Commodity Price Gains: Speculation vs. Fundamentals

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Letter Writer:

Thomas Synnott, adjunct professor of industrial engineering at The Cooper Union in New York City

Date Posted:

March 1, 2012

Letter:

This was a good and very useful article. I referenced it in an article I've written for Business Economics. (Mr. Synnott's article, "The Long Wave Revisited," appears in the April issue of this National Association for Business Economics publication.) Thanks to the authors and the Regional Economist.


Letter Writer:

Mark Pfeiff, portfolio director, Kaiser-Francis Oil Co., Tulsa, Okla.

Date Posted:

Aug. 8, 2011

Letter:

I found your piece "Speculation vs. Fundamentals" very interesting.

One thing that I did find missing was any mention of how futures contract margins are adjusted in response to higher/lower prices and how this along with interest rates impacts the cost of holding futures. I've attached the link to the CME web site which contains the historical margin rates for your reference.

http://www.cmegroup.com/clearing/risk-management/historical-margins.html

I also suspect that the terms and willingness at which banks extend credit to businesses like that of the athletic apparel wholesaler cited in your piece may have an impact on commodity prices.

I've always wanted to take the time to try and understand better many of the points raised in your piece; so, I appreciate your work.

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