On Feb 9, 2011, at 11:17 AM, SA wrote:
> But this isn't a trivial point. The claim that for every buyer there's a seller is true. That's why explaining financial price movements by reference to "amounts of money" flowing into this or that asset can only be true in a metaphorical or shorthand sense. The real cause, of course, is that the price *at which* the amounts of money on both sides balance has gone up. I know, I know - everybody already knows this. But it means that financial price movements have to be explained by reference to changes in people's perceptions and expectations about the future - not by referring to "amounts" of money, which always end up in balance, whether prices are rising or falling.
You have vast amounts of organized money almost exclusively on one side of the trade. Against that, you have dispersed sellers, some of whom may be selling a position they bought just yesterday. The consensus, though, is that prices have only one way to go. Rising prices attract more buyers - until, at some point, the bubble pops. But money is coming out of bonds and into commodities. I don't get the idea that there aren't measurable net flows of money in and out of asset classes.
Doug