As the cost of fossil fuel prices rise and exchange traded funds (ETFs) reap the rewards while our wallets take a beating, people are beginning to want answers.
Who’s to blame? Lately, "speculator" seems to be as dirty a word to some as "lawyer" or "journalist."
TrimTabs Investment Research came out with a report on Thursday saying that oil speculation had the potential to destroy the economy and send the world into financial ruin, reports Laura Mandaro for MarketWatch.
TrimTabs said that this year, commodity trading advisors and commodity ETFs have received $2 billion a month. If just half of those assets bought oil futures, they would present long positions in 100,000 contracts a month – or 3% of the open interest in oil futures.
But do speculators really deserve the bad rap?
James Saft for Reuters doesn’t think so. And neither does Francisco Blanch, the head of global commodities research at Merrill Lynch in London. He points out that while there has definitely been an increase in contracts on some exchange traded commodities futures, many markets have also seen a rise in such contracts on sugar and hogs, too, and they haven’t seen the same price spike as oil.