Post by jeffolie on Dec 10, 2010 13:02:48 GMT -6
I have long posted that I predict a Dollar crisis that I expect to start after the 2012 elections in 2013 and take a year or more to play out just as happened to other major empire currencies such as the USSR's rubble and the UK pound after WWII.
I invested on this approach buying silver and gold.
Mish caves in...admits inflation, favors metals
Mish long has agrued against inflation and for deflation until just recently when he begrudgingly changed to admittting that currently there is some but not much inflation in his opinion.
Now in this piece Mish declares he favors metals which is the first time that I have noticed he has any appreciation for metals...."I am a fan of physical gold and silver..."
Mish now declares the Dollar is in decline and that its decline is a problem. This seems to be a significant change in his opinions.
Mish is late to realize the declining Dollar is a problem and late to favor metals.
Commodities have gained about 50% from their intermediate term low (CRB index about 200 is now about 300) and Mish presented the CRB chart.
==============================================================
Investors Hold Biggest Commodity Positions On Record; Viral Nonsense About Silver
The Commodity Futures Trading Commission says futures positions in commodities are 17% higher now than when the commodity index peaked in June 2008. The Wall Street Journal picks up the story in Investors Pile Into Commodities
Investors are holding their biggest positions on record in the commodities markets as prices surge and debate intensifies among U.S. regulators about whether to limit the amount that any one trader can bet in markets for energy, metals and agricultural products.
Hedge funds, pension funds and mutual funds dramatically ramped up their holdings in everything from oil and natural gas to silver, corn and wheat this year. In many cases, the number of contracts held for individual commodities now far exceeds the amount outstanding in mid-2008, the last time commodity markets were soaring to records and debate raged about whether excessive speculation was driving up prices.
Contracts held by investors have risen 12% this year through October and are 17% higher than June 2008, according to data from the Commodity Futures Trading Commission, the market regulator.
In several commodities, including the $200 billion crude oil market, so-called speculative investors now make up a significantly larger proportion of the market than they did in 2008. Investors increased their bullish bets on crude oil by 24% since June 2008 and now represent 16% of the market, up from 13% just over two years ago. Bets in the copper market are up 58% and for silver they are up 52%, according to the CFTC data.
Debate within the CFTC is adding to the tension. Bart Chilton, a CFTC commissioner, has been pushing fellow commissioners to crack down on excessive speculation.
"Speculative money from the likes of hedge funds, index funds and pension funds is coming into the commodity markets at a blistering pace," Mr. Chilton said in prepared remarks for a speech he plans to make on Wednesday at a conference in New York. He said that while speculation may not drive up prices, it can distort them. "If prices are skewed in a manner that is not fair by speculators, consumers can pay more than they should," he said.
Anti-Fiat Sentiment
The rise in the number of futures contracts is not based on anti-dollar sentiment alone, but rather a distrust of fiat currencies in general.
$CRB Reuters/Jefferies Commodity Index
Commodity prices peaked in June 2008.
$USD - US Dollar Index
The US$ index was 72-74 in June of 2008. The US$ index is 80 now yet the number of futures contracts keeps going up.
The Journal reports ...
The CFTC is under increasing pressure to meet a January deadline set by the Dodd-Frank Wall Street reform law, which requires the regulator to set limits on how many commodity futures contracts in energy and metals a speculator can own. An agriculture proposal is to be implemented by mid April. So far, the agency hasn't developed a formal proposal on position limits; it says it is still collecting data on the over-the-counter market in order to come up with a comprehensive regulatory framework.
Dangerous Position for Commodity Players
The CFTC setups makes for a dangerous situation for commodity investors.
All those screaming about JP Morgan manipulation silver prices should think twice about their screaming. Whatever ruling the CFTC comes up with, if any, that ruling is highly unlikely to be unfavorable to JPM.
Moreover, if the CTFC limits contracts, it will lead to equal long and short liquidations. Mathematically it has to. For every long there is a short.
Guess who will have advance notice?
Viral Nonsense About Silver
Emails and videos regarding silver are going viral. There is no evidence to support the theory that JPM will be forced to cover silver futures no matter how high the price of silver goes.
JPM did not have to cover shorts at $7, at $10, at $15, at $25, or at $30. JPM has been short silver futures for something like forever. If JPM has not been forced to cover yet, perhaps the reasonable conclusion is no price would force JPM to cover shorts. Yet these "force JPM to cover" theories have gone viral with everyone plowing into the buy silver meme.
JPM can easily be hedged. To hedge, all JPM would need to do is offset its short positions with an offsetting position in SLV or some other mechanism.
The ultimate irony would be if JPM gets a small benefit out of rising silver prices. It would not surprise me in the least were that to be the case.
I am a fan of physical gold and silver, but I certainly do not advise buying silver because of some alleged short squeeze that is unlikely at any price.
Thoughts on Controlling Speculation
Speculation in commodities is a measure of distrust in fiat currencies in general. China, Great Britain, Europe, and the US are all engaged in various beggar-thy-neighbor competitive currency debasement policies.
The proper way to stop commodity speculation (and a vast number of other problems far more important than commodity speculation) is to fix the root cause of speculation (currency debasement), not to place limits (long or short) on the number of futures.
Mike "Mish" Shedlock
globaleconomicanalysis.blogspot.com
I invested on this approach buying silver and gold.
Mish caves in...admits inflation, favors metals
Mish long has agrued against inflation and for deflation until just recently when he begrudgingly changed to admittting that currently there is some but not much inflation in his opinion.
Now in this piece Mish declares he favors metals which is the first time that I have noticed he has any appreciation for metals...."I am a fan of physical gold and silver..."
Mish now declares the Dollar is in decline and that its decline is a problem. This seems to be a significant change in his opinions.
Mish is late to realize the declining Dollar is a problem and late to favor metals.
Commodities have gained about 50% from their intermediate term low (CRB index about 200 is now about 300) and Mish presented the CRB chart.
==============================================================
Investors Hold Biggest Commodity Positions On Record; Viral Nonsense About Silver
The Commodity Futures Trading Commission says futures positions in commodities are 17% higher now than when the commodity index peaked in June 2008. The Wall Street Journal picks up the story in Investors Pile Into Commodities
Investors are holding their biggest positions on record in the commodities markets as prices surge and debate intensifies among U.S. regulators about whether to limit the amount that any one trader can bet in markets for energy, metals and agricultural products.
Hedge funds, pension funds and mutual funds dramatically ramped up their holdings in everything from oil and natural gas to silver, corn and wheat this year. In many cases, the number of contracts held for individual commodities now far exceeds the amount outstanding in mid-2008, the last time commodity markets were soaring to records and debate raged about whether excessive speculation was driving up prices.
Contracts held by investors have risen 12% this year through October and are 17% higher than June 2008, according to data from the Commodity Futures Trading Commission, the market regulator.
In several commodities, including the $200 billion crude oil market, so-called speculative investors now make up a significantly larger proportion of the market than they did in 2008. Investors increased their bullish bets on crude oil by 24% since June 2008 and now represent 16% of the market, up from 13% just over two years ago. Bets in the copper market are up 58% and for silver they are up 52%, according to the CFTC data.
Debate within the CFTC is adding to the tension. Bart Chilton, a CFTC commissioner, has been pushing fellow commissioners to crack down on excessive speculation.
"Speculative money from the likes of hedge funds, index funds and pension funds is coming into the commodity markets at a blistering pace," Mr. Chilton said in prepared remarks for a speech he plans to make on Wednesday at a conference in New York. He said that while speculation may not drive up prices, it can distort them. "If prices are skewed in a manner that is not fair by speculators, consumers can pay more than they should," he said.
Anti-Fiat Sentiment
The rise in the number of futures contracts is not based on anti-dollar sentiment alone, but rather a distrust of fiat currencies in general.
$CRB Reuters/Jefferies Commodity Index
Commodity prices peaked in June 2008.
$USD - US Dollar Index
The US$ index was 72-74 in June of 2008. The US$ index is 80 now yet the number of futures contracts keeps going up.
The Journal reports ...
The CFTC is under increasing pressure to meet a January deadline set by the Dodd-Frank Wall Street reform law, which requires the regulator to set limits on how many commodity futures contracts in energy and metals a speculator can own. An agriculture proposal is to be implemented by mid April. So far, the agency hasn't developed a formal proposal on position limits; it says it is still collecting data on the over-the-counter market in order to come up with a comprehensive regulatory framework.
Dangerous Position for Commodity Players
The CFTC setups makes for a dangerous situation for commodity investors.
All those screaming about JP Morgan manipulation silver prices should think twice about their screaming. Whatever ruling the CFTC comes up with, if any, that ruling is highly unlikely to be unfavorable to JPM.
Moreover, if the CTFC limits contracts, it will lead to equal long and short liquidations. Mathematically it has to. For every long there is a short.
Guess who will have advance notice?
Viral Nonsense About Silver
Emails and videos regarding silver are going viral. There is no evidence to support the theory that JPM will be forced to cover silver futures no matter how high the price of silver goes.
JPM did not have to cover shorts at $7, at $10, at $15, at $25, or at $30. JPM has been short silver futures for something like forever. If JPM has not been forced to cover yet, perhaps the reasonable conclusion is no price would force JPM to cover shorts. Yet these "force JPM to cover" theories have gone viral with everyone plowing into the buy silver meme.
JPM can easily be hedged. To hedge, all JPM would need to do is offset its short positions with an offsetting position in SLV or some other mechanism.
The ultimate irony would be if JPM gets a small benefit out of rising silver prices. It would not surprise me in the least were that to be the case.
I am a fan of physical gold and silver, but I certainly do not advise buying silver because of some alleged short squeeze that is unlikely at any price.
Thoughts on Controlling Speculation
Speculation in commodities is a measure of distrust in fiat currencies in general. China, Great Britain, Europe, and the US are all engaged in various beggar-thy-neighbor competitive currency debasement policies.
The proper way to stop commodity speculation (and a vast number of other problems far more important than commodity speculation) is to fix the root cause of speculation (currency debasement), not to place limits (long or short) on the number of futures.
Mike "Mish" Shedlock
globaleconomicanalysis.blogspot.com