves without having to trade futures of individual commodities.

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