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WASHINGTON -- Senate Majority Leader Harry Reid, back from the Fourth of July break, last week delivered a typical harangue on Republican obstructionism and Democratic virtue that included a promise: By week's end, he would show Republicans his proposal to deal with "this speculation thing" that he calls the root cause of $4-a-gallon gasoline. It would attempt "to end speculation on the oil markets." By week's end Friday, Republicans had seen nothing of Reid's plan because of internal Democratic disagreement on details. But plenty of other Democratic legislative proposals floated around Capitol Hill claiming to resolve the nation's gasoline woes...

The Commodity Futures and Trading Commission (CFTC) is investigating trading in oil futures to determine whether the surge in prices to record levels is the result of manipulation or fraud. They might want to take a look at wheat, rice and corn futures while they’re at it. The whole thing is a hoax cooked up by the investment banks and hedge funds who are trying to dig their way out of the trillion dollar mortgage-backed securities (MBS) mess that they created by turning garbage loans into securities.

Call this the Age of Commodities. Also think of this as the age in which commodities, long relegated to the cellar by economists and markets, have fought back. They have fought back with such vigor and catastrophic effect on global business that they may be the determining force in the November election. But Sens. John McCain and Barack Obama have been tiptoeing around the global crisis triggered by a run on commodities. Wikipedia defines the category well: “A commodity is anything for which there is demand, but is supplied without qualitative differentiation across a market. In other words, copper is...

NEW YORK (Fortune) -- Atlanta hedge fund manager Michael Masters has been a star witness in two recent Congressional hearings on how speculators are supposedly driving up oil prices. Masters and I don't see eye-to-eye on this issue, so I was surprised to get a call from him after my "Don't Blame The Oil Speculators" column went up on Fortune.com last week. Masters contends that without speculators, the price of oil would be $65 or $70 a barrel. He points out that the amount invested in commodities index products has risen from $13 billion to $260 billion in five years,...

Commodities Boom Recalls 70s Surge; Prices Not There Yet CHICAGO (Dow Jones)--Despite record highs that seemed unthinkable to many just a year ago, most commodities prices still have a long way to go before inflicting the pain global consumers felt in the 1970s. An analysis of 18 different commodities by Barclays Capital shows that only crude oil and heating oil have surpassed inflation-adjusted highs from almost 30 years ago. Of key food commodities, the closest to those highs is corn, which was still 42% below its inflation-adjusted October 1974 peak as of Thursday's close. Wheat was 57% below its 1970s...

Record oil prices have failed to temper the enthusiasm of Chinese auto buyers. In 2006, 6.2 million cars were sold in China, enough for the Middle Kingdom to surpass Japan for #2 in total vehicle sales (the United States still sells twice as many). In the first five months of 2008, Chinese auto sales show no signs of decelerating, up 17.4% from the same period last year. The rise in Chinese auto sales has been so dramatic that projections by China’s government for auto sales in 2020 were already exceeded by 2005. Millions of tons of copper, nickel, aluminum have...

WASHINGTON -- Speculative traders' interest in crude oil has grown to the point that they now account for roughly 70% of all trading in West Texas Intermediate crude on the New York Mercantile Exchange, compared with 37% in 2000, according to an investigation by a congressional subcommittee that forms part of an escalating political assault on Wall Street's role in the run-up in oil prices. The subcommittee's findings, based on data obtained from federal commodity-futures regulators, are the latest sign that Washington is gearing up to try to limit the role of hedge funds, investment banks and other speculative traders...

Obama calls for oil crackdown By: Mike Allen June 22, 2008 12:39 PM EST With the cost of gas a top issue in the presidential campaign, Barack Obama on Sunday will announce a plan to crack down on oil speculation by tightening regulations on energy traders. The announcement is further evidence that an Obama administration would take an activist, populist approach to regulating business. Obama wants to close a loophole in federal law that exempts some energy traders from regulations that govern other exchange-traded commodities. Democrats call this “the Enron loophole” because it benefited the Houston energy-speculation firm that collapsed...

Story appeared in MAIN NEWS section, Page A1 Runaway oil and food prices are angering consumers but yielding sweet profits for investors such as the California Public Employees' Retirement System. CalPERS has racked up a 68 percent return playing the commodities market in the past 12 months. The California fund and other pension systems have done so well, in fact, that some in Congress want to ban them from the commodities markets or at least curtail their investments. The elected officials say the pension funds are playing a significant role in driving prices up simply by pouring billions of dollars...

One of the biggest factors in high oil prices, according to many experts, is that investors, such as hedge funds and investment bankers, can use loopholes in commodities law to manipulate the market and drive crude oil, heating oil, gasoline and diesel fuel prices to new heights. Congress is aware of the problem and lawmakers recently passed legislation to address the “Enron Loophole,” one of the major loopholes that opens the door to abusive trading practices, but the law didn’t go far enough.

US Commodities: Gold Climbs, Moves Over $900/Oz; Grains Slide By: iStockAnalyst Thursday, June 19, 2008 5:39 PM NEW YORK -(Dow Jones)- Gold futures climbed and moved above $900 an ounce Thursday, as rising prices have brought in more buyers thinking gold prices will continue to increase. August gold rose $10.70 to settle at $904.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

Commodities analysts leaving Wall Street By Francesco Guerrera and Deborah Brewster in New York Published: June 18 2008 02:10 | Last updated: June 18 2008 02:10 Wall Street is witnessing an exodus of analysts covering oil, gas and other commodities as the credit crunch and lucrative offers from hedge funds drive research experts away from investment banks. Over the past few months, highly regarded oil analysts such as Citigroup’s Doug Leggate and Geoff Kieburtz, Morgan Stanley’s Douglas Terreson and Bank of America’s Robert Morris have left. Recruitment experts say the moves are prompted partly by investment banks’ need to slash...

Corn hits record, soy rallies as floods expand By Julie Ingwersen and Nigel Hunt Thu Jun 12, 1:39 PM ET Corn prices soared to record highs on Thursday as flooding damaged crop prospects in the U.S. Midwest, heightening concern over shrinking stocks and fueling the market's relentless advance. Torrential rains have swept across the Midwest, the key growing region in the world's top producer, resulting in floods which have destroyed homes, as well as thousands of acres of corn and soybeans. "It's the worst in recent memory, at a time when demand has never been higher," said Gavin Maguire, analyst...

Why Can’t Our Media and Politicians Get The Oil Story Right? Of course the answer is quite simple! Our pathetic media and politicians can’t get it right because they don’t know how to analyze a market. After all, how many of them have actual experience in managing a client’s portfolio or traded a futures market? The problem is that their ignorance is having an outlandish impact on our lives as their ineptitude to understand and present the facts might very well lead to policies that will substantially hurt this country’s economy for a long time to come. We have precedence...

China consumes more than double what its natural resources can supply... China uses 15 percent of the world's total biological capacity—resources such as water, land and timber... "In the next 10 to 20 years, China's consumption will likely continue to pose threats to China's own ecosystems and place increasing pressures on global biocapacity," Water and electricity are priced below their market value in China, causing it to be inefficiently used ...

The stock market endured its deepest nosedive in more than 15 months Friday as the aspects of the U.S. economy most visible to Americans in their everyday lives appeared to be careening out of control. Skyrocketing oil prices and a weak job market sent the Dow Jones Industrial Average plummeting 394.64 points, its biggest single-day drop since Feb. 27, 2007. The blue-chip indicator ended down 3.1%, at 12209.81, with all 30 of its blue-chip components posting losses. Intraday Futures8 and Currencies9A potent blend of dollar weakness, speculation, bullish analyst comments, and geopolitical worries sent crude prices soaring. Ole Slorer, a...

Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs. The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs. The CFTC has also waived regulations over the past decade on U.S. investors who trade...

More on the possible contribution of index fund investment to recent commodity price moves. We and many others have been discussing whether the surge in investment fund purchases of long positions in commodity futures contracts may have been a factor contributing to the spot prices of those commodities beyond what would be warranted by considerations of physical supply and demand. John Mauldin shares an interesting graphic from Deutsche Bank researchers, showing that the prices of a number of commodities in which no futures market exists have increased even more dramatically than those traded on major exchanges.

The U.S. commodity markets' chief regulator will unveil policy changes next week meant to address public and political concerns that market malfunctions may be contributing to rising food and energy prices, The New York Times reported on Saturday. Citing people who have been briefed about the agency's plans, the Times said that the new measures would be announced by the Commodity Futures Trading Commission, which oversees exchanges central to the establishment of prices for commodities ranging from corn to crude oil worldwide. Facing mounting political pressure and farm industry demands, the CFTC is expected to outline measures to address the...

After being buffeted by the dot-com, housing and credit bubbles -- not to mention the Chinese stock-market bubble -- there is a readiness by people on Wall Street and elsewhere to ascribe the term "bubble" to all sorts of things. But when it comes to commodities like crude oil and corn, that may be off the mark. ...But figuring out whether a commodity exceeds its fundamental value is difficult: Because there is no income stream, there is no equivalent to the price-to-earnings ratios that people use to value stocks. Prices, to be sure, are soaring -- crude oil fetched $132.19...

Investing in commodities has been a brilliant move in this decade -- so brilliant that the strategy has attracted untold numbers of large and small players, particularly in the last few years. What do you suppose all of their buying has done to the price of oil? Pushed it down? With crude surging above $130 a barrel this week for the first time, a long-simmering issue is threatening to boil over: the role these new investors, often derided as rank speculators, have had in stoking the prices of oil and other commodities. Their standard line has been, "It's not our...

The global financial system these days is beginning to look like a giant Whac-a-Mole game--when we think we've knocked down one speculative bubble, another one just like it pops up. The latest is the commodities bubble--everything from oil and natural gas to gold, copper, wheat and rice....Like the credit bubble, this speculative bubble in commodities has badly distorted the workings of key markets and sectors of the global economy....this bubble is creating vast new wealth for some, including brokers, traders and investment houses who have gorged on fees and trading profits. The difference this time, however, is that even before...

Oil retreated after speeding to new peaks for a third straight day on Thursday, topping $135 a barrel as investors fretted over long-term supply constraints and a big drop in U.S. crude stocks. The latest leg of the rally began on Wednesday when oil leapt by more than $4 after U.S. weekly data showed crude stocks had declined by 5.4 million. Analysts had expected an increase. "Yesterday's EIA numbers set off this latest blast higher, but we suspect that prices would have gone up almost in spite of the numbers," Edward Meir of MF Global said in a note. "The...

Somewhere beneath the valley floor lies one of the world?s biggest untapped copper deposits, worth up to £44 billion In a dusty, windswept valley 20 miles southwest of Kabul there stands a cluster of derelict buildings, littered with shrapnel, shell casings and unexploded ordnance. It is an unremarkable scene by Afghan standards – at first sight, just another sad monument to three decades of war. Yet this desolate, seemingly hopeless, place is the source of Afghanistan’s most recent chapter of violence – and possibly now of a brighter economic future. It was here, in the Aynak valley, that al-Qaeda...

Food Shortages Growing? An email from a reader in the Midwest causes me some concern: "Last night at the daughter's horse riding lesson the price of horse feed came between my wife & the stable owner/riding instructor. One of her friends in Kansas said that his winter wheat looked great, but there was no wheat in the wheat plant heads (kernel/seed-I don't know the correct term). He reported that the grain miller that they normally use said that they are having trouble getting any wheat to prepare. Same thing from many Kansas wheat growers; plants look great, but no wheat...

Vast amounts of money are flooding the world's commodities markets, driving up prices of staple foods like wheat and rice. Biofuels and droughts can't fully explain the recent food crisis -- hedge funds and small investors bear some responsibility for global hunger. Not long ago, Dwight Anderson welcomed reporters with open arms. He liked to entertain them with stories from the world of big money. Anderson is a New York hedge fund manager, and as recently as last October he would talk with enthusiasm about his visits to Malaysian palm-oil plantations and Brazilian grain farms. "You could clearly see how...

Texas Gov. Rick Perry asked the government to cut "skyrocketing" food prices by waiving half of the renewable fuel standard for ethanol made from grain. The Republican governor from the oil-producing state said in a statement that such a waiver was "the best, quickest way" to ease rising food costs before lasting damage was done. "We're diversifying our state's energy portfolio at a rapid rate, but this misguided mandate is significantly affecting Texans' family food bill," he added. Perry said that over the last three years, the price of corn has shot up 138 percent around the world, while global...

An escalating global food crisis could bring the problem of hunger home to the US and other developed countries. Millions of poor Americans risk going hungry if food prices continue to rise and food agencies struggle to cope with rising costs, dwindling resources and a huge increase in demand. Already more and more poor people in the US are turning to charity and government assistance as they struggle with rising food costs and soaring fuel bills. Even some stores are restricting bulk rice purchases as the grain reached a fresh high on Thursday. Laurie True, executive director of the California...

WASHINGTON (AP) - Federal regulators on Tuesday said placing tougher restrictions on agricultural commodity trading will not alleviate high and volatile prices in those markets, and could make matters worse. Farmers, ranchers and grain processors met with regulators in Washington to discuss the causes behind turbulent markets and historically high prices for wheat, corn and other foodstuffs. Farmers and food producers argue speculation by Wall Street investors -- not a supply-demand imbalance -- is what's driving up prices and volatility, making it harder for commercial buyers and sellers of grain to use the exchanges as a tool for limiting the...

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.� -Thomas Jefferson The Founding Fathers put Congress in control of the the U.S. monetary system. In 1913 Congress relinquished this awesome power and gave it to a private cartel with the passage of the Federal Reserve Act. For almost 100 years, Federal Reserve policy has swindled Americans...

China became the world's biggest producer of gold last year, overtaking South Africa which held top spot for 100 years, the independent precious metals consultancy GFMS said here on Wednesday. Meanwhile the price of gold was on course to reach a record high of 1,100 dollars an ounce in 2008 amid global financial turbulence, the respected research group added in its latest annual Gold Survey. Gold struck an all-time peak of 1,032.70 dollars an ounce on March 17, four days after the yellow metal breached 1,000 dollars for the first time. "Global mine production fell by a slight 0.4 percent...

First the good news: Automotive expert Ed Wallace says there's no gasoline or oil shortage in the U.S. today and near-record reserves are on hand. Now the bad news: Not only has the congressional mandate for ethanol jacked up the price of food, but Washington, Wall Street and fuel producers all want you to think the gas and oil shortage they keep talking about is real. Washington, Wallace says, appears to be protecting oil speculators and ethanol producers rather than the interests of U.S. citizens who will ultimately pay higher prices for food and U.S. farmers, who are already staggering...

NEW YORK (AP) - Commodities prices fell in a broad sell-off Monday as profit-taking on the last day of the quarter and a bearish U.S. agriculture report battered everything from precious metals to grains and energy futures. Relentless global demand for agricultural coupled with dwindling world stockpiles has exacerbated the supply crunch for wheat, soybeans and corn, which have spiked to historic levels in the past year. Hoping to capitalize on the boom, U.S. farmers are expected to plant about 75 million acres of soybeans and nearly 64 million acres of wheat in 2008, year-to-year increases of 18 percent and...

CHINA, AS EVERYONE KNOWS, IS A BIG FORCE IN THE extraordinary boom in commodities. Its voracious appetite for everything from corn and wheat to copper and oil has helped push up U.S. commodities prices by some 50% over the past 12 months. But China is by no means the whole story. Speculators -- including small investors -- are also playing a huge role. Thanks to the proliferation of mutual funds and exchange-traded funds tied to commodities indexes, speculative buying has gone way beyond anything the domestic commodities markets have ever seen. By one estimate, index funds right now account for...

It has been almost 160 years since the first California gold rush but, with prices hitting record highs, prospectors are once again flocking to the state’s rivers and deserts in search of the precious metal. Gold’s ascent – prices crossed the $1,000 an ounce barrier this month and remain well above $900 – has sent sales of mining equipment soaring. “There’s been a dramatic change . . . our sales have risen four-fold in the last three months,” said Harrigan McGregor, owner of GoldFeverProspecting.com, an equipment retailer in northern California. “This is the second big California gold rush. We’ve had...

ELKO, Nevada (Reuters) - When Elaine Barkdull Spencer's two sons were growing up, she vowed they would never work in gold mining, because of its capricious cycles of boom and bust. These days, both sons are in the industry and Barkdull Spencer isn't complaining. One of her sons, who is 27, earns $100,000 a year and the other, who is 25, makes $90,000. It is hard to outshine gold in rural northeastern Nevada. With gold at record levels on a weak dollar, inflation concerns and U.S. economic uncertainty, Elko (population 22,000) is enjoying a boom. "We're at the peak of...

I heard it on TV so it must be true. All kidding aside, the last two days have been absolutely brutal for the commodities side of our portfolio and Wednesday, the energy stocks also got whacked. And I don’t know about you folks but I haven’t reached that zen, Buffett-like state where falling prices don’t faze me. They faze me. A lot. In my experience, the periods in which my self-doubts peak are honestly the times I should have been buying. Even in the short time since this website/blog has been up (since 01/2007), the market has already tested me...

Could the commodity currencies fall further? Yes. According to the Baltic Dry Index charts below, commodity prices will continue to fall. For those of you who do not know what the Baltic Dry Index is, it was once termed the “Best Economic Indicator You’ve Never Head Of” by Daniel Gross. This index is closely followed by all Wall Street Insiders because it is a good indicator of economic growth and production. In a nutshell, the BDI reflects how much it costs to ship raw materials (like coal, iron ore, cement and soft commodities like grains and sugar) by sea. The...

LONDON -- Nymex light, sweet crude oil futures fell more than $3 to below $100 a barrel in London Thursday, as a further recovery in the dollar and renewed concerns over the health of the U.S. economy prompted investors to liquidate crude and other commodity positions. Following a week of volatile trade and steep price declines, analysts suggested Thursday that a turning point in investor sentiment is underway, one that could herald a stronger focus on fundamentals. "Severe seesaw price action over the past several days reflects investors questioning the logic that commodity prices should rise every time the macroeconomic...

The word "INFLATION" covers two very different concepts, and it's important to keep them separate, writes David Galland for Casey Research. The first concept is monetary inflation, which is when the supply of money increases faster than the supply of goods and services. The other concept is price inflation, which refers to an increase in the overall level of prices for goods and services. The relationship between the two is the relationship of cause and effect. Monetary inflation causes price inflation, because an excess of money reduces the value of each monetary unit. But while almost everyone sees price inflation...

In his recent letter to shareholders, Warren Buffett quoted a Silicon Valley bumper sticker: "Please God, just one more bubble.” Well, that driver got his wish, but the bubble is in commodities this time around — not tech. From wheat to gold to copper, commodity prices have exploded over the past five years. Many experts say a bust is imminent. "We’re seeing bubble-like trading activity from speculators that has sent markets to levels that basic fundamentals probably don’t justify in the near term,” Bill O’Neill, former director of commodity research for Merrill Lynch and now a partner at LOGIC Commodity...

NEW YORK (AP) — Gold futures had their worst day in nearly two years Wednesday, beaten down after a smaller-than-expected interest rate cut bolstered the dollar and diminished the metal's appeal as a hedge against inflation. Other commodities also traded lower, with crude oil, silver, copper and agriculture futures all falling sharply as part of a broad commodities sell-off. The Federal Reserve on Tuesday lowered interest rates for the sixth time since September, moving aggressively to counter growing turmoil in financial markets that led to the near-collapse of investment bank Bear Stearns Cos. The Fed cut its benchmark federal funds...

Frank Holmes, chief executive officer at U.S. Global Investors, says that gold will hit $2,000 an ounce and that while the move won't be straight there from current levels investors should not be surprised by it. Holmes noted that virtually all commodities have gone through their "inflation-adjusted 1980 price levels," with the notable exception of gold, and that to get to that range the price of gold would have to top $2,000 an ounce. Holmes said he expects a short-term pull-back in gold -- based on a correction he sees coming in oil and a short rally in the dollar,...

WASHINGTON (Reuters) - U.S. bakers lobbied the Bush administration and Congress on Wednesday to build up wheat supplies and take other measures to dampen wheat and flour prices. Robb MacKie, head of the American Bakers Association, said booming prices for wheat has brought the U.S. food industry to a crossroads -- threatening profits, jobs, and potentially boosting prices by double digits for consumers when they buy everything from bread to pizza. "It's going to get much worse," MacKie told a news conference with other members of the baking industry, who will meet Agriculture Secretary Ed Schafer and other officials in...

The global volume of futures and options trading soared by 28 per cent last year, the largest annual increase since 2003, fuelled by a sharp rise in equity market volatility and a rush to commodity related contracts. More than 15bn futures and options contracts changed hands during 2007 at 54 exchanges across the world, according to the Futures Industry Association. The results show the rate of growth accelerating after a 19 per cent rise in 2006, 12 per cent in 2005, and 9 per cent in 2004. It is the largest volume rise since volume jumped 30 per cent from...

Commodities were at the centre of one of the earliest known financial bubbles – the tulip mania that hit the Netherlands in the 17th century. The price of the flower was lifted by huge investment demand to a peak of 1,500 guilders a pound in February 1637 – equivalent to what a master carpenter made in about four years. It had seen a tenfold increase in the space of two months and was trading at a level not supported by demand-supply fundamentals. Amid record costs, demand for tulip bulbs soon evaporated and prices crashed. Fast-forward about 400 years and some...

London and Europe join global equities sell-off By Michael Hunter in London and Lindsay Whipp in Tokyo Published: March 3 2008 08:54 | Last updated: March 3 2008 08:54 Europe joined the global sell-off on equities markets on Monday, as the dollar continued to trade around the $1.52 mark against the euro, helping commodities prices to linger around record levels. As European stock markets opened for business, gold continued to close in on the $1,000 mark, rising to $982.60 a troy ounce, up from $975.90 at the close on Friday. Crude looked to have established a foothold above $100 a...

Soybean futures on the Chicago Board of Trade hit their highest levels since 1973 on strong technical buying and bullish long-term fundamentals, which included concern over securing enough U.S. soybean acres for next spring. U.S. soybean acreages have fallen sharply as farmers jumped to corn amid a rally in prices of the other crop last year. In Friday's trading, CBOT soybeans for January surged as much as 17.25 cents to $11.78 a bushel. They closed at $11.77-1/2, up 16.75 cents CBOT corn for March rose as much as 10.5 cents to a 11-year high of $4.48 a bushel on indications...

Rising Crude Oil Pushes Consumer Prices Higher Monday, November 12, 2007 | 09:00 AM in Commodities | Consumer Spending | Federal Reserve | Inflation I'm not sure what to make of the Core-heads -- that motley collection of blinker-eyed ostriches who either claim there is not much in the way of inflation, or refuses to acknowledge the impact Oil prices has on everything else we consume. Despite all of the obvious price data and anecdotal evidence to the contrary, they insist there is little or no inflation. Policy makers who believe this tripe are making a serious mistake. Why> Because...

Imagine that a cardiologist told you that aside from the irregular heartbeat, the stratospheric cholesterol count and a little blockage in your aorta, your core heart functions are just fine. That's precisely what the government's cardiologist—Ben Bernanke, chairman of the Federal Reserve—has just done. The central bank is supposed to make sure the economy grows fast enough to create jobs and make everybody richer, but not so fast that it produces inflation, which makes everybody poorer. "Readings on core inflation have improved modestly this year," the Federal Open Market Committee said in justifying its 50-basis-point interest-rate cut last month, while...