I've noticed that soybeans and orange juice benefit from huge price spikes. And gold from spikes in the opposite direction, namely south. This so far is anecdotal but are commodities much more prone to price spikes than financials? And why is this so?
Specifically with respect to the agricultural commodities (such as corn, soybeans, coffee, sugar, wheat, orange juice), the supply side is heavily determined by weather. Let's say that because of the drought, the crop was reduced by 30% in a particular year. Assuming that the demand is the same, the price must go up by (roughly) 30%. By comparison, there is no such single powerful factor that influences the supply in the financials (such as index futures). Instead, the supply/demand is affected by the aggregated expectations of the market participants, and these expectations change slowly. Unlike the crop heavily affected by weather, the GDP (and the GDP expectations) don't go from a 30% growth to a 30% contraction from one year to another, at least in developed countries. Then there are additional factors for agricultural commodities, such as storage costs for future delivery, and the fact that they are perishable goods.
OJ spiked 2.5% today between 12:48 and 12:53 pm. So you would look first to see if there were some news impacting the supply of OJ. Make senses. I'm not accustomed to thinking in terms of such frequent spikes in price.
I don't trade OJ, and I don't follow the OJ news. But you prompted me to look it up. Looks like there was some announcement today by the Brazilian government with regards to the increase (by USD $5.8 billion) in farmers' credits/subsidies. It's my understanding that Brazil is the largest producer of oranges in the world (while the U.S. is the distant second). So today's spike in OJ prices may have something to do with that announcement, which was made at about 11:30 am EDT.
Perhaps the credit was less than expected because the OJ price went up at 12:48 EST. But either way, you answered my question quite well.
I like trading Gold. GLD is an ETF so you can trade it without messing around with high risk Futures.
What makes the futures any more high risk than the ETF? The physically backed gold ETFs are a tax nightmare and track the same underlying, seems irrational to prefer them.