Speculative Bubble

What is Speculative Bubble?

Speculative Bubble meaning A rapid run-up in prices caused by excessive buying that is unrelated to any of the basic, underlying factors affecting the supply or demand for a commodity or other asset. Speculative bubbles are usually associated with a ‘bandwagon’ effect in which speculators rush to buy the commodity (in the case of futures, ‘to take positions’ before the price trend ends, and an even greater rush to sell the commodity (unwind positions) when prices reverse.

 

reference: U.S. COMMODITY FUTURES TRADING COMMISSION – CFTC Glossary