Dakota Beacon

Commodity prices, in general, continued to tumble this week.  But what most people don’t know is that it is not a market factor that is causing the tumble, but a government factor lately.  The CFTC wasn’t doing what Senator Dorgan wanted done, so his kind replaced him with a new leader. It’s funny how speculation is called manipulation when the end result is not appealing to your needs.  So, now the new leader at the CFTC says there is a problem with commodities and wants to put limits on how many contracts index funds may own.  How idiotic and un-capitalistic to limit people’s potential to legally profit in this country!  If these people had half a brain and hadn’t spent their whole life in government, they would talk to people in the trenches working in this business. Commodity futures don’t cause problems; they help avert them by seeing an oversupply or a short-fall in a commodity before we run out, thus reducing the chance of running out of that commodity by bringing profitability to the producer with plenty of lead time.

The answer to the new large index funds is very simple.  Bona-fide hedgers and small speculators, whether buyers or sellers, would continue to put up 5% margins on commodities like they have for 150 years and large registered buy only index funds would be allowed to invest in commodities, like they buy stocks, and that is to put up 50% margins.  This means the higher the market goes, the more they have to put up if they want to make continual purchases.  If they feel the market still has value at the elevated rates, they know they have to come up with more money to continue purchasing. They also have to consider the ramifications of buying into commodity futures that require you to liquidate at a finite date.  How can you control something when you are being forced to sell it in the future?

Our Senator Dorgan wants to be a hero and play Robin Hood, when in fact, he is stealing from the agricultural and energy industry of North Dakota every day, as the market liquidates over the past weeks, wondering what is next.  Take a pencil and calculate a $1.00 per bushel lost on wheat alone in North Dakota in total value over the past two weeks, as well as the value lost in oil per day, and you will see our Senator has stolen quite a bit from his constituents. Some may think this is a heartless capitalistic remark.  What the socialists that rebut this are jealous of, is what a waste of profit that many individuals of North Dakota have made from energy and grains that had went on to provide new jobs and a robust economy that is the envy of the nation with an overflowing state coffer.  The socialists would have rather seen higher energy and food prices come from “Cap and Tax” so the government could have made better use of those gains.  Karl Marx must be smiling in his grave, knowing there are people out there still believing in his cause.

Eugene Graner

President

Heartland Investor Services Inc.

Karl Marx and Socialist Everywhere….....