The investor vs. The speculator
I waited for Communist Party Of India's statement regarding future trade ban for some commodities, as expected they are not satisfied with Indian Government action and they want to ban 25 more commodities. Here is statement from CPI(M) general secretary Mr. Prakash Karat
"The CPI(M), which supports the ruling UPA coalition from outside, had charged the government with making a “wrong diagnosis” of the causes behind price rise and said the steps announced to control inflation would in fact stifle the high growth rate. It demanded a ban on futures trading in 25 commodities, alleging that allowing multinational companies to get into speculative trading in food grains had “resulted in price rise.”
Based on Karat statement, speculation is the main reason of price rise and as usual he blamed multinational companies. Sir, first you need to understand the difference between an investor and a speculator. I urge you to change 1947 mentality of labeling an investor as speculator. An investor is who do all basic research and home work before buy anything and a speculator is one emotionally attached and buy anything they want without doing any home work and based on price movements. These markets are now controlled by investors. If an investors thinks that market is infest by speculators, then price would automatically come down. Great example would be this decade's dot com burst. A good investor always sells when speculator comes into the play. As of now, commodities trading in India or oil future trading is not infested by speculators. It is just reflecting real state of price.
Here is Channa price for last one year contract from Multi Commodity Exchange of India(MCX) . See how our investors bring down price from peak of little over 3000 to 2400 with in last 2 months. Either it could be speculator infested effect or supply increase and demand subside, either way it is reflecting current real price.
Source :http://www.geojit.com/commodities/CommCharts.asp?index=3&Symbol=CHANA&ExpDate=2008.05.20&Exchng=MCX&SPeriod=-12&ChartType=1
"The CPI(M), which supports the ruling UPA coalition from outside, had charged the government with making a “wrong diagnosis” of the causes behind price rise and said the steps announced to control inflation would in fact stifle the high growth rate. It demanded a ban on futures trading in 25 commodities, alleging that allowing multinational companies to get into speculative trading in food grains had “resulted in price rise.”
Based on Karat statement, speculation is the main reason of price rise and as usual he blamed multinational companies. Sir, first you need to understand the difference between an investor and a speculator. I urge you to change 1947 mentality of labeling an investor as speculator. An investor is who do all basic research and home work before buy anything and a speculator is one emotionally attached and buy anything they want without doing any home work and based on price movements. These markets are now controlled by investors. If an investors thinks that market is infest by speculators, then price would automatically come down. Great example would be this decade's dot com burst. A good investor always sells when speculator comes into the play. As of now, commodities trading in India or oil future trading is not infested by speculators. It is just reflecting real state of price.
Here is Channa price for last one year contract from Multi Commodity Exchange of India(MCX) . See how our investors bring down price from peak of little over 3000 to 2400 with in last 2 months. Either it could be speculator infested effect or supply increase and demand subside, either way it is reflecting current real price.
Source :http://www.geojit.com/commodities/CommCharts.asp?index=3&Symbol=CHANA&ExpDate=2008.05.20&Exchng=MCX&SPeriod=-12&ChartType=1
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