… Much of that investment flowed into derivatives, investments in paper backed by commodities, not the underlying goods themselves.
That investment helped artificially force commodity prices higher than the underlying demand.
Now, with that speculative wave unwinding, the world may see cheaper commodities prices for some time to come, said Brian Reynolds, chief market strategist for Rosenblatt Securities.
“Wall Street structured the equivalent of $22 trillion worth of commodities through OTC commodity derivatives and now they’re unwinding,” he said.
“This is a permanent decline, for probably five to 10 years.”