by William Davies

Global commodity trading now takes place on a growing platform of modern, transparent commodity exchanges across all time zones. Using agreed frameworks of rules and regulations and standard contract designs we now see a wide range of commodities traded between end users and primary producers. The result is that it is now much easier to buy and sell across the range of basic commodities from orange juice to gold bullion, from crude oil to coffee beans.

While some of the major commodities like coffee and crude oil have been traded for a number of years, we are now seeing in modern commodity markets the strong innovation theme leading to new futures contracts being traded. One area where new product development has made a notable change is in the trading of carbon emission permits. Given the growing global concern about the serious long term impact to the environment …

by Anthony David

For the global macro trader there are essentially two different kinds of trades: relative value and directional. Relative value is essentially when you are looking at two different instruments that have reliable historical relationships and trading off that relationship. Directional trading, as the name implies, is when you place a bet saying that you think oil, gold, etc is going up or down.

There are multiple categories of directional traders. Some are technically oriented and deemed technicians and look at charts and other price action based studies. Other macro traders use fundamental analysis thinking that they can determine if an asset is under or over valued. Gut feel is a style as well. Most of the time gut traders lose their money but there are a few that can trade successfully solely of off their feelings. The next large category of traders are the CTA long term …

by Taipan Greene

How to invest in oil is a subject of interest to many traders in a world economy that is largely driven by the price and availability of products derived from products obtained from crude oil, like gasoline, diesel fuel, jet fuel, plastics, and fertilizer.

It is hard to imagine a world in which these products are extremely expensive or not widely available but that could be the case within a few years.

The term Peak Oil is one that most investors are now aware of. Yet the meaning of peak oil is widely misunderstood. Peak Oil does not mean that the world is nearing a time where there is no oil available. Rather it refers to the rapidly developing situation in the production of oil where the major oil fields of the world are in a state of production decline and even with new technology no major …

by Dagny Taggart

Macro trading and the art of tactical asset allocation can be lumped into the same category. This is because they both share so many similarities. They are both trying to find the best values on the globe and in several different asset classes. The difference is that most global macro traders are aiming for absolute returns whereas tactical asset allocation is typically only looking for market beating returns and less then market risk.

Tactical asset allocation is a dynamic asset allocation process that essentially tries to allocate capital to where the best potential future returns are. For instance if you have a 25% allocation to US stocks and they are at 12 year lows with the lowest PE ratio in over a decade you would likely believe that now is a good time to be putting more money to work there. A tactical asset allocator would then …

On June 10th, the Commodity Futures Trading Commission (CFTC) called a public meeting of its Energy Markets Advisory Committee to address continually exponentiating oil prices.

Representatives from major investment banks such as Goldman Sachs, JPMorgan, and Morgan Stanley fielded questions regarding their banks’ roles in the oil futures market for the first time under the public eye. Many groups have raised suspicion as to whether the banks are using investors’ funds to bid up oil prices, while at the same time issuing predictions that prices will rise.

Donald Casturo, managing director of Goldman Sachs, stated: “There is a clear separation between our research and trading departments…The firm is acting within the terms of the law.”

Still, organizations like Industrial Energy Consumers of America remain skeptical of the truth in this statement. The CFTC announced the launch of an investigation to be conducted by a special panel consisting of Federal Reserve, SEC,

On June 3, George Soros said oil prices will not “crash” any time soon. What reason(s) did the billionaire cite?

Hungarian-born Soros said commodity index trading “is still inflating the bubble,” but oil prices have “a strong foundation in reality.”

While I’m not exactly counting on a crash, I’m hoping I can restock my oil position (USO) at lower prices.