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Price fluctuation in tradeable products of any kind is never "natural", it is supply/demand-driven. And supply and demand are complex forces with much turbulenc
by hellofunk 11y ago
Price fluctuation in tradeable products of any kind is never "natural", it is supply/demand-driven. And supply and demand are complex forces with much turbulence from a vast number of influences.
- Retric 11y agoSpeculation is a thing. BC is still infinitesimal in terms of the global economy and even relatively tiny movements of money can underline or pop a bubble.
- hellofunk 11y agoYes, and speculation is one of the forces affecting demand. There is no such thing as a "natural" price move in any tradeable product. The term has no meaning; all trading is based on some form of speculation or other forces.
- Retric 11y agoPeople use "natural" or "baseline" to refer to the price a commodity returns to after a bubble burst. Though, price movements are more chaotic than that and you can have short term spikes, swings from external effects ex: natural disasters, short term 'bubbles', and demand from things like tax policy changes so "natural" is somewhat vague. So, the implication is it's what happens when you remove short term and artificial effects.
- hellofunk 11y agoIn practice I've never heard anyone use the word "natural" in regards to price movement in a tradeable product, not in the five years I've been working in the financial industry. Sounds like more of a layman's term, perhaps. But the line between short-term and long-term movements is nearly non-existent since one typically affects the other, and the idea that there is any sense of normal price movement that lies behind all that turbulence is fairly naive.
- Retric 11y agoIt is a defined term, but I think trymas is referring to the layman's usage. "natural price" https://en.wiktionary.org/wiki/natural_price https://en.wiktionary.org/wiki/natural_price A price for a good or service that is equal to the cost of production.
- hellofunk 11y agoOh well that is a totally different term than the context it is being used in here.
- smrtinsert 11y agoThis is false, a lot of things are seasonal or weather related.
- hellofunk 11y agoThe weather does not cause prices to change. Traders do. The weather can be an influence on supply or demand economics, but price fluctuation at its core is not a natural phenomenon by any means.