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Page added on May 30, 2008

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Institutional Investors: The ‘Dark Force’ Driving Oil Prices Sky High?

…I recently received an e-mail from a Wall Street friend on this very topic. He sent the powerful testimony of a money manager named Michael Masters, who appeared on May 20 before the Committee on Homeland Security. Describing himself as “a concerned citizen,” he convincingly argues that a huge amount of new money from institutional investors, like pension funds and college endowments, has been flowing into commodities accounts, and has driven prices higher.

Very simply, the case he makes is this: First, he distinguishes the new institutional investors entering the commodities arena from the traditional speculators, in that these institutions only buy; they do not sell. That is, traditional traders in the commodities pits would buy oil, let

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