I'm not sure hyperlinks will be preserved, so here's the url: http://www.dollarsandsense.org/archives/2008/0708collins.html.
> On Feb 9, 2011, at 1:13 PM, SA wrote:
>
> > Okay, so this is telling us that *commodity funds* received $60bn in net
> inflows. They used that money to buy commodities contracts, I'm assuming.
> That made them buyers. But who sold them the commodities contracts? Sellers,
> of course. So the net flow into commodities contracts was zero.
>
> So you're telling me that an inflow of $60b into commodity funds from
> buyers who weren't there before won't tend to drive prices higher? Really?
> Especially when the buyers are intending to stick around - a lot of this
> money was index funds, which have to stay invested as long as their clients
> don't start cashing in? And were not present in the market before?
>
> Sure they have to buy it from another holder. But at a higher price than
> that holder probably bought it. Yes, the psychology of expected valuation
> contributes to the price rise, but there's nothing like a flow of scores of
> billions to stimulate psychology. The flow of money into the market drives
> the valuation of the stock of assets higher. When the money flow slows, the
> bubble will pop, and money will exit for some other asset.
>
> Here's some testimony by the hedge fund manager Mike Masters:
> http://hsgac.senate.gov/public/_files/052008Masters.pdf.
>
> Doug
>
-- -- Chris Sturr Co-editor, *Dollars & Sense* 29 Winter St. Boston, Mass. 02108 phone: 617-447-2177, ext. 205 fax: 617-447-2179 email: sturr at dollarsandsense.org