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Commodities Briefing - Category | Investment more

Gold’s role as safe-haven investment wanes

Posted on 20 October 2015 by VRS  |  Email |Print

The price of gold, which typically swings with political, economic and inflationary threats, these days moves in step with a different force: the US Federal Reserve. Traders and analysts say the metal’s role as a safe-haven investment in times of turmoil has waned recently, with the price more likely to fluctuate on shifting expectations about when the Fed will raise rates.
Gold has rallied 5.3 per cent this month after a sour September jobs report in the US encouraged investors to bet there will be no hike this year. Higher rates, when they happen, are widely expected to undermine future demand for gold, which doesn’t pay interest so becomes less competitive against investments that do. Prices slumped to five-year lows in July when expectations for rate increase ran high………………………………………..Full Article: Source

Gold Stocks: The Ultimate Investor’s Guide to Gold

Posted on 19 October 2015 by VRS  |  Email |Print

Mankind’s fascination with gold is believed to have started more than 6,000 years ago when a culture centered in what is now Eastern Europe began to use it to fashion decorative objects. Since then, it has also been used as currency and is seen as a sign of affluence. Given its historical connections to wealth, gold continues to be an object that people desire to both grow and protect their riches.
What has changed over the years, however, is the fact that physical gold, whether it’s in the form of bullion, bars, coins, or jewelry, is no longer the only option for those seeking the profits and protection of gold. In addition to those physical options, we now have gold stocks, which come in their own variety of options, including a range of gold ETFs, mining companies, and mutual funds………………………………………..Full Article: Source

Puzzled investors halt bullion rally

Posted on 19 October 2015 by VRS  |  Email |Print

Last week, data releases in the US painted a mixed picture of the economy, making investors run hither and thither. Gold made a spectacular rally in the first four trading sessions of the week, touching a high of $1,191/ounce on Thursday, but later lost steam to close the week at $1,177/ounce, up only 1.8 per cent.
The Federal Reserve is closely tracking inflation and labour market data, but these data points are lately not leading to a cohesive picture on the economy. So, bullion investors have continued to obsess over the billion-dollar question on whether the Fed hikes its rate before the end of this year. The central bank’s next meeting is during October 27-28………………………………………..Full Article: Source

Mining industry ‘needs’ $205b in investment

Posted on 19 October 2015 by VRS  |  Email |Print

The mining industry needs to invest $US150 billion ($A205 billion) to meet expected demand or face shortages, according to analysts Wood Mackenzie. But before that happens Wood Mackenzie tips even more mine closures and cutbacks. It says about 500,000 tonnes of copper has to be cut from the market and more than half the global nickel production is at a loss.
It comes with Queensland’s economy taking a heavy hit from the slowdown in the state’s mining industry. Deloitte Access Economics, in a report out today, pointed out the slump in commodity prices and related profits meant “the chance of new mining and energy construction projects getting the go-ahead any time soon continues to fall”………………………………………..Full Article: Source

Now’s the time to invest in commodities and emerging markets, says Morgan Stanley

Posted on 15 October 2015 by VRS  |  Email |Print

Morgan Stanley has turned contrarian investor on emerging markets, saying now is the time to buy emerging market and commodity-exposed stocks and currencies while anticipating a sharemarket bounce to finish the year.
The US-based investment bank’s global strategy team doesn’t share market concerns that emerging markets, led chiefly by China, would send the developed world spiralling into a recession. “We believe [global economic] expansion is still in tact, with strong consumer trends in developed markets helping to offset the drag of [emerging markets] growth,” Morgan Stanley said in its updated Autumn Outlook paper………………………………………..Full Article: Source

Why There’s No Better Time to Buy Commodities

Posted on 14 October 2015 by VRS  |  Email |Print

Commodities haven’t just had a rough year. It’s been more like a rough half-decade, in which prices of raw materials and foodstuffs were halved. Once a mainstay ingredient in the investing soup, this asset class is now being shunned, and some people are making ever more bearish price forecasts. So is it time to jump back in and gain the well-documented investing benefits of adding metals, grains and energy into your investment pot?
Maybe so, and there are good reasons to consider it (plus some pitfalls to avoid). First, there is the broad reason to own commodities, which is to reduce risk. Because the prices of commodities tend to be uncorrelated with the prices of other assets such as stocks and bonds, the overall volatility of a portfolio tends to be lower. And because most investors define risk as volatility, when it is lower there is less risk………………………………………..Full Article: Source

Commodities: Time To Buy?

Posted on 14 October 2015 by VRS  |  Email |Print

“Commodities: Time To Buy.” That was the cover story of the August 7 edition of Barron’s, which went on, “The harsh selloff in energy, gold and other commodities is starting to look like capitulation.” We continue to disagree with this optimistic forecast for commodities.
Our August report, “Commodity Weakness Persist,” published at the same time as the Barron’s cover story, analyzed the many negative forces on commodity prices and concluded, “The aggregate CRB index is already down 57% from its July 2008 pinnacle and 45% since the more recent decline commenced in April 2011………………………………………..Full Article: Source

Investors expect gold buying in India to pick up as festival of Navratri is underway

Posted on 14 October 2015 by VRS  |  Email |Print

Demand in the Indian gold market is expected to strengthen over the next 10 days as the festival of good over evil known as Navratri is under way. The nine-night and ten day festival is deemed as an auspicious time for Indians, a time in which they purchase luxury items such as gold. Indians believe that buying such luxury items at this time generates growth and prosperity.
Abhishek Mehta, vice president of RiddiSiddhi Bullions, told IBTimes.co.uk: “The market has always seen the rise of gold price during Navratri and Diwali, being festive season, this is when people tend to buy more.”……………………………………….Full Article: Source

Commodities Rebound but Investors Remain Wary

Posted on 12 October 2015 by VRS  |  Email |Print

A commodity-sector rebound this week lifted raw-material prices, mining-company shares and the currencies of developing nations, the latest sign of the whipsaw trading that has racked markets this year.
Behind the past week’s recovery: tentative signs that China’s economy may be stabilizing after a decline in its growth rate, which could bolster demand for commodities. Many investors also cited a belief that ultralow interest rates will persist longer in the U.S., reducing further dollar appreciation. ……………………………………….Full Article: Source

Are commodities companies livin’ on a prayer?

Posted on 07 October 2015 by VRS  |  Email |Print

Investors have over the past week questioned if major commodities names are – to quote the 1980’s Bon Jovi hit — “Livin’ On A Prayer” if prices relapse or remain battered for years. Glencore has been in the thick of it defending its liquidity, debt maturities and bank loans after its stock tanked 29 per cent at the beginning of last week.
The startling capitulation came despite management seemingly warding off any threat by implementing a plan to tackle its $30 billion debt pile. Much to the relief of its investor relation’s team, a charm offensive at a swanky hotel in Mayfair elevated the flagging share price………………………………………..Full Article: Source

Global Oil to Cut Spending by $130 Billion, OPEC Says

Posted on 07 October 2015 by VRS  |  Email |Print

Global oil investments are set to be slashed by $130 billion this year, crimping supplies and ultimately boosting prices, the chief of the Organization of the Petroleum Exporting Countries said.
OPEC Secretary-General Abdalla Salem el-Badri said global investments in petroleum projects will be reduced by 22.4% to $521 billion in 2015. Lower supply will result in “less supply in the very near future. Less supply means high prices,” he said………………………………………..Full Article: Source

Gold investor flows increase, physical market soft: Barclays

Posted on 06 October 2015 by VRS  |  Email |Print

Investor appetite for gold increased at the end of September, seen in increased inflows into gold exchange-traded products, while physical markets remained weak with China on holiday and soft Indian demand, Barclays analysts said in a note Monday.
As of September 30, a total of 4.1 mt of gold was added to gold exchange-traded products, taking total holdings to 1,652 mt, according to Barclays. Given that the gold price fell than $30/oz during the period, “this may suggest investors are bargain buying, in contrast with the trend following flows so far this year,” Barclays said………………………………………..Full Article: Source

What are we to make of the commodity price meltdown?

Posted on 05 October 2015 by VRS  |  Email |Print

What has recently happened to commodity prices is a key indicator of the strains in the world economy, and perhaps a forecaster of the dangers that lie ahead. Equity markets have been generally weak, while Swiss commodity giant Glencore has seen its share price drop by two thirds. What are we to make of the commodity price meltdown?
Throughout our industrial history, concern about commodities has usually focused on anxiety about shortages and high prices. In the 19th century, the great British economist William Jevons forecast industrial growth would grind to a halt because of a shortage of coal. In the early 1970s, the Club of Rome forecast a serious shortage of all essential commodities would cause their prices to surge, thereby inhibiting, perhaps even stopping, economic growth………………………………………..Full Article: Source

Why investors need not fear a commodity meltdown

Posted on 05 October 2015 by VRS  |  Email |Print

The Glencore episode has stoked fears of another Lehman-like crisis, this time centring around commodity stocks. But investors do not have to worry too much, as the influence of commodity stocks on the Indian markets has been waning over the past seven years. Due to continuous underperformance, Indian investors have shifted their preference from commodities to bank and information technology stocks.
This shift is apparent from an analysis of the share in the market capitalisation of various stocks in the Nifty basket. The proportion of commodity stocks in the Nifty basket stands at 12.6 per cent, based on the free-float market cap. This is down sharply from the 19 per cent at the end of June 2014, when the sharp decline in commodity prices began………………………………………..Full Article: Source

A silver lining for commodity investors?

Posted on 02 October 2015 by VRS  |  Email |Print

It’s been a brutal year for those whose fortunes depend on commodities, but other years of steep losses may offer something to cling to. Four of the five worst years for the S&P GSCI total return index, which tracks the price of 24 commodities, were followed by a bounce for the index, according to S&P Dow Jones Indices.
Here’s a look at that record: The index fell 46.5 per cent in 2008, its biggest drop on record, and was followed by a 13.5 per cent gain in 2009. After falling 35.8 per cent in 1998, the index gained nearly 41 per cent in 1999………………………………………..Full Article: Source

Sell gold if it dips to $1,104/oz

Posted on 02 October 2015 by VRS  |  Email |Print

Comex gold futures were lower on Thursday following its biggest quarterly loss in a year, after upbeat US jobs data boosted speculation that the Federal Reserve could press ahead with an interest rate hike this year. Comex gold futures moved perfectly in line with our expectations.
As mentioned in the previous update, as per the price structure, there is a chance for the uptrend to resume higher once prices cross $1,130-35 levels. Prices found strong resistance near $1,150 and could not capitalise on the gains. The present state of charts looks mixed, but not yet displaying any clear trend either ways………………………………………..Full Article: Source

Have Commodities Bottomed?

Posted on 01 October 2015 by VRS  |  Email |Print

Commodity prices have been heading lower for more than four years, and according to data accessible via Bloomberg, commodities have been the worst performing asset class of 2015, with the most severe losses in cyclical commodities, such as oil and industrial metals. Based on the Bloomberg Commodity Index, the commodity asset class is now down roughly 50 percent from its 2011 high.
It’s no wonder, then, that many investors are asking me: Have commodity prices reached a bottom? My take: It’s still probably too early to call a bottom. As I write in my new Market Perspectives paper, “Can Commodities Come Back?”*, commodities have been hurt by several, interrelated supply and demand trends, none of which appears to be going away anytime soon………………………………………..Full Article: Source

Commodities Are Collapsing; Now is the Time to Buy

Posted on 30 September 2015 by VRS  |  Email |Print

Joe Kennedy once famously said that he knew it was time to exit the stock market when his shoeshine boy offered him a stock tip. That principle, that when financial news and opinions become mainstream, the move is over, can also be applied in reverse. The collapse in commodity prices and in the stock of companies in the associated industries is nothing new.
It started when oil began its dramatic fall over a year ago and has continued ever since, fueled by fears about slowing global growth and a relatively high dollar. In the last couple of weeks, however, it seems to have passed into the mainstream. It seems that every news bulletin and publication has a story about the death of commodities right now, which, to a contrarian with an understanding of history, suggest that now is a good time to be buying………………………………………..Full Article: Source

Investors: Get Ready for an Even Deeper Commodities Slump

Posted on 30 September 2015 by VRS  |  Email |Print

The sharp collapse in commodities continues to worsen. The Scotiabank Commodity Price Index for August 2015 has fallen by 10.5% month over month, and the bad news doesn’t stop there. The index is now 14% lower than it was in August 2009 at the height of the global financial crisis, and there are signs that commodity prices will sink even lower. Let me explain.
Now what? The key driver of the pessimism surrounding the outlook for commodities rests squarely with concerns over China’s economy. Not only is 2015 GDP growth forecast to be at its lowest level in over two decades, but a number of crucial economic sectors that support the demand for commodities appear to be caught in protracted slumps………………………………………..Full Article: Source

What Oil Investors Can Learn From Gold

Posted on 30 September 2015 by VRS  |  Email |Print

Commodities investors had been riding on momentum for years and with a diminishing supply of the product coming from producers, prices seemed destined to keep rising for the foreseeable future. Then in the span of a few months, the commodity’s price crashed and billions upon billions in investment value and producer company market capitalization was wiped out.
For many energy investors, this story might sound familiar. But it’s not the story they are thinking of. In 2013, after a price run-up that had lasted for a decade, investors in gold found out that the precious metal was not as safe as many had assumed. Gold is supposed to be the ultimate safe-haven asset………………………………………..Full Article: Source

Gold price: ‘safe haven’ busted by commodities rout

Posted on 30 September 2015 by VRS  |  Email |Print

Equities are in sharp reverse in yet another knock to investor confidence. And gold, once seen as a safe haven, is no exception to this downward slide. “This is when you know it’s bad,” says Business Insider‘s Myles Udland.
In truth, gold was not expected to rise substantially any time soon, given the widespread belief that a rates rise might be looming. But gold was expected to hold steady in a narrow range while wider markets swung wildly. Instead the precious metal slumped by around $20 on Monday to $1,127 an ounce. ……………………………………….Full Article: Source

Big Investors’ Take on Precious Metals

Posted on 24 September 2015 by VRS  |  Email |Print

The ongoing commodity rout has grabbed the attention of a few prominent investors in the market. Precious metals have taken a nosedive, with gold falling 6.5% and silver close to 7% on a YTD basis. Platinum and palladium have fallen even further by 20% and 26%, respectively.
Gold and gold investment, specifically, lacked luster during the past few months as investors anticipated an increase in the interest rate. Gold-backed leveraged ETFs such as the Direxion Daily Gold Miners 1 (NUGT) have considerably underperformed the backing metal. It lost a whopping 77% on a year-to-date basis. The leveraged ETF tracking silver investments, Proshares Silver Trust (AGC), has comparatively fallen less. It has fallen 20% on a year-to-date basis………………………………………..Full Article: Source

Commodity index investing debate reignites

Posted on 21 September 2015 by VRS  |  Email |Print

As investments go, commodities have proven such a dog they almost seem not worth arguing about. Once-popular theories — that central bank money printing would inflate hard assets, or that China’s appetite for commodities was bottomless — have dissipated like natural gas from a poorly sealed well.
The Bloomberg Commodity Index, a basket of 22 futures contracts, is scraping the lowest levels in more than a decade. The benchmark chalked up a total return of minus 42 per cent over the past decade, even as the world burnt a tenth more oil and digested two-fifths more corn………………………………………..Full Article: Source

Rough ride ahead for bullion investors

Posted on 21 September 2015 by VRS  |  Email |Print

Precious metals won a reprieve this week after the US Federal Reserve voiced concerns about the weakness in the global economy and left its rates unchanged. Gold ended at $1,139/ounce, up 2.8 per cent for the week. Platinum closed at $981.8/ounce, up 1.2 per cent. Silver gained about 3.8 per cent closing at $15.17/ounce.
While the US unemployment rate fell to the central bank’s target of 6.5 per cent more than a year ago and is now at 5.1 per cent, still-low inflation, sluggish wage growth and the mayhem in global financial markets saw the Fed defer rate hikes. However, given that pressures are mounting on the central bank to lift rates, there is expectation of one rate hike of at least 25 basis points before end of the year………………………………………..Full Article: Source

Time to Invest in Gold? Consider These Four Factors First

Posted on 18 September 2015 by VRS  |  Email |Print

The market expects gold to go lower as the Fed raises interest rates. That’s because gold pays no interest, unlike bonds. In fact, more than $2.6 billion was wiped from the value of gold exchange-traded products (ETPs) in just three weeks as investors awaited the Federal Reserve’s meeting. Ouch!
And in all, since gold entered a bear market in April 2013, a whopping $54 billion in value has bled out of gold ETPs. Holdings in bullion products fell to 1,508.2 metric tons on August 11. That’s the lowest since 2009. As the saying goes, trying to catch a falling knife is a good way to end up with bloody fingers…………………………………Full Article: Source

Economic Data Suggesting Commodities Are Worthwhile Investment

Posted on 15 September 2015 by VRS  |  Email |Print

The Bloomberg Commodity Index (BCOM), which tracks 22 different commodities, is trading at the lowest levels since 2002 (below). The relationship between the US dollar and commodities is generally negatively correlated; with a strong US dollar, commodities have fallen.
This weakness in commodities, however, indicates that the global economy remains fragile with growth either slowing or not present at all in many countries. For investors, this weakness presents an opportunity………………………………………..Full Article: Source

Why Commodities And Precious Metals Are True Contrarian Opportunities

Posted on 15 September 2015 by VRS  |  Email |Print

Investors tend to make ‘contrarian’ investing choices too early in the cycle. Basically, the price of an asset can be trending higher, lower or sideways. When an asset is declining in price, it remains in a downtrend until proven otherwise. The chance of a trend change is much smaller than the trend continuing.
In other words, being ‘contrarian’ is difficult, and the pitfall is that an investor may be too early with his contrarian call. Our experience shows that a good contrarian call is based on a set of indicators, including price and technicals, investor and media sentiment, and opportunity costs………………………………………..Full Article: Source

It’s Time To Buy Commodities

Posted on 14 September 2015 by VRS  |  Email |Print

Commodities have been hammered by nearly 45% as the dollar has strongly rallied. The Federal Reserve is poised to increase the discount rate - an action which has historically driven the dollar weaker. Commodities and the dollar are inversely correlated - as the dollar falls, commodities will probably rise.
In case you’re just waking up, commodities are in the midst of one of the largest selloffs in several years. On a year-over-year basis, those even moderately exposed to the Goldman Sachs Commodity Index (a leading commodity index) have been heavily impacted by the commodity drop of nearly 45%. However, if you are an individual who likes profit (and who doesn’t?), you’re in luck………………………………………..Full Article: Source

Global oil glut set to grease the wheels of investment banks

Posted on 14 September 2015 by VRS  |  Email |Print

While it’s likely to deepen the despair of Australia’s oil minnows, the latest prediction that the oil price could fall as low as $US20 a barrel is sure to gladden the hearts of investment bankers, who are hoping to profit from more takeover activity in the embattled energy sector.
In a report released last week, Goldman Sachs analysts warn that oil prices “will be lower for even longer”, and may need to fall as low as $US20 a barrel to clear the huge glut in global markets. “The oil market is even more oversupplied than we had expected,” the report says………………………………………..Full Article: Source

Gold Rebounds as Investors Wait for Fed Decision

Posted on 11 September 2015 by VRS  |  Email |Print

Gold prices nudged higher on Thursday as a weaker dollar lent support to the market and some investors recalibrated their views on U.S. interest rates. The most actively traded contract, for December delivery, rose $7.30, or 0.7%, to settle at $1,109.30 a troy ounce on the Comex division of the New York Mercantile Exchange.
The dollar retreated against other currencies after data showed prices for imported goods last month posted their largest drop since January, a sign that inflation in the U.S. remains mild. The report revived the argument that the Federal Reserve would stand pat on rates at next week’s monetary policy meeting, as officials have expressed concern that inflation remains stubbornly low………………………………………..Full Article: Source

Is Gold Still a Safe Haven?

Posted on 11 September 2015 by VRS  |  Email |Print

A safe haven is an investment that is expected to retain its value during times of market turbulence or economic uncertainty. Therefore safe haven investments provide a low level of risk for investors. Conventional wisdom considers gold a safe haven (alongside the US dollar, the Swiss Franc and US Treasury Bonds), an asset to which investors traditionally cluster when chaos threatens financial markets.
This is because, as a physical asset, the interest rate decisions of one country cannot manipulate its value, and its value cannot easily be changed by dramatically increasing supply to the same effect that printing more money creates. However, the days of gold being considered as a safe haven may be over………………………………………..Full Article: Source

If the Bear’s Near, Which Assets Protect You?

Posted on 10 September 2015 by VRS  |  Email |Print

Realistic investment expectations are always important. But they are especially so now, since market drops have suddenly rekindled investors’ memories of bear markets. After several bracing declines for stocks, the question for investors now is: What should they expect when the next bear market comes along—if it isn’t already here? And how can they protect themselves?
The answer to the first question: Expect stocks to fall across the board. In other words, don’t expect to avoid losses on investments in “defensive” sectors of the market. The answer to the second question: There might be some safety in gold and other commodities—or there might not. The surest way to avoid losing money in a bear stock market is to invest in bonds………………………………………..Full Article: Source

Big name investors are getting bullish on commodities

Posted on 10 September 2015 by VRS  |  Email |Print

A few legendary influencers in investing are making huge bets right now on commodities, an area that’s faced—and continues to face—some pretty strong headwinds. What are we to make of this? I already shared with you that famed hedge fund manager Stanley Druckenmiller made a $323-million bet on gold, now the largest position in his family office fund.
It’s also come to light that George Soros recently moved $2 million into coal producers Peabody Energy and Arch Coal. Meanwhile, activist investor Carl Icahn took an 8.5-percent position in copper miner Freeport-McMoRan, which we own………………………………………..Full Article: Source

India: No FPI Investment in Commodities Till Government Review

Posted on 10 September 2015 by VRS  |  Email |Print

Hopes of commodities market for FPI investment after coming under Sebi’s ambit later this month has been dashed by RBI, which has told the markets regulator to keep any such decision on hold till a policy review is done by the government in this regard.
While the government has issued notifications for merger of commodities markets regulator FMC with capital markets watchdog Sebi with effect from September 28, the revised norms for exchanges and various market participants were notified last month to pave way for the combined regulatory regime………………………………………..Full Article: Source

Dr Doom: there’s no safe asset in the world but…

Posted on 08 September 2015 by VRS  |  Email |Print

Marc Faber believes there is no safe asset class at the moment, although he thinks the mining sector now looks interesting. ‘I think that because of modern central banking and repeated monetary policy interventions there is no safe asset anymore,’ the author of the Gloom, Boom & Doom report told Bloomberg.
‘When I grew up in the 1950s it was safe to put your money in the bank on deposit, the yields were low but it was safe. [But] nowadays you don’t know what will happen next in terms of purchasing power of money, but what we do know is it’s going down.’ However, following the huge sell off in commodities, Faber believes there is in opportunity in the mining sector………………………………………..Full Article: Source

Gold’s ‘safe haven’ status tarnished by two week slump

Posted on 07 September 2015 by VRS  |  Email |Print

Gold’s safe haven appeal has been dulled after prices endured a two-week slump. Gold prices have endured a two-week slump after jobs data from the US kept an interest rate rise on the cards and dulled its appeal to would-be buyers.
The yellow metal, which is often viewed as a safe haven by investors, has slumped by $50, or 3.5pc, from a high of $1,170 per ounce on August 24, to close at $1,120 per ounce at the end of last week. The US Federal Reserve is still on course to increase the key central bank borrowing rate before the end of the year, and this will dull the precious metal’s appeal, as it offers no interest, or income, to investors………………………………………..Full Article: Source

Marc Faber Warns “No Safe Assets Anymore” So “Focus On Precious Metals”

Posted on 04 September 2015 by VRS  |  Email |Print

Respected economist and historian and the editor of the ‘Gloom, Boom & Doom Report’ Marc Faber warned on Bloomberg TV’s Market Makers yesterday that there are now “no safe assets” including deposits and said that he is focusing “on precious metals.”
In another informative and interesting interview, Faber spoke about dangerous central bank policies and the stupidity of QE, the cause of inequality including competitive currency devaluations and warned that even deposits are no longer safe………………………………………..Full Article: Source

Is Natural Gas the New Gold?

Posted on 28 August 2015 by VRS  |  Email |Print

When the market is shaky, seek safety in … natural gas. Wait – what? Citigroup Inc. is touting natural gas – a commodity so notorious for volatility that its most renown bet is called the “widow maker” – as a possible haven for investors weary of the market’s wild swings.
A sluggish global economy, a staggering China and plummeting oil prices have sent commodity, currency and stock markets spiraling this summer. But they mean very little for U.S. gas futures, which have been stable for more than two months and even briefly entered a bull market in the late spring………………………………………..Full Article: Source

Is gold back to being a safe haven?

Posted on 28 August 2015 by VRS  |  Email |Print

Gold prices have increased in August, recovering from a lacklustre performance over the last few years, after market volatility ramped up. While gold hasn’t been rising in tough periods as many investors would expect, it does appear that investors have been buying into the commodity this month, following a positive 3.35 per cent return from the S&P GSCI Gold Spot index.
The obvious guess as to why this is the case is the global volatility we have experienced in recent months. This came to a head on Monday, when the FTSE 100 had £74bn wiped off its value, the Dow Jones ended the day down 558 points and the Shanghai Composite dropped by 8.5 per cent………………………………………..Full Article: Source

Alternative investments: Helping investors weather the current market storm

Posted on 28 August 2015 by VRS  |  Email |Print

The recent sharp sell-off in global equity markets has focused investors on the importance of holding diversifying investments that can help mitigate volatility and potentially cushion their portfolios during times of market stress. Given their unique nature, alternative investments are proving to be useful tools to help investors weather the current market storm.
As the chart1 below illustrates, a basket of alternatives — based on Invesco’s alternatives framework as explained in my previous blog post How to approach the alternative investments puzzle — has historically delivered equity-like returns with low levels of volatility (as measured by standard deviation) and lower maximum……………………………………….Full Article: Source

Why gold was the best buy in 2008-9 crash and will be this time too

Posted on 27 August 2015 by VRS  |  Email |Print

What was the best asset class to buy for the recovery that followed the 2008-9 crash in global financial markets? Step forward gold whose rise was only exceeded by silver. Precious metals not only delivered the fastest recovery from that huge sell-off but offered increases way above the pre-crash levels.
Gold tripled from its low in the crash, while silver went on to record an eight-fold increase, still just shy of its 1980 all-time high. It is not hard to see history repeating itself all over again. Just look at the Chinese central bank this week cutting interest rates, just like the Fed had to do in 2008-9………………………………………..Full Article: Source

Gold Outlook – Not a Safe Haven Anymore?

Posted on 26 August 2015 by VRS  |  Email |Print

Gold rallied from the July lows of $1077 to test the $1167 level. Gold is believed to be a safe haven where investors put their money during periods of economic uncertainty. During the last economic recession, gold price rallied to over $1920. Unfortunately, this level has been the highest price since 2011.
The introduction of Quantitative Easing by the FED in order to stimulate the economy has eventually put gold in a bear market. The market is anticipating a rate hike from the FED as early as September. This is bad news for gold bulls because it will have a negative impact on the price of gold. This means that gold prices are more likely to go lower than we saw in July………………………………………..Full Article: Source

Commodity Hedge Funds Lose Most in Three Years as Rout Deepens

Posted on 25 August 2015 by VRS  |  Email |Print

Hedge funds betting on commodities lost the most in almost three years in July as the price-rout deepened. Funds lost money for a third month, according to the Newedge Commodity Trading Index, which was released to investors Friday and tracks the performance of raw-material trading strategies including equities and physical products.
The 1.3 percent decline was the most since October 2012 and the index is down 2.4 percent this year. A slide in everything from oil to metals pushed commodity prices down the most since 2011 in July. Managers are losing money and commodity funds at Cargill Inc. to Armajaro Asset Management LLP closed this year as China’s slowing economy adds to the global glut in most raw materials. Glencore Plc shares are at a record low, and oil and copper prices dropped to the lowest in six years………………………………………..Full Article: Source

What risks does the commodities slump pose for income investors?

Posted on 21 August 2015 by VRS  |  Email |Print

Eric Moore, manager of the Miton Income fund, looks at how major resources companies are responding to price falls. Some of the biggest changes in global markets over the last 12 months have come in commodity markets. Compared to a year ago, gold is down 15%, copper is down over 25%, sugar is down by a third, iron ore is down over 45% and the oil price has halved. These are massive moves, which have equally massive implications for equity investors.
For starters, ‘Dr Copper’ and his fellows are suggesting all is not well with aggregate demand, which does not chime with an equity market that remains keen to anticipate a sustained recovery………………………………………..Full Article: Source

Climate philanthropist George Soros invests millions in coal

Posted on 20 August 2015 by VRS  |  Email |Print

Billionaire has previously funded renewable energy and low-carbon initiatives and has called coal a ‘lethal bullet’ for climate change. Billionaire climate philanthropist George Soros invested more than $2m (£1.3m) in struggling coal giants Peabody Energy and Arch Coal in recent months, despite having once called the fuel “lethal” to the climate.
Filings with the Securities and Exchange commission show that between April and June this year Soros Fund Management (SFM) bought more than 1m shares in Peabody ($2.25m), the world’s largest private coal company, and 500,000 shares in Arch ($188,000)………………………………………..Full Article: Source

Commodities investors adapt, but don’t add allocations - Pimco

Posted on 19 August 2015 by VRS  |  Email |Print

Commodities investors are altering their exposure to the asset class following the recent price declines, but aren’t boosting allocations and don’t look likely to for now, a senior executive at Pimco told Metal Bulletin. Nicholas Johnson, an executive vp and portfolio manager focusing on commodities and multi-asset portfolios, said that investors were trying to change their exposure “at the margins.” “Some investors are saying they are exposed to too much volatility and would prefer a lower volatility.
“We see some interest from investors to mix their commodity beta – so investment in the S&P Goldman Sachs Commodity Index, and a commodity hedge fund,” he said. “The idea of this is that the investor will have some commodity beta but they also have some absolute return, so together they lower volatility and they probably have a little better return expectation. We do see some people who were all beta before now going to a mix of beta and hedge funds,” he noted………………………………………..Full Article: Source

China Devaluation Sparks Gold Buying Everywhere - Except China

Posted on 19 August 2015 by VRS  |  Email |Print

After last week’s surprise yuan devaluation investors everywhere were eager to buy gold as a haven. Everywhere, that is, except in China. Huaan Yifu Gold ETF, the bullion exchange-traded product with the biggest volume in China over the past month, posted a third straight weekly outflow as of Aug. 14. The withdrawal came even as global ETPs posted the first increase of assets since late June. Holdings in the Chinese fund are heading for the first monthly loss since April.
Gold prices in New York have climbed about 1 percent since Aug. 10, the day before China carried out its first major devaluation of the yuan since 1994 in a bid to promote domestic economic growth. While the currency move spurred some investors to seek shelter from volatility across equity and commodity markets, it also shored up confidence among Chinese buyers, dimming the haven appeal of precious metals in the nation………………………………………..Full Article: Source

Investors need positive commodities news to lure them back

Posted on 14 August 2015 by VRS  |  Email |Print

Investors will need to see some positive news in the commodity markets before they return to the asset class, the ceo of Tiberius Asset Management AG said. According to Christoph Eibl, who founded the company in 2005, about 90% of its investors have reduced their commodities exposure or left the space altogether in the past few years since 2011.
“When a client has to report its eighth quarter in a row of a decline in commodities prices at its quarterly investment meetings, there is eventually a question as to why it is invested in that asset class. There are certain points when you don’t want to hear that question any more, and you sell,” he said………………………………………..Full Article: Source

Best time to save and invest as gold price drops

Posted on 14 August 2015 by VRS  |  Email |Print

The price of gold dropped in the past week in what is considered the sharpest drop in the past 16 years. Financial analysts consider this development as a result of the crisis in the European Union. However, this is also considered a great period for personal savings and investments, as well as increased competition among gold shops. Media reports confirm that gold prices are not expected to drop bellow $1,000 an ounce.
Abdullah Al-Ammari, the CEO of Salim Hassan Al-Amari and his brother’s company, said that the local market has witnessed an increase in demand for 50 and 200 grams gold bullions. He noted that the drop in prices is a great opportunity to make savings as an investment………………………………………..Full Article: Source

Investors Should Hold Onto Gold Despite Expected Fed Rate Hike

Posted on 14 August 2015 by VRS  |  Email |Print

Gold seems to be falling out of favor with investors amid a looming rise in return on US debt as the US Federal Reserve is expected to announce an increase in its federal funds rate; however, the Head of Commodity Research at Germany’s Commerzbank has advised investors to hold on to the precious metal rather than sell it.
Gold seems to have fallen out of favor with investors as US Federal Reserve Chair Janet Yellen is expected to raise rates at its next policy meeting in September on the back of an improving American economy, boosting the dollar………………………………………..Full Article: Source

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