If the U.S. Congress continues to blame traders for high commodity prices, and imposes artificial margin or other restrictions on the markets, there are other alternatives to trading American futures exchanges. I have recently done some research into some of these alternatives. If free markets in the United States are endangered by current sentiments of blaming the traders, then traders and investors around the world may be forced to export their money to nations where those funds are more welcome.
The primary reason that Congress tries to blame traders for high commodity prices is because it is Congressional policies that have created high commodity prices through overspending that weakens the U.S. Dollar (thus inflating commodity prices), misguided ethanol mandates that inflate food prices, and bans on domestic oil production that inflate the price of crude oil. Congress is the villain, not the hero! But Congress is more interested in power and their own job security than in doing what's best for the American people. Thus, instead of taking responsibility for their disastrous policies by correcting them, they prefer to play politics and partisan party games and loyalties instead. It is very easy for them to blame nameless speculators, because speculators are a small minority, and because they (Congress) know that most Americans are ignorant of the value, functions, and purposes of the futures markets. Traders are an easy target for shameless politicians.
Two exchanges in particular are among those I would consider. I am encouraging my current brokers to provide connectivity to these exchanges, among others. The Dalian Commodity Exchange in China, and the Dubai Gold & Commodities Exchange appear to be potential leaders in the competitive market place. The Singapore commodity markets are also a possibility. Watch them.
The Dalian Commodity Exchange already offers futures volume levels for many agricultural commodities, including corn and soybeans, that rival the U.S. Exchanges. The DCE already has volume levels of soybean futures contracts that exceeds the Chicago Mercantile Exchange. According to data on the DCE's website, the DCE offers corn futures volumes that are about 2/3 of the current volume on the CME. The Open Interest on the DCE for corn is already over 400,000, and the volume is growing by 95% (nearly doubling) each year!
The Dubai Gold and Commodity Exchange is still very small with low volume. However, the nature of Dubai as the emerging capitol of the financial markets in the Middle East is bound to attract greater and greater capital, especially from the immensely wealthy beneficiaries of the limitless spigot of oil money in that part of the world. Dubai is determined to become one of the world's financial capitals, and all the fundamentals point toward success for them.
The Dalian Commodity Exchange already offers futures volume levels for many agricultural commodities, including corn and soybeans, that rival the U.S. Exchanges. The DCE already has volume levels of soybean futures contracts that exceeds the Chicago Mercantile Exchange. According to data on the DCE's website, the DCE offers corn futures volumes that are about 2/3 of the current volume on the CME. The Open Interest on the DCE for corn is already over 400,000, and the volume is growing by 95% (nearly doubling) each year!
The Dubai Gold and Commodity Exchange is still very small with low volume. However, the nature of Dubai as the emerging capitol of the financial markets in the Middle East is bound to attract greater and greater capital, especially from the immensely wealthy beneficiaries of the limitless spigot of oil money in that part of the world. Dubai is determined to become one of the world's financial capitals, and all the fundamentals point toward success for them.
The U.S. Congress should take extreme caution in imposing artificial, populist regulations on the futures markets that will not help to increase commodity supplies. If they continue to blame speculators, they will very likely permanently damage domestic capital markets and the capital flight out of the United States will cause the US Dollar to collapse even further. This will cause all commodities to increase in prices even more. Congress will literally exacerbate the very conditions they seek to control, as they bully the capital that provides liquidity and continuous price discovery for commodities.
In addition to the effect on the Dollar, Congress should shudder to think that by shutting down the free futures markets, they could literally hasten the day when the US Dollar is no longer the world's primary reserve currency. This would have catastrophic ripple effects world-wide, as the Dollar evolves from the world's primary currency to perhaps the world's pariah currency instead. As investors and governments begin to shun not only the Dollar currency, but also Dollar-denominated debt (especially treasuries), interest rates will inevitably be forced to rise, shutting down credit and mortgage markets, and reducing consumer-driven purchases.
Lastly, Congressional impositions on the commodity markets may also result in the commodities themselves flowing out of the United States and into other countries more willing to pay the market price for them. This may cause shortages of those commodities in the United States, as those commodities are siphoned to those places where the capital is available and the citizens are willing to pay more competitive prices for them. One way or another, the markets eventually punish those who try to restrict them.
In addition to the effect on the Dollar, Congress should shudder to think that by shutting down the free futures markets, they could literally hasten the day when the US Dollar is no longer the world's primary reserve currency. This would have catastrophic ripple effects world-wide, as the Dollar evolves from the world's primary currency to perhaps the world's pariah currency instead. As investors and governments begin to shun not only the Dollar currency, but also Dollar-denominated debt (especially treasuries), interest rates will inevitably be forced to rise, shutting down credit and mortgage markets, and reducing consumer-driven purchases.
Lastly, Congressional impositions on the commodity markets may also result in the commodities themselves flowing out of the United States and into other countries more willing to pay the market price for them. This may cause shortages of those commodities in the United States, as those commodities are siphoned to those places where the capital is available and the citizens are willing to pay more competitive prices for them. One way or another, the markets eventually punish those who try to restrict them.
