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Comment: Investor demand and spot commodity prices

Author

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  • Östensson, Olle

Abstract

Tilton et al. claim in their article “Investor demand and spot commodity prices” to show that “investor demand can be pushing up a commodity's price even when investor stocks are falling.” In the present comment, it is argued that in both the cases described by Tilton et al., investors are supplying the market, putting physical material into it, rather than adding to demand. Thus, the reasoning by Tilton et al. is not concerned with the phenomenon referred to in the traditional theory, where, in the absence of changes in demand and supply fundamentals, prices rise as a result of increased investor demand for futures contracts.

Suggested Citation

  • Östensson, Olle, 2011. "Comment: Investor demand and spot commodity prices," Resources Policy, Elsevier, vol. 36(4), pages 372-374.
  • Handle: RePEc:eee:jrpoli:v:36:y:2011:i:4:p:372-374 DOI: 10.1016/j.resourpol.2011.08.002
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    References listed on IDEAS

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    1. Campbell, Gary A. & Roberts, Mark, 2003. "Urbanization and mining: a case study of Michigan," Resources Policy, Elsevier, vol. 29(1-2), pages 49-60.
    2. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, pages 177-200.
    3. Evans, Paul & Karras, Georgios, 1994. "Is government capital productive? Evidence from a panel of seven countries," Journal of Macroeconomics, Elsevier, pages 271-279.
    4. Kessides, C., 1993. "The Contributions of Infrastructure to Economic Development, A review of Experience and Policy Implications," World Bank - Discussion Papers 213, World Bank.
    5. Willis, K. G. & Garrod, G. D., 1999. "Externalities from extraction of aggregates: Regulation by tax or land-use controls," Resources Policy, Elsevier, vol. 25(2), pages 77-86, June.
    6. Kenneth Button, 1998. "original: Infrastructure investment, endogenous growth and economic convergence," The Annals of Regional Science, Springer;Western Regional Science Association, pages 145-162.
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    Citations

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    Cited by:

    1. Tilton, John E. & Humphreys, David & Radetzki, Marian, 2012. "Investor demand and spot commodity prices: Reply 2," Resources Policy, Elsevier, pages 403-404.
    2. Gulley, Andrew & Tilton, John E., 2014. "The relationship between spot and futures prices: An empirical analysis," Resources Policy, Elsevier, pages 109-112.
    3. repec:eee:jrpoli:v:53:y:2017:i:c:p:135-146 is not listed on IDEAS
    4. Tilton, John E. & Humphreys, David & Radetzki, Marian, 2012. "Investor demand and spot commodity prices: Reply," Resources Policy, Elsevier, pages 397-399.

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