7.28.09 (oops two full posts in one day!)
Your daddy is at it again. he says you can not buy natural gas. “Why?” you might ask? And “who is my daddy?” you might also want to know. Well you should know that your new daddy is government, since many people elected someone to office that thinks average people are too simple to make their own decisions.
And with this new government attitude from the top, we now have the federal agencies falling in line with that thinking. Earlier this month, the Commodities Futures Trading Commission (CFTC) said that the issuers of the US Natural Gas Exchanged Traded Fund could not issue more shares to meet investor demands. More shares are needed to buy more futures contracts on the futures exchange and meet the demand from investors wanting a one click way to invest/speculate in the natural gas market. However, the CFTC is afraid of ‘speculation,” the same kind that ‘brought down the housing market’, stock market, and everything else (long time readers know what I think about blamin the “bogeyman” for these problems, but lets not get off topic). Basically daddy, i.e. the CFTC, wants to protect us poor little Americans from any and all risks.
But whom does this affect? Large institutional investors can still buy or sell futures contracts directly – due to their size, futures contracts often require larger investments and therefore typically ONLY larger investors can get involved – prudently, that is. Smaller investors often can avoid the large investment requirement of buying futures contracts and use Exchange traded Funds or ETF’s to get involved in some of these previously unavailable markets in energy futures such as gas or oil, agriculture futures such as corn or sugar, and hard commodity futures such as platinum or copper.
Therefore, the only loser here is the (smaller) INDIVIDUAL investor – the individual investor is limited now in participation in (now at least one) these markets (this foreshadows the likelihood now that any time a market gets hot according to “daddy’s” standards it will be shut down). Larger investors however, can still speculate (as they have EVERY right to) in the futures market. With that being said, if you like the fact that daddy is telling you what to do (as an average American- not an institution) and not do in yet another area of your life, that’s fine but if your American blood boils just a little bit when you see stuff like this, do something about it.
By the way, Chris Grande does not have an opinion to give here on any of these investments. I merely want to point out an action by a regulatory body and its results on the average American’s freedom to buy something. Any other interpretation of this article is off base. Thanks!
FYI – I used Investopedia.com as the link for the definition of a futures contract – bookmark that page if you come across financial definitions that you need answers to.