TSJones wrote:It did the same for gold. Gold at $1800 an ounce? Are you kidding me? Spec money was running wild.
a lot of this was the result of futures markets trading where contracts are established for a delivery of a certain commodity by a certain date. contract law goes back to the code of Hammurabi(sp?) in ancient Mesopotamia.
I make no attempt to defend derivatives trading. it just exists and it is not going away.
Thats my point , Where is the real price discovery happening by market forces , why is gold not worth $5000 or $900 , why is Oil worth $32 today and till 3 days back was falling below $27 , did the supply side suddenly went down in past 2-3 days or the demand went up , where is the real price discovery of gold or oil happening
All that happened was Draghi to say that further stimulus will come by March and Oil zoomed up from 27 to 32 within 2 dayshttp://www.bloomberg.com/quote/CO1:COM
When Fed declared its intent to raise the interest rates and raised the rate by 0.25 basis point Oil started falling drastically since oct-nov note the steep decline in the price in that bloomberg chart since november , A time where Oil Prices are generally up due to Winter.
So we are caught in QE warp be it Fed , ECB or BOJ or PBOC , All we need is constant sustained QE in these times and have no real price discovery mechanism.
Are we Doomed as we dont have any Markets ? Looks like We will by QE and Die by it