In futures or commodity market a speculator is anybody who:
(1) isn't a producer, processor, a major consumer, or a manufacturer who makes use of a certain material like gold, petroleum, wheat or sugar, but
(2) tries to make a profit by buying or selling that material.
So when American Airlines buys and/or holds a large quantity of physical petroleum or a large number of oil futures contracts, they are NOT speculators, because they are a major consumer of petroleum which they use to fly their airplanes.
But when Goldman Sachs trades oil futures, they ARE speculators, because they don't produce or refine petroleum, nor do they consume petroleum in large quantity or make products from petroleum.
There's NO problem for anybody to speculate in any commodity market. The market NEEDS speculators to provide liquidity without which no market can operate efficiently or at all. Speculators are GOOD for the market and the economy as long as they DON'T overdo it.
When LARGE quantities of a commodity are traded or held by a SMALL number of speculators, it is BAD for the market and the economy, because it would DISTORT the price of the commodity, which is the OPPOSITE of what an EFFICIENT market is supposed to do.
Conclusion:
There should be a LIMIT as to how much commodity/material a speculator may trade or hold, whether in physical form or in the form of futures contracts.
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