Speculation in Commodity Market Drives Volatility, Impacting Future Returns.
The article looks at how speculation affects a thinly-traded commodity market, focusing on times when speculators are very active. By using a measure called the speculation ratio, the researchers found that while future returns in the market are mostly influenced by basic factors, the volatility of those returns is greatly impacted by how much speculation is happening. This is true whether speculation is high or low.