Merrill Lynch Analysts Say Investment in Commodity Markets not Pushing Prices Higher

In an attempt to get the attention off of themselves, American politicians have been spinning the idea that what they call "speculators" in the commodities markets are one of the key causes of the huge increase in prices.

In response, analyst Francisco Blanch at Merrill Lynch (NYSE:MER) not only refutes that, but says the trading causes more stability in the market. Blanch said:

“Only some commodities have experienced significant price appreciation, and we see no evidence linking increases in open interest and trading volumes to price rises. On a positive note, we find evidence that the increases in trading volumes actually help decrease price volatility.”

The real problem is the policies of the government in relationship to supply-and-demand (not allowing much drilling in US), as well as their horrid monetary policies which continue to devastate the market by overprinting their funny money; causing booms and busts.

Another problem cited is the decline in real interest rates which cause prices to increase.