I’ve published about Red Kite hedge fund twice in my blog. Essentially their strategy was always to manipulate prices of commodities upward by taking enormously large positions. The difference of commodity futures from stocks is that eventually you need to roll them over, otherwise you will get a barge of grain at your doorsteps in Greenwich, Connecticut. So the strategy works only when it’s hidden, and once uncovered, other traders can do you bad things.
Well, Mish just reported that now Red Kite changed its strategy. Now they are trying to corner the market by actually stockpiling the physical metal. I suppose they were forced to do that once they’ve realized that rolling over the futures will produce enourmous losses.
Let me add that once last year I heard an expert at Boomberg radio who said that most industrial metals are overvalued at least 3x times.
The commodities bubble is about to pop (“about” means from few weeks to a year). Don’t be surprised with 70% declines in some metal prices