On May 31, 2008, at 10:58 AM, Jim Devine wrote:
Shane Mage wrote:
If speculators, not "fundamentals," are driving up prices then these
speculators must be hoarding
actual cacao beans.
can't someone just "buy cacao beans long"?...
Only from someone just "selling cacao beans short." Both trades will
have to be unwound within the speculators' short time horizon. One
side, in a very volatile market, will make big profits, the other side
will suffer somewhat bigger losses, the difference going to
intermediaries. But whether the price soars or plummets, it can only
stay there if the supply or demand side fundamentals justify it. It
is "fundamentals" that speculators speculate about, to the extent that
they aren't merely speculating about other speculators' speculative
intentions.
more importantly, wouldn't the rising [$] price of these beans to some
extent reflect speculation that the dollar is going to continue to
fall?
But to that extent the price (in gold or euros) could just as easily
fall on speculation that euros and gold are going to go on rising.
Shane Mage
"Thunderbolt steers all things...it consents and does not consent to
be called Zeus."
Herakleitos of Ephesos
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