In 2004, commodity markets appeared to have a historical temptation for funds. The article on the UK Financial Times website stated that pension funds and mutual funds are increasing their speculative funds in the commodity market to diversify their investment portfolios. The high return on investment from the energy and metals markets over the past few years. HSEMIT, the director of merchandise marketing at Goldman Sachs, said the funds in commodities included in the commodity index increased from US$15 billion in 2003 to US$40 billion by the end of 2004. 90% of the injected funds come from the cash flow of retirement funds. This part of the funds was originally placed in the fixed rate and the securities market for retirement funds and mutual funds. But long-term investors are increasingly recognizing that commodity prices can provide strong returns. The Goldman Sachs Commodity Index has risen 25% last year, although it has fallen by as much as 12% compared to the peak in October, and the S&P 500 has risen about 10% last year. Goldman Sachs estimates that the Goldman Sachs Commodity Index has returned since 1970 The average is 12%, while returns from key securities and bond indices are between 8.5% and 11% during the same period. The Goldman Sachs Commodity Index has attracted nearly $30 billion in funds to invest in the index. Other commodity indices include the Reuters Research Institute of Goods and Deutsche Bank's Liquid commodity index has also attracted $10 billion in funding. There was an incredible increase in the funds flowing into the commodity index, and it took Goldman Sachs to spend the first time in eight years on investing in the index to reach $3 billion. The Goldman Sachs Commodity Index first invested in 1991. In the past 18 months of investment interest from pension funds plus oil prices for some time hit a record high, making oil prices rise to $55 a barrel. Metals, including aluminum, gold and tin are all due to China. The economic demand has set a long-term peak price, and the prices of most raw materials have risen due to China's economic growth. Barclays Capital said last week that the U.S. Mutual Fund Commodity Sector Index related assets were less than US$330 million two years ago and reached US$7.5 billion by the end of November 2004. Inflows into the commodity index for the month of last month The funds reached 280 million U.S. dollars. The greater the amount of funds held by the retirement funds in the commodity index, and the large number of over-the-counter transactions, also means that they are increasingly involved in the trading of futures commodities by buying crude oil, precious metals and basic metal futures. Analysts said that the increase in retirement and mutual fund participation reflects the increase in the number of futures contracts in European and North American exchanges. Last year, the turnover of these exchanges set a new record. However, retirement funds represent only a portion of the funds in commodity futures, and the dominant forces in these markets are still hedge funds and industry participants. And is this part of the fund's participation in commodity market trading a historic phenomenon? In the future, it will also participate in short selling, thereby further increasing the capacity of medium- and long-term speculative funds in the futures market. It remains to be confirmed. Of course, the dollar’s ​​rebound has stopped today. The steady rebound of the European exchange rate against the U.S. dollar will again provide support to the basic metals market. The relaxation of the spot premium in the main basic metal market will help stabilize the price, and the price of copper will again be tested at 3,000 U.S. dollars. turn off. The volume of trading closer to the market was good, perhaps due to the continuous transfer of positions caused by changes in the price difference. Heavy volume trading undoubtedly increased the market's turnover rate, but the total interest in the position has continued to decline in the past few days, it is difficult to confirm the emergence of new fund buying interest, or that the fund's buying interest temporarily after the price collapse In a more sluggish state. Perhaps today's closing result suggests that the fund has started to reopen its position, but it is also necessary to observe whether there will be a significant increase in the total amount of positions held tomorrow. According to past transactions, the rebound in copper prices is often reflected in the decline in positions. However, today’s consumption on the floor said that the purchase price of copper over US$3,000 was almost a short covering, and the key is that we need to see a good closing result on the weekly line, especially the current 3035-40 resistance level is taken by the weekly line. Breakthroughs, the technical aspects of copper prices will clearly show a good transition, in fact, although the top is not elevated, but the bottom is still up, when many technical analysts will be 2850 as a retested support level, It is undoubtedly beyond people's expectations that the price of copper exceeded $3,000 today. The reason for supporting the rise in copper prices is still very simple. The tight supply of spot goods is reflected in the recent increase in the number of warehouse receipts for LME injection. The rebound of the international shipping index also confirms that demand is picking up. Of course, the recent tsunami is affecting global rescue, causing shipping expenses. The rate of recovery is also a reason. Judging from the market's position balance, the net fund reported is about 21,000 more hands, and the position structure of the recent consolidation transaction will not change substantially. However, the drastic price drop itself is caused by the exchange rate The relevant hedge funds and CTA funds acted according to an almost round of wide range volatility. The long positions of these funds were reduced by the spread profit of the entire fund's long positions, while the funds holding the main long position in the market currently. Having experienced several plunges in copper prices, there is almost no indication of any instability in the follow-up consolidation. Under current circumstances where the fundamentals are still “strongâ€, this part of the fund’s confidence in the funds still holds It is quite resolute. China is facing a strong consumption season after the Spring Festival. This is what these foundations are looking for. Any decline in LME stocks will increase the confidence of this fund. Of course, whether the closer crowding will increase over time will increase. There is a possibility of triggering the delivery of idle stocks into the warehouse, which has a considerable impact on these funds. From this point of view, the balance of fund positions in the range of shocks also has the potential to adversely affect long-term growth. This should lead to the close attention of those who have discovered trends, so whether the fundamental situation is still very good, or the fundamental turning point of the balance between supply and demand in the mid- and long-term this year is already in the expectation of many institutions, and the time turning point is to capture the trend turning point. The opportunity lies. In addition, almost the price of copper is trying to explore the historical high point because the fund has increased its amount of funds in the copper market. The plunge in prices has caused these long-standing funds to be in a difficult position. Is it the copper market? Has it been endlessly circulating this situation? The energy is depleted as the fund holds too much, and also because the fund's long positions will reverse people's opinions in the short term, whether technical or fundamental. The technical relationship between the exchange rate and the copper market is now in a parallel relationship. There is no cross-directional relationship between the two. This shows that no matter whether it is the fund to promote prices or consumers to promote prices, the anger of the bull market no longer exists. . What the market is always waiting for is the opportunity to turn around. Because relying on these long-standing factors to establish long positions is now very fragile. Because even if the fundamentals are strong, the funds that are chasing the highs are obviously unwilling to bear the losses. The recent plunge in copper prices clearly means that many funds that have opened positions at a high level are losing money. Therefore, when the exchange rate reverses and the chart reversal occurs, the fund's market-making direction will change. From a time point of view, the market balance has turned to be fragile, and it is favourable to the bearish side of long-term rallies. The depth of the price retracement has puzzled the bulls, at least on the highs, the sluggish volume of high volume, and the weakening of liquidity has occurred several times. This situation is repeated and is the exact signal of short-selling in the mid- to long-term. Therefore, the recent price rebound may become a long position for quilts. The following are some of the views on the economic situation: - Despite the decline of the U.S. dollar, the U.S. current account deficit will widen - the U.S. will face relatively lower demand, while the U.S. reserves will be threatened by a gradual increase in the U.S. dollar decline so far. The impact of the current account deficit is minimal, and the U.S. economy is still growing stronger than its major trading partners. Imports are already much larger than exports, and internal and external dependencies will become more and more expensive. It is not a matter of shrinking. If this continues, the United States will become heavier and heavier for the world capital market. Fast, but not very fast, or it is slow to expand. The longer the international community takes time to take action, the situation will become worse. We emphasize three situations and look at the different adjustment speeds. If the international community in the next two If no action is taken during the year, the United States will be forced to control the surplus of the economic account so that external responsibilities can be controlled. The dollar has not fallen enough... but there are no other attractive policy points that can be taken as a response. The dollar will fall further. The U.S. authorities will know this and will be happy to accept the tolerance policies of the outside world. However, the result of the stimulus means The US dollar will lose its own level and itself will lose its foreign imbalance. For Japan and other countries in Asia and the euro zone, a weaker US dollar will not only damage exports but also undermine domestic demand. Few countries have domestic policies. There will be corresponding adjustments, which will make the world in a very unfavorable state. The lack of adjustment in market solutions There is no international agreement in the medium-term outlook to fix this problem. The market seems to be obliged to adopt a solution. The main problem seems to be that domestic demand in the United States continues to strengthen. Because of foreign investment As Americans become more and more nervous about holding US assets, the dollar's risk premium may start to rise and undermine US domestic welfare levels. The United States may use this process to increase its trade protection and try to force greater Other foreign exchange rate adjustments. A threat to tolerance of the exchange rate reserve may tolerate the inevitable adjustment of domestic U.S. policy, but it also threatens the reserve position of the U.S. dollar. Now the euro offers an option because its value is increasing to become the unit reserve currency of all countries, any exchange reserve Loss of status may cause the United States to face significant problems: The cost of access to the domestic capital market increases, and commodity prices have greater uncertainty. The slowdown in industrial growth in the seven countries has so far not had a significant impact on metal prices. This is partly due to the fact that industrial production is still expanding in other parts of the world. Especially in China, output growth there remains healthy in November. The year-on-year increase was +14.8. This helped maintain the global industrial production growth in November at +5.0% y/y, which is lower than the high peak-year-on-year increase of +7.7% in May, but it is still continuing in terms of metal demand. The state of expansion. However, if China's industrial production growth slows down to less than +10%, this situation may occur in the middle of this year. We expect that the leverage of commodity prices will undoubtedly be destroyed. Why there are other factors in why metal prices remain at such a high level, despite the slowdown in global economic growth has begun, the United States declined to remind the market in late 2004, metal prices provide a relative exchange rate hedging mechanism. This is mainly relative to the depreciation of the US dollar. Preserve value. Many markets have low stocks (copper, nickel, lead, and tin). It significantly slows down the metal market's dramatic short-selling. The rapid increase in copper production in the copper market has been used by smelters to replenish inventory rather than increase refined copper production. In the short term, these factors will continue to support prices, and even further rises, but any further increase may prove to be unsustainable, especially if the economic growth slows down. We continue to believe that the average price of the metal this year will be lower than that of 2004. This year's gold will perform better than the base metal and it will be used as a hedging tool to sell US dollars to buy commodities. Source: China International Futures Brokerage Co., Ltd.