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Commodities Briefing 29.Aug 2014

Posted on 29 August 2014 by VRS |  Email |Print

Commodities revenue at the top 10 investment banks climbed by about a fifth in the first half of the year as a cold winter boosted business in U.S. power and gas and some investors returned to the sector, a consultancy said.
Revenue from commodities for the leading banks rose 21 percent to $3.3 billion in the first six months after falling by a similar percent last year, London-based financial industry analytics firm Coalition said in a report on Thursday………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

In a world captivated, or should I say “cap-sized”, by the exasperating events in Gaza, Ferguson, Ukraine and now most recently by ISIS, it’s almost not worth talking about where the opportunities have been and where they might be in the financial markets. There are far greater concerns about the nature and safety of our planet.
We began the year with one of the most impressive bull markets in natural gas in recent memory, brought on by the polar-vortex, which uncharacteristically made its way south “without” the assistance of a negative AO/NAO index (warm blocks over the arctic and Greenland)………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

The boom in oil and gas investment that insulated Australia from the Global Financial Crisis is fading fast and there are few signs of new projects on the horizon, EnergyQuest says.
Dr Graeme Bethune - chief executive of the energy economics group – said the level of oil and gas investment is already well below the peak reached in the last quarter of 2013 and will keep falling as new LNG projects are completed………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Whenever overseas turmoil has pushed energy prices higher in the past, John and Beth Hughes have curbed their driving by eating at home more and shopping locally. But the current crises in Ukraine and Iraq did not stop them from making the two-hour drive to San Antonio to visit the Alamo, have a chicken fried steak lunch, and buy fish for their tank before driving home to Corpus Christi.
“We were able to take a day-cation because of the lower gas prices,” said Ms. Hughes. The reason for the improved economics of road travel can be found 10,000 feet below the ground here, where the South Texas Eagle Ford shale is providing more than a million new barrels of oil supplies to the world market every day………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Venezuela’s embattled Nicolás Maduro has spent most of his 19-month presidency fighting to avoid changing any of the economic policies he inherited from his predecessor, the late Hugo Chávez. Maduro has repeatedly told his countrymen that Chávez’s socialist blueprint is working in spite of mounting shortages, soaring inflation, and two maxi-devaluations in the past two years. Now falling oil prices may force his hand.
The price of Venezuela’s benchmark basket of crude and petroleum products fell on Aug. 22 to $90.89, a two-year low. Since the end of last month, the price has fallen 10 percent, tracking a surprising drop in international prices in spite of Mideast tensions………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

OPEC’s oil production has risen in August from July, a Reuters survey found on Thursday, as a recovery in Libyan supply held up and Angola and Iran boosted supplies, outweighing a further decline in Iraq.
The survey also found Saudi Arabia and other core Gulf OPEC producers kept output largely flat and have not cut back to prop up prices, which in August dipped to a 14-month low near $101 a barrel, or to make room for higher Libyan output………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

The world fears an oil crisis will occur if the security situation in oil-producing countries does not improve, especially in Iraq and Libya, two prominent producing countries. Everyone is concerned and is expecting the suspension of the Iraqi oil supply at any time now. If an Iraqi oil disaster occurs — especially if production allocated for export is halted — oil prices will easily hit an average of $130 per barrel and will only cease to fluctuate when Iraq regains calm and stability.
There is an urgent demand on Iraqi oil in both the short and long term. The suspension of production is equivalent to 1 million barrels per day (bpd) of Libyan oil supplies and nearly 3.3 million bpd of Iraqi supplies………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Global green energy expansion may stall unless governments can put in place more stable and long-term policies, the International Energy Agency (IEA) warned.
Its third annual Medium-Term Renewable Energy Market Report outlines how renewable sources of energy such as wind, solar and hydropower have made strong progress worldwide to make up around 22 per cent of global power generation, roughly on a par with electricity from gas………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Investments in new clean-energy capacity will total $USUS1.61 trillion ($1.72 trillion) through 2020 even as the expansion of renewables is expected to slow, the International Energy Agency said.
Funding for power generation from wind, solar radiation and biomass will average $US230 billion a year from $US250 billion in 2013 as technology costs fall and growth loses pace, the Paris-based adviser to 29 nations said today in its annual renewables report………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Growth in global renewable energy capacity will slow to 2020 if uncertain government policies continue to threaten investment, the International Energy Agency (IEA) said on Thursday.
Last year power capacity from sources such as wind, solar or hydro expanded at its fastest pace to date, putting renewables on a par with natural gas at almost 22 percent of global electricity generation. ……………………………………….Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

After a long bull move gold is at a crossroads. Depending on who you talk to, the 15-year bull market in gold has ended or is taking a breather preparing for its next leg up. The massive inflation predicted from the enormous liquidity poured into the system by central banks around the world has not arrived so gold has pulled back from its 2011 high.
Gold is the most followed and globally traded commodity. But not just by retail investors watching late night TV. While there is no more gold standard, governments maintain a reserve quantity of gold. Although gold has industrial applications, gold is a monetary asset and its prime driver is investment demand. We take a look at the top reported official gold holdings of individual countries (as of June 2014) based on information from the World Gold Council………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

For gold traders, the last few months have been challenging to say the least, with the precious metal lurching higher and lower driven by fear, the US Dollar, a singular lack of any inflation and seasonal supply and demand. At times like this it can help to look at related or associated markets for an alternative view.
One such is silver, which has been more measured in its price action over the last few weeks, remembering as always, that silver is not a precious metal, but an industrial one, and the daily chart for the December futures contract delivers some interesting insights………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

As pointed out by the Fed Chairman Janet Yellen, how much slack there is in the U.S. labour market is still up for debate. The Fed uses a Labour Market Conditions Index, which consists of 19 factors. The undertone is that the underuse of the labour force is still big although a few Fed governors have been saying that the interest rates will rise sooner than expected.
The ECB governor surprised the market by saying for the first time that both the fiscal and monetary policies are necessary to stimulate aggregate demand, which means there is room for more asset purchases and possibly QE and more fiscal policy flexibility from the governments………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Let’s talk diamonds for a change. Often it seems that gold gets all the fun when I write and speak about precious metals and minerals. But Vancouver-based Lucara Diamond, which we own in both our Gold and Precious Metals Fund (USERX) and World Precious Minerals Fund (UNWPX), has been turning heads here at U.S. Global Investors lately for a number of reasons, the most notable being that it continues to report stellar returns.
The company reports that, in its second quarter, it achieved tender proceeds, or profits, of $95 million from sales of 111,900 carats of diamonds, amounting to $849 per carat. Compared to last year’s second quarter, profits are up an impressive 93 percent………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

With the launch in mid-August of a new system to arrive at the price for silver, precious metals investors are dealing with the first in a series of changes in how the market prices of silver, gold, platinum and palladium are reached.
More change is coming, since the other three metals have yet to go through the process, but what’s happened so far is this: Concerns about price fixing after everything from LIBOR to currency were found to have been manipulated led to accusations about the gold and silver markets, and in January of this year Germany’s financial regulator Bafin said that the manipulation of precious metals prices was worse than that occurring with LIBOR………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

A rise in the global population, growth in the Chinese economy, urbanization of other Asian countries and the increasing requirements of developed countries have created an unprecedented demand for industrial or base metals given their usage in a wide variety of applications in the construction and manufacturing businesses.
However, of late, tepid global economic growth and a slowdown in the Chinese economy have emerged as major headwinds for the global metal industry………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

US investment bank Goldman Sachs said the refined nickel market has shifted from a major surplus in 2013 to a much smaller surplus in 2014, according to a research note Thursday, adding that prices are likely to continue to rally into 2015.
The bank notes that the buildup of LME warehouse stocks is merely a moving of stock from an Australian stockpile (since the start of 2013) and from Chinese bonded warehouses (following the Qingdao port investigation in Q2, when the authorities launched an investigation into trading companies for allegedly using warehouse receipts multiple times to secure financing from banks)………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Scotiabank’s Metal & Mineral Index rallied strong in July as base metal prices jumped higher across a broad front—“pushed up in part by exuberance over better-than-expected results for China’s economy”, observed Scotiabank economist Patricia Mohr in an analysis published Wednesday.
“Firmer potash and sulphur prices and the beginning of a recovery in uranium also contributed to the gain,” she noted. “Spot uranium prices have increased to US$31 per pound in late August alongside stepped-up Chinese buying, after bottoming at a mere US$28 in June………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

During the height of gold’s bull run, market observers frequently complained that exchange traded products backed by physical holdings of bullion, including the SPDR Gold Shares, were criticized for being the tail wagging the dog of the gold market.
Said differently, traders and investors were often stumped by what asset class truly moved the gold market: Futures or ETFs. Although investors have put money to work in gold ETFs this year, the predictive power of GLD and rival funds is seen as waning following a 2013 drubbing that saw GLD tumble 28.3%………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

A week or so ago, I wrote an article that listed three reasons to buy Market Vectors Gold Miners ETF . It’s important to understand that gold went on an unprecedented bull run from the early 2000s through late 2011, but it has largely been in decline since. Further, gold has historically been an underperforming asset as compared to the stock market.
And while the Market Vectors Gold Miners ETF is made up of stocks, the companies are all in the gold mining business, and this group tends to move with the price of gold. With that said, here are three reasons the Market Vectors Gold Miners ETF could fall. Should you consider limiting your exposure to gold and gold miners? Let’s take a closer look………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Investing in natural gas sounds like a winner: demand keeps rising, fracking promises to meet that demand, and prices have jumped in the past several years. Meanwhile it’s touted as an alternative to coal, and to a lesser extent, oil. There’s a lot to like.
But investing in commodities on a futures market is still a complicated business for most retail investors. Taxes and expenses can be complicated to work out. Hence the exchange-traded fund can be a better vehicle. ……………………………………….Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

The U.S. dollar is breaking out and that means a number of currency exchange-traded funds are seeing significant moves right now. Currency ETFs provide a way to access the foreign exchange (forex) market, while using the stock market to do it.
Currencies, like other assets, can spend a lot of time doing nothing, but when a major trend or reversal occurs, the moves can be large and fast-moving. Such a trend is underway now in the U.S. dollar, which affects other currencies as well………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Commodities exchanges the latest idea for city’s free trade zone, and part of its plan to establish itself as a hub for international commerce. In the latest attempt to raise the profile of its Hong Kong-style free port, Shanghai has unveiled ambitious plans to create a clutch of international commodity trading platforms in its free-trade zone (FTZ).
According to an action plan to develop the city into a centre for international commerce, major commodities including iron ore, cotton and copper will be traded on the internationalised markets inside the 28.8 sq km FTZ by 2015. The announcement follows long-heralded plans to establish international boards for crude oil futures and gold trading in the zone………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Egypt plans to get benefit from the Chicago Mercantile Exchange (CME)’s wide expertise, seeking to establish its first and biggest commodities exchange in the Middle East. Egypt’s Minister of Supply Khaled Hanafy announced Wednesday that his country, represented in officials from the Armed Forces, Cabinet and Arab Contractors Company, will start a number of meetings with CME chairman and board members.
The meetings aimed to review means of technical cooperation and support between the two countries to build the first commodities exchange in Egypt and the Middle East, dedicated for the grains and wheat………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

A forthcoming paper in the Journal of Development Economics looks at the dollar’s ascendancy to global reserve currency. Barry Eichengreen, of the University of California, Berkeley, and two economists from the ECB up-end the conventional history of when the dollar became top dog.
Economic historians have typically believed that until the second world war the British pound sterling remained the leading international currency. The system was geared in favour of sterling, the argument goes: bankers instinctively used the pound because everyone else did. Economists refer to this as inertia. An extension of this logic is that there can be only one major international reserve currency—in the same way that Blu-ray discs, not HD DVDs, came to dominate the high-definition video market. It’s easier if everyone uses the same thing………………………………………..Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Bitcoin, an alternative digital currency which is used to purchase goods and services online, is showing staying power, Reuters reported on Thursday, August 28. Though virtually unknown only a few years ago, the electronic currency is now catching on among more and more online vendors, including Expedia, America’s largest online travel agent, and Overstock, an online retailer.
Although bitcoin sales hardly ever represent more than one percent of total sales, Reuters says many of the vendors it interviewed expect that the online currency “will one day be as ubiquitous as the Internet.”……………………………………….Full Article: Source

Posted on 29 August 2014 by VRS |  Email |Print

Chile is set to approve a carbon tax next week, making it the second country after Mexico in Latin America to put a price on polluting. The carbon tax will go before the House of Representatives in the first week of September, as part of a broader package of tax reforms. If approved, Chile will start charging US$5 per tonne of CO2 from 2017, around $2 more than in Mexico.
“Chile is not a great contributor to greenhouse gas emissions, but we are very vulnerable. It is in our national interests to see significant commitments in terms of climate change,” said Gariazzo Rodrigo Pizarro, head of the division of environmental economics in the Chilean government………………………………………..Full Article: Source

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