“Vast amounts of money are flooding the world’s commodities markets, driving up price.”
No they aren’t somebody needs to learn about futures before he opens his mouth. why doesnt he go to the Chicago Board of Trade and get some information.
I've been a futures trader for 36 years, m'friend, and the rise in open interest in the last 5-6 years in futures mkts is, frankly, astonishing.
We have now a phenomenon unseen ever before. There have been commodity ''funds'' for years, no big deal and who cares. For the past few years, though, there's an entirely different type of 'fund' that has come into the futures mkts.
A couple of types, actually. One type is the NOLLSO: non-leveraged long-side only fund, which buys futures or spot product, takes delivery and stores the goods. Big shooters only, please -- this is a bloody expensive way to trade. Essentially, this type of fund is betting that it can hold goods long enough for the price to rise apace w/o being beaten up by carrying costs.
In some mkts, this policy is a statistical favourite, as long as one has the required capital: crude, copper, nickel certaily, tin perhaps, any of the less watched cash mkt metals, moly, indium and iridium, cobalt, antimony, gallium and so forth . Since by definition such funds use no leverage, they can withstand a year or so of mkt downturn very easily. Two or more years' downturn becomes very dicey, though.
The other type is what I call the 'genius' funds (with a deal of irony, to be sure). This bunch, led by B-school 'quants' who don't know hard winter wheat from their collective elbows, buys renewables, the grains, the oilseeds, the softs (oh, you don't know what softs are? get some information...). There's going to be a huge blowup with these guys: a couple of good crop years back-to-back and they'll be destroyed. Next year, this year, 3 years hence, who knows...or cares? It'll happen when it happens, and it's going to be brutal for them. I can't wait...heh heh heh.
To deny that vast amounts of capital are not flowing, and/or have not been flowing into physical commodities, though, whether futures or spot, is utterly beyond fatuous and borders on being purblind.