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Author Archives | VRS

VRS - who has written 36685 posts on Opalesque Commodities Briefing.


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All’s Fair In Love And War And Oil

Posted on 27 August 2014

An Iraqi Kurdish crude oil tanker has been seen floating off the coast of Israel after offloading its cargo, ship tracking data has shown. If true, the transaction would be in open defiance of Baghdad, with whom Israel has no diplomatic or commercial relations. Furthermore, any commercial transaction between an Arab country and Israel violates the ruling of the Arab Boycott Bureau that bans all commercial exchanges with the Jewish state.

IEA: U.S. LNG won’t matter much for Europe

Posted on 27 August 2014

Liquefied natural gas sent from North America to European markets likely won’t make much of a regional difference, the director of the IEA said from Norway. International delegates are gathered for an annual energy conference in Stavenger, Norway. The theme for the ONS conference, organizers said, is change.

Gold price lifted out of danger zone

Posted on 27 August 2014

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery on Tuesday attempted a comeback of sorts, recovering from a two month low. By the close of regular trade gold was changing hands for $1,285.20 an ounce, up over $6, after earlier hitting a day high of $1,291.90. The gains follow six weak sessions which saw the metal lose 2% in value.

India’s Appetite for Gold Improves

Posted on 27 August 2014

As gold prices linger near a two-month low, demand in Asia has started edging higher with buyers in India increasing purchases ahead of a Hindu religious festival this week. The mark up to global gold prices, known as a premium, that Indian consumers pay has climbed to $10 to $13 a troy ounce from zero in July, a sign that appetite for gold is picking up in the world’s second-largest consumer of the precious metal.

Is Asian gold demand really slipping so much?

Posted on 27 August 2014

By all accounts in the mainstream media, gold demand in Asia, and in particular in China and India, has been slipping dramatically this year which some see as the principal reason behind current price weakness. But all may not be as the reports suggest. Is Chinese demand, as suggested by the enormous slippage in gold imports though Hong Kong really as bad as the figures appear to show?

How The Coming Silver Price Bubble Will Develop

Posted on 27 August 2014

What is an asset bubble? An asset bubble occurs when a large number of buyers, normally not usually prone to speculate in an asset, bid the price of that asset much higher than underlying valuations would support, most often fueled by leverage or borrowed money. Typically, towards the terminal phase of the bubble the most compelling reason for continuing to buy the asset is due to the rising price itself, as all caution is thrown to the wind amid the collective belief that prices can only move higher still.

How to Invest in Silver Today for Double-Digit Gains

Posted on 27 August 2014

If you’ve been watching silver for some time, you know it’s been in the doghouse. After peaking at $49 back in April 2011 the white metal is down 60%, having languished between $19 and $22 for the past two years.

Why Gold And Silver Prices Are Range-Bound

Posted on 27 August 2014

Frustrated investors in physical gold and its derivative asset classes have fumed quietly as a mal-regulated market for counterfeit gold and silver (futures contracts, certain ETFs) leads precious metals prices around by the nose for the exclusive enrichment of an elite cadre of financial institutions.

Platinum giants still to struggle

Posted on 27 August 2014

A combination of labour issues, various spats with government and a number of operational issues are not yet behind Lonmin, Impala Platinum and AngloPlats and investors should be wary of committing to buying shares despite a recent recovery. Lonmin in particular was one of the big movers in Europe last week, rising just over 5%. But Peter Garny, head of equity strategy at Saxo Bank was not convinced.

Fund Managers Cut Most Precious Metals Positions In Latest CFTC Data

Posted on 27 August 2014

Large speculators cut their net-long gold futures and options holdings on the Comex division of the New York Mercantile Exchange in the latest Commodity Futures Trading Commission data for the week ended Aug. 19, reversing some of the gains established in the last report.

Global Copper Deficit May Support Prices – Morgan Stanley

Posted on 27 August 2014

The global copper market is at its biggest deficit in seven years, says Morgan Stanley, citing data from the International Copper Study Group. The group says the copper deficit is 466,000 metric tons for the January-May timeframe, versus a 250,000 surplus in the same period of 2013, Morgan Stanley says, while adding its full-year forecast is for a 90,000 ton deficit.

Commodities: Iron ore prices fall towards 2009 lows

Posted on 27 August 2014

Front month West Texas crude futures ended the session just barely higher, up by 1 cent at $93.35 per barrel on the NYMEX. To be had in account, militants in Libya took control of the Tripoli airport, underscoring the still tenuous security situation in the North African country - from which oil exports have recently increased moderately.

Big miners cause iron ore plunge

Posted on 27 August 2014

The big miners, rather than slowing growth in China, are being blamed for the steep fall in the price of Australia’s top export, iron ore. However it is unlikely they are worried about it. Iron ore fell below $US90 a tonne on Monday for the second time this year, selling for $US89.20.

Accessing Pimco’s Alpha Via ETFs

Posted on 27 August 2014

After launching the actively managed Pimco Total Return ETF (BOND | B)—an ETF version of Pimco’s flagship Total Return Fund (PTTRX)—in February 2012, Pimco is looking to strike it big again in ETFs. BOND was the second-most-successful ETF launch in the 21-year history of ETFs, gathering its first $1 billion in less than three months. Pimco in a recent regulatory filing has detailed a similar approach as it took with BOND, replicating three existing mutual funds in tradable ETF wrappers.

Why you should invest in ETFs

Posted on 27 August 2014

Exchange traded funds are the next big thing, a product which should have done well earlier but will definitely do now. Just as the name suggests, an exchange-traded fund, or an ETF, is essentially a fund that is traded on the exchanges. Since it trades like an equity share, it is easy for all investors to buy and sell.

Coffee ETNs Surge on Pessimistic Brazilian Harvests

Posted on 27 August 2014

After pulling through its worst drought in decades, Brazil, the world’s largest supplier of coffee, is expected to experience an extended period of poor harvests, boosting coffee futures and related exchange traded notes.

London Metal Exchange dismissed from U.S. price-fixing lawsuits

Posted on 27 August 2014

A judge has dismissed London Metal Exchange Ltd as a defendant from U.S. antitrust litigation accusing banks and commodity companies of conspiring to drive up aluminum prices by restricting supply, hurting manufacturers and purchasers.

Soybean Futures Prices Tumble to Nearly Four-Year Low

Posted on 27 August 2014

Soybeans fell to their lowest intraday price for a front-month contract in almost four years, as September futures near expiration, spurring investors to close out their positions. The so-called first-notice day is Friday, when investors who had bought contracts betting on rising price trend may be required, depending upon terms of their original transaction, to take delivery of the soybeans.

Cutting edge: Incorporating forex volatility into commodity spread option pricing

Posted on 27 August 2014

In this article, Joseph Yechong Chen extends Kirk’s formula to spread option pricing when forex is a stochastic factor and is multiplied to one leg in the payoff formula. The article illustrates the importance of forex risk factors and the need to include them in the business strategies of asset acquisitions and divestitures

Rising risk of currency market volatility

Posted on 27 August 2014

The biggest threat to investors may come from the foreign exchange market rather than the stretched prices of equity and bond markets. Judging by recent policy and technical signals, the forex market may be about to exit an unusual phase of low volatility.

What Price Carbon? Industry’s Hand in Rise And Fall of Australia’s Climate Change Law

Posted on 27 August 2014

When Australia’s Prime Minister Tony Abbott last month steered through Parliament repeal of the country’s carbon pricing mechanism, he was cheered on by business associations representing major international and domestic companies. They had campaigned hard for repeal of the scheme, which required about 360 large emitters to pay a fixed price for their emissions, with the intent of moving to a floating price by mid-2015.

EU carbon prices edge lower ahead of increased supply

Posted on 27 August 2014

European carbon prices edged lower in thin trade on Monday ahead of an increase in supply from government sales of carbon allowances. Front-year EU Allowance (EUA) futures closed at 6.34 euros, down 4 cents on Friday’s settlement.

Commodities Rally Is Half-Baked

Posted on 26 August 2014

It all started so well: a surprise drop in Treasury yields, expectations of accelerating economic recovery, and more than a dash of geopolitical turmoil. Yes, 2014 was shaping up to be a good year for commodities. And indeed, the first half was more than acceptable. At 7.1%, the recently renamed Bloomberg Commodity Index (formerly the Dow Jones- UBS index) had its best six-month period since the latter half of 2010 and its best first half since that of 2008, when the supercycle’s ascent seemed unstoppable.

Commodities Attractive As Stocks Smash Highs

Posted on 26 August 2014

Most financial advisors suggest that their clients diversify across asset classes, with only the percentages of stocks, bonds, gold and other assets as a matter for debate. I won’t wade into the latter discussion, but the charts suggest that commodities as an asset class may be ready to play a greater role.

Commodity Index Turns Negative On The Year As S&P 500 Breaks 2,000

Posted on 26 August 2014

One of the main commodity indexes, the Bloomberg Commodity Index is in the red for the first time year-to-date as equity markets post record highs, analysts said.

Saudi Aramco CEO says OPEC will take oil price “as it comes”

Posted on 26 August 2014

The global oil price is market driven, fluctuating with supply and demand and the Organization of the Petroleum Exporting Countries or the International Energy Agency should not try to control it, the chief of Saudi Arabia’s state oil producer said.

IEA Chief Says Europe Must Rely on Russian Gas

Posted on 26 August 2014

Europe has limited options for finding natural-gas supplies from outside of Russia despite tensions over Ukraine, the International Energy Agency’s chief executive, Maria van der Hoeven, said on Monday. “In the short term, Europe has very, very little means to diversify its gas imports,” Ms. van der Hoeven said on the sidelines of the Offshore Northern Seas energy conference. “As far as we can see, Russian gas will be needed in Europe.”

Low Oil Prices Could Crush Russian Economy

Posted on 26 August 2014

Oil remained under pressure from plentiful supplies and October Brent crude eased 18 cents to $102.11 a barrel. WTI crude lost 18 cents to $93.47 a barrel. As tensions around the globe continue to escalate oil supplies remain higher than expected.

Gold Rising-Rate Fallacy

Posted on 26 August 2014

Gold has slid during this past week on mounting fears of interest-rate hikes. Between the latest FOMC meeting’s minutes and the Fed’s annual Jackson Hole Economic Policy Symposium, American futures speculators’ rising-rate phobias have been whipped into a fever pitch. They worry gold will be crushed when the Fed eventually starts normalizing rates. But history shatters this fallacy that rising rates are gold’s nemesis.

Gold likely to find limited support on downside: Barclays

Posted on 26 August 2014

Gold is likely to find limited support on the downside in the absence of firm physical demand coupled with muted investor appetite, a report by Barclays said. Gold prices dropped to two-month lows, remaining below the $1300/oz mark last week following stronger-than-expected data from the US and hawkish comments from the Fed.

Gold price drops to near 2-month low

Posted on 26 August 2014

Gold held close to its lowest in two months on Monday, as the dollar marched higher after central bank heads signaled that interest rates were set on a diverging course in the United States, Europe and Japan.

Gold Speculators Reduce Positions

Posted on 26 August 2014

Investors are exiting the Gold market on speculation that signs of sustained U.S. economic growth will push the Federal Reserve closer to raising interest rates, cutting demand for bullion as an inflation hedge.

Platinum giants still to struggle

Posted on 26 August 2014

A combination of labour issues, various spats with government and a number of operational issues are not yet behind Lonmin, Impala Platinum and AngloPlats and investors should be wary of committing to buying shares despite a recent recovery.

Fund Managers Cut Most Precious Metals Positions In Latest CFTC Data

Posted on 26 August 2014

Large speculators cut their net-long gold futures and options holdings on the Comex division of the New York Mercantile Exchange in the latest Commodity Futures Trading Commission data for the week ended Aug. 19, reversing some of the gains established in the last report.

Hedge Fund Citrine Sees Zinc, Nickel as Best Base Metal Bets

Posted on 26 August 2014

Zinc and nickel will probably lead advances in base metals next year as global demand outstrips production, according to Paul Crone, chief investment officer at Citrine Capital Management LLC.

Aluminum Inventory: The Elephant in the Commodity Metals Room

Posted on 26 August 2014

OK, so what’s happening on the LME’s largest contract, primary aluminum? The cash to three months spread is down to just $17/ton and 118,850 tons of metal sitting in the exit queue at Vlissingen, Netherlands, has just been put back on the market according to a Thomson Reuters report by Andy Home.

Peru to become world’s second-largest copper producer

Posted on 26 August 2014

Peru is set to become the world’s second-largest copper miner, behind neighbouring Chile, thanks to a $20bn pipeline of Chinese mining projects, according to senior officials in Lima. Last month’s $7bn acquisition of Glencore’s Las Bambas copper project in Peru by China Minmetals’ MMG subsidiary has reinforced the links between the two countries, as Beijing seeks to secure more resources to drive economic growth.

As Commodity Prices Slide, Big Miners Seek a Sustainable Strategy

Posted on 26 August 2014

Navigant Research’s report, Renewable Energy in the Mining Industry, summed up the state of the global mining business: “In the last decade, increased demand from countries such as China and other emerging economies pushed the price of many metals and minerals upward, which stimulated investment in the mining industry.

ETF Managed Portfolio Landscape Sees Consolidation

Posted on 26 August 2014

Assets in ETF managed portfolios remained flat in the second quarter, according to a new report. But a dive beneath that bland finding reveals a more interesting nugget about this fast-growing subindustry: Investor dollars are increasingly concentrated in the hands of a select few firms.

Target Date Closures Highlight ETF Limits

Posted on 26 August 2014

The world’s largest ETF issuer, BlackRock, is closing 10 target-date ETFs for lack of interest. And that’s a shame. The ETFs have been efficient, low-cost vehicles providing a complete long-term investment solution. Funds like the iShares Target Date 2020 ETF (TZG) delivered thoughtful allocation to broad asset classes like stocks and bonds, as well as diversified exposure within each asset class.

Egypt seeks to have first, biggest commodities exchange in MENA

Posted on 26 August 2014

Egypt plans to launch the first and biggest commodities exchange in the Middle East in the coming period, said Minister of Supply Khaled Hanafy. The Egyptian minister further elaborated in a telephone interview with Al-Hayat TV channel on Saturday, that Cairo city would be the hub of contracting, trading, receiving and distributing the grains.

Are We At The Beginning Of A Bear Market In Commodity Prices?

Posted on 26 August 2014

A cyclical bull market in commodities began right after the start of the new millennium. Many commodity prices zoomed to new actual all-time highs, not adjusted for inflation. Consider that crude oil, which peaked at $41.15 per barrel prior to 2004, reached over $147 in 2008. Today it remains over the $90 per barrel level — more than double the pre-2004 high.

Opposition to currency union with Scotland is a bluff, says top economist

Posted on 26 August 2014

Nobel prizewinner Joseph Stiglitz also accuses Scotland’s finance sector of using scare tactics over independence. Prof Joseph Stiglitz, the Nobel prize-winning economist, has accused David Cameron’s government of bluffing over its opposition to a currency union with an independent Scotland.

What is carbon-pricing and why do we need it?

Posted on 26 August 2014

Carbon pricing systems around the world are delivering economic benefits and addressing climate change. But more needs to be done to raise political and corporate support. A dangerously warming planet is not only an environmental challenge, it’s a fundamental threat to efforts to end poverty and could put prosperity out of reach of millions of people. If you need further evidence, read the recent Fifth Assessment Report from the Intergovernmental Panel on Climate Change.

EU carbon prices edge lower ahead of increased supply

Posted on 26 August 2014

European carbon prices edged lower in thin trade on Monday ahead of an increase in supply from government sales of carbon allowances. Front-year EU Allowance (EUA) futures closed at 6.34 euros, down 4 cents on Friday’s settlement.

World events to spark fall commodities rally

Posted on 25 August 2014

When asked what the current geopolitical landscape spells for commodities, Jeb Handwerger, editor of Gold Stock Trades says that all the uncertainty in the world right now is fuel for the precious metals and the energy sectors. Looking back on history, Jeb claims that the invasion of Iraq in 2003 proved to be a huge boost for the junior resource companies and precious metals.

JP Morgan: The best way to invest in commodities

Posted on 25 August 2014

It has been a rocky summer for global equity markets with escalating geopolitical risk and some investors fearing the consequences of interest rate rises, the natural resources sector has actually strongly outperformed global equities.

Water: The World’s Most Important Commodity

Posted on 25 August 2014

It’s quite the strange duality when you think about it. Undoubtedly, water is the single most important thing on earth. Ok, so maybe it’s the second most important thing (sorry, oxygen) – but you get the idea.

Hedge Fund Crude Bets Tumble Amid Surging Global Supply

Posted on 25 August 2014

Speculators are the least bullish on U.S. crude oil prices in 16 months as refinery maintenance weakens demand at a time when Libya and Iraq are swelling global supplies.

The 3 Most Serious Threats Facing Big Oil Companies

Posted on 25 August 2014

At first glance, the future may look pretty bright for the large Western integrated oil companies like ExxonMobil, BP, Royal Dutch Shell, and Chevron – collectively known as Big Oil. Oil prices have risen dramatically over the past decade and continue to hover just above $100 per barrel, while US natural gas prices have rebounded nicely since hitting a low of under $2 per Mcf in the spring of 2012.

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