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Commodities -- may be slowing in some investors are worrying that many popular products are not living up -- expectations.
Joining us now is a master in exchange traded fund industry Jim Wyatt president index publications an -- The journal of indexes.
Jim just held the inside commodities conference Jim -- you'd be here.
Talk about though -- some of these exchange traded funds perform vs actual commodity could that be discouraging investors.
The US popular oil ETF up 23%.
Up seven -- eight or 9%.
And then that that natural gas ETF plunging 57% natural gasoline down fifteen.
That was discouraging investors.
I think some investors are incredibly discouraged I mean I think fundamentally the issue -- in is that.
Investors don't understand how futures markets work.
And the spot is not the same as the futures.
And the possibility and the rainbow is a product that could track spot -- -- track spot.
-- It's impossible because the only way to do that really -- to store barrels of oil in the tanker off the coast.
But I mean I think people have been stunned shocked.
You know it gas is down already -- getting crushed on -- roll every time in those products so it's a real issue.
Seemed like you be that hard to solve we've created collateralized debt obligations -- credit default swaps based on the back of various tranches in the mortgage market.
What can we create ETF -- mere spot price will believe me there are people on the project you know they can do it it would be out and they are certainly working on it.
You know -- -- a variety of innovations that have attacked a problem in in sort of a more indirect -- like spreading out across you know different futures contracts to try to bring in the -- tango but.
Oil looks very low and there's incredible demand.
It's goodness it's gonna push out the price of those futures and it's going to be very difficult.
Essentially with the US what is happening is because that out there out month contracts are higher.
They're content fund has had a costly basically sell low and buy high and it reduces the return -- -- on.
But what about.
Did crackdown by the CFTC the commodity futures trading commission on these ET yes it is a -- somebody's gonna disappear this about a handful of maybe even stop it.
Showing new share -- well I think you know there's some different issues there the issue with the CFTC.
Of commodities invest -- -- speculation.
Driving the price of commodities right that's that's what that's about so what they.
Are talking about doing what they'll probably do is put position limits on futures.
And acted directly affect some of these exchange traded products which.
At times -- a huge percentage of the total futures.
With the perfect time to -- -- not to get -- in the weeds we talk about the contain go to David's point you gotta sell low buy high sell it because this contain go with a futures cost more.
If we get long duration backward nation which I can't believe I just said that on the year where Ford prices are lower than current prices.
But oil still going up in other -- people -- and six months oil prices dual role but we're currently in the cash market still going up wouldn't that cause the -- to search.
It certainly could.
Absolutely and I mean it happens it happens just this last spring oil went into back creation and when that happens the rule -- actually works for you but -- long run.
Investing in commodities is there any way to beat inflation commodities -- a commodity and in an of itself is inflation.
Well I mean a lot of people use commodities as as an inflation hedge and I think that's part of the reason for the big running gold that's part of the reason for the big -- commodities.
-- people are looking at them as a hedge against what.
-- -- -- in -- -- say in that gold gold at that correlated the Consumer Price Index.
Well and that and look at the price who look at what the price is done I mean I think with cool people look at gold as the ultimate hands in a in a market that collapses.
And look what happened last fall -- -- everything else.
-- is good to see you -- your vision man final around the place thanks for being here taken -- town Jim Wyatt president index publications an editor of the journal of indexes.
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