I spent the better part of 2 weeks working with Gene Epstein on his cover story on the commodity bull markets. Obviously most of the material gets cut. Rightfully so, I am sure. There are a couple of points about the commodity bull markets that I think were missed. Here is the link, although you might have to sign up for a free 4-week trial to read the article:
First so far as I can tell, small investors trading through commodity index mutual and exchange funds appears to be the minor part of the commodity speculation problem. In trying track down these funds and total their assets, I found less than $40 billion. This leaves $300 billion unaccounted for. How did I arrive at this number?
The commodity indexes most popularly used as benchmarks for commodity investment include in their list a number of British commodity markets. While the US markets, by my estimate quoted in Barron’s, have absorbed $211 billion currently, the total figure including London is $358 billion.
Where is the rest of the money coming from? Institutional investors including pension funds, endowment funds, and even sovereign funds have made significant forays into commodities in recent years as way of boosting and diversifying returns. They have done so up until now in what has to a great extent been a self-fulfilling forecast.