Comment Text:
Gentlemen:
The price of gasoline at the pump today is absurd. This inflated price is the result of a direct transfer of wealth from the end user to speculative investors. You allow this action to occur. I am asking why. Why do you allow this to happen? There are items in the commodity world that cross over to the consumer world and very quickly affect the price individuals pay for items they need to live day to day. Items such as grain, sugar, corn, and gasoline are staples that are requirements to survive in todays world. Allowing these items to be an avenue for wealth to speculative investors should be a crime.
A simple change to the investor rules is all that is needed. An investor in commodities futures used to be there only to lock in a price currently for a commodity to be delivered in the future. This protects the company that will bring the product to market. Yes everyone gets that. It is a market function that must occur so that risk to the producer is minimized. However, a speculator needs no protection, they are merely investing to manipulate this market for their own gain. How does this get corrected without removing the protection that is necessary for producers? Simple. A rule that requires investors to actually take delivery of a contract at the end of the contract period. Make sure that this contract can not be traded for an additional contract in the future.
With those two sentences, producing companies still can have their product for future delivery locked in at a price, and the speculators are locked out of the market. Speculation does not serve the market in any fashion, including liquidity. Having the market closed to only actual producers and transfer agents ensures that the actual price of the commodity reflects what the market will pay, without a slice for those who speculate.
Not taking this step now will set the table for a dangerous situation not only for the petrolium markets, but for food also. A dramatic and speculative run up in rice, corn or other grain could actually mean starvation for large populations across the globe, perhaps leading to wars. This is a very real possibility, and by allowing speculative trading in investments key to every day living, you are yourselves accomplices to this crime.
I have not stated anything here that is not common knowledge in the business world. You however continue to let this transfer of wealth continue from the backs of the consumers who do not have a choice but to purchase these goods, to the investors who drive up prices with your blessing. It is obvious who lines your pockets.
Now change the rules.
