MCR and PAN, page-9

JJ2

it is worth "considering why and how" ALL commodity prices have crashed GIVEN ALL the stimulas around the world.............................................

the number of financial instruments "created" during this period (think MBS's, CDO's and tracnhe debt for property in the 2000's .......and then apply that to all commodities.......0

have a look at "how" some of the giant players finance their activities ........(basically - its a sell forward using futures and derivatives and then deliver against that - or (even better).....offtake with a third party, sell fwd and use THEIR product to meet contract)...

we have not seen the "liquidation event" in the physical markets as yet (imho) .......we have seen three events (large vols dumped on the LME.....but price was almost unchanged) ......if one checks the SHFE .......a lot of the lme "dumpings" have eneded up on this market (natural arbitrage betwixt markets)......this metal is "held" via cancelled warrents (ie if you really want to buy physical - you WILL change the price on SHFE)

a similar thing has occurred in oil markets (oil storage is "technically full" in the USA) and several major users have dimped inventory .......leading to price moves (down).....

you can see a similar thing in gold markets on comex ..........except - the amout of metal in storage cant meet "demand" for delievries (should that occur)......

essentially - all commodity markets have been "financialised" .......

as access to credit gets "tighter" - these types of deals get harder to do......(which is a positive imho).....

anyways - enough rambling !

rgds
V_H