On Feb 9, 2011, at 2:35 PM, SA wrote:
> I think you're confusing cause and effect here. When $60bn of new money flows into commodities via commodity funds, $60bn of old money flows out of commodities via non-fund types of investors.
So? The trades happen at continuously higher prices, raising valuations. The influx of buyers caused that. It doesn't matter what the sellers do with the proceeds. But a position worth $1.0m last week is worth $1.05m this week.
> This *really* gets it backward. Your saying money flows in and out and that causes psychology to change.
Yes. It feeds on itself. This is how a bubble happens. Reflexivity, as George Soros likes to say.
> They weren't coerced into doing it by their bank balances.
Not sure what this means.
Doug