Hoarding

DEFINITION of 'Hoarding'

The purchase of large quantities of a commodity with the intent of pushing up the price. An investor hoping to increase the price of a commodity can do so by leveraging his or her demand for it, and buying physical inventory as well as purchasing futures contracts for that commodity. Hoarding can also take place in financial instruments like bonds.

BREAKING DOWN 'Hoarding'

Hoarding is basically no different than buying and keeping a commodity. However, if the investor's intent is to corner or otherwise monopolize a commodity, then it may be considered an illegal act. In 1933, owning more than $100 worth of gold became a criminal act called hoarding, but holding/hoarding as much gold as you can afford to buy was re-legalized in 1974. Unfortunately for traders and regulators, it is not always easy to distinguish hoarding from a deliberate intent to manipulate the market.

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