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Oil-Led Slump Spurring Fastest Investor Exit From Commodities Since 2008

Posted on 19 December 2014 by VRS  |  Email |Print

Investors are exiting commodities at the fastest pace in six years, betting a slump in prices isn’t over as corn, oil and gold drop close to their cost of production. Open interest in raw-material futures and options is down 6.5 percent since June, heading for the biggest second-half slump since 2008, exchange data show.
U.S. exchange-traded products tracking metals, energy and agriculture saw net withdrawals of $169.4 million in 2014, marking the first two-year slump since the funds were created a decade ago………………………………………..Full Article: Source

Commodities Drown in Oil

Posted on 19 December 2014 by VRS  |  Email |Print

Investing in an index is usually a good way to hedge your bets. In commodities, though, it is hard to get around one thing: energy. The oil market is enormous: Even after the recent slump in prices—and Thursday’s rally fizzled quickly–the notional value of annual oil consumption is around $2 trillion.
That is reflected in the make-up of the Bloomberg Commodity Index, of which oil and refined products such as gasoline constitute 17.2%. Throw in natural gas and the overall energy component rises to 27.2%. In another popular index, the S&P GSCI, oil alone weighs in at 67.2%………………………………………..Full Article: Source

Naimi: OPEC needs more support for output cutdown

Posted on 19 December 2014 by VRS  |  Email |Print

Saudi Arabia’s powerful oil minister said on Thursday that OPEC could not cut output without the support of other big producers and attempts to get them on board had not worked.
Ali al-Naimi said it was impossible for OPEC to cut alone to reverse the oil price slump—which he called temporary—when others were pumping more, saying that could lead to losing market share and with no guarantee of supporting prices………………………………………..Full Article: Source

Opec: Iran blames falling oil price on ‘political plot’

Posted on 19 December 2014 by VRS  |  Email |Print

Brent oil up in London as Iran’s oil minister turns up the pressure on Opec to act on falling prices. Iran’s oil minister has said that a “political conspiracy” is to blame for the dramatic slump in the price of crude in remarks that could signal that the Islamic Republic will try to exert pressure on the Organisation of Petroleum Exporting Countries (Opec) to again consider cutting output.
Bijan Zanganeh told the country’s state petroleum news agency: “The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes.”……………………………………….Full Article: Source

Will gold tarnish or shine in 2015?

Posted on 19 December 2014 by VRS  |  Email |Print

Resurgence in gold demand from China and India, the world’s biggest consumers, is set to restore some shine to the yellow metal in 2015 after a lackluster year. “Physical gold demand in China and India were held back in 2014 amid high stocks and import controls, respectively,” said Victor Thianpiriya, commodity strategist at ANZ. “Both these shackles have been removed, putting demand on a solid footing as we head into 2015.”
In China, physical gold demand will return because stocks are depleting, said Thianpiriya, who sees the precious metal ending 2015 at $1,280 an ounce, up from $1,200 currently………………………………………..Full Article: Source

Supply the key commodity driver as demand takes a back seat: Russell

Posted on 18 December 2014 by VRS  |  Email |Print

The big change in many commodity markets this past year was that demand is no longer king, with supply becoming the key driver, a dynamic that’s likely to persist in 2015. While this trend has been identified, it has not been well understood, with much market commentary still focused on the state of demand as the key determinant of commodity prices.
This has been especially the case with China, where concern over the slowing pace of economic growth has been used as an explanation for weaker commodity prices. The problem is that this analysis doesn’t stack up against commodity volumes being bought by China, the world’s largest consumer of natural resources…………………………………….Full Article: Source

Winners And Losers From The Oil Price Plunge

Posted on 18 December 2014 by VRS  |  Email |Print

World oil prices have plunged over the last six months with a surge in production and weaker than expected global demand. For several years, global oil prices were fairly stable, sitting at around $110 a barrel. But since June prices have almost halved to around $60 a barrel.
This is good news for countries which import oil, with motorists having to pay less to fill up their cars, but not for exporters, which have seen a significant drop in income…………………………………….Full Article: Source

Lead Touches Two-Year Low as Metals Fall Before Fed

Posted on 18 December 2014 by VRS  |  Email |Print

Lead prices dropped to a 28-month low on concern that demand will ebb in China, the world’s largest consumer, while some industrial metals fell on concern that the Federal Reserve is moving closer to boosting interest rates.
Yesterday, a Chinese manufacturing gauge in December fell to a seven-month low, a report showed. The Fed ends a two-day meeting today. Sixty-eight percent of economists surveyed by Bloomberg News said policy makers will drop a pledge to keep rates near zero percent for a “considerable time.” Nickel and tin prices dropped in London…………………………………….Full Article: Source

Fitch: Falling Commodities Prices Hit Australia’s Fiscal Outlook

Posted on 17 December 2014 by VRS  |  Email |Print

Australia’s fiscal outlook has weakened due to lack of support for spending cuts in the Senate and a sharp decline in key commodities prices that eroded the country’s terms of trade in 2H14, says Fitch Ratings. Further deterioration in commodities prices or continued objections to spending cuts in the Senate would pose risks to the fiscal outlook.
But Australia is still well positioned relative to other ‘AAA’ rated sovereigns due to its low general government debt ratio and government commitment to fiscal consolidation. The Treasury’s Mid-Year Economic and Fiscal Outlook (MYEFO), published on 15 December, identified two key factors behind the deterioration in the Australian fiscal position since the release of the 2014-2015 budget in May……………………………………..Full Article: Source

OPEC signals ‘wait and see’ approach could last a year

Posted on 17 December 2014 by VRS  |  Email |Print

Core Gulf OPEC oil producers signaled this week they are prepared to wait as long as six months to a year to see the market stabilize, quashing hopes for any quick intervention to stop the price rout that took crude to under $60 per barrel.
Some OPEC watchers had identified $60 as a potential red line at which the group, which produces a third of global oil, was expected to send a signal to the market that the decline had been too fast and too steep……………………………………..Full Article: Source

Gold capped at $1238

Posted on 17 December 2014 by VRS  |  Email |Print

After breaking through a bearish trendline at the beginning of last week, Gold benefited from some USD profit-taking and managed to climb its way back up the charts. However, the yellow metal found resistance at $1238 preventing entry to $1240 and current technicals indicate this could be a psychological ceiling in the current Gold market.
The $1238 level also represents a 50.0 fib level from the previous high ($1344) to the previous low ($1131) and the metal finding resistance at the 50.0 fib level twice last week does suggest the Fibonacci levels are in play. If this is the case, technical traders would likely be bearish below $1238 and looking at a potential entry opportunity if Gold manages to break through this resistance. …………………………………….Full Article: Source

When Rare Earths, Graphite, Lithium, and Uranium go to war they insure the peace and create the future

Posted on 17 December 2014 by VRS  |  Email |Print

We all know that individual, as well as institutional investors have only one goal, which is to make a return on their investment (a profit). This is not the purpose of government nor should it be.
However it should be the goal of government to spend money wisely and, if that is so, then to spend some of the money it receives from its taxpayers on the research and development of technologies that have applications not only to the military (providing the security function of government) but also to the civilian economy for maintaining and improving public health and the general quality of life of that government’s citizens…………………………………….Full Article: Source

Chinese rare earth giant born

Posted on 17 December 2014 by VRS  |  Email |Print

China’s leading rare earth producer – Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. to give its full name – is set to further tighten its grip on the industry. Baotou’s giant mine in Bayan Obo, Inner Mongolia near Baotou City, produces the bulk of the world’s rare earths and does so as a byproduct of iron ore mining.
SMM reports Baotou will merge with five smaller rare earth firms to establish the China North Rare Earth Group Co. Baotou will acquire shareholdings in Baotou Feida Rare Earth Co., Baotou Jinmeng Rare Earth Co., Baotou Hongtianyu Rare Earth Magnets Co., Wuyuan Runze Rare Earth Co., and Xinyuan Rare Earth Hi-Tech & New Material Co……………………………………..Full Article: Source

Brent Seen Falling to $50 in 2015 as OPEC Fails to Act

Posted on 16 December 2014 by VRS  |  Email |Print

Crude oil prices are poised to fall below half where they were six months ago, before producers begin dealing with a global glut. Brent, the global benchmark, will slide to as low as $50 a barrel in 2015, according to the median in a Bloomberg survey yesterday of 17 analysts, down from the $115.71 a barrel high for the year on June 19.
The grade has already collapsed 47 percent since then and needs to fall further before producers clear the current glut, said five out of six respondents who gave a reason………………………………………Full Article: Source

A Bull Market in Bear Market Gold Demand

Posted on 16 December 2014 by VRS  |  Email |Print

A glance at any gold price chart reveals the severity of the bear mauling it has endured over the last three years, writes Jeff Clark at Casey Research’s Big Gold letter. More alarming, even for die-hard gold investors, is that some of the fundamental drivers that would normally push gold higher, like a weak US Dollar, have reversed.
Throw in a correction-defying Wall Street stock market and the never-ending rain of disdain for gold from the mainstream and it may seem that there’s no reason to buy gold; the bear is here to stay. If so, then I have a question. Actually, a whole bunch of questions. To start, if we’re in a bear market, then…Why Is China Accumulating Record Amounts of Gold?……………………………………..Full Article: Source

Rabobank issues 2015 commodity market outlook

Posted on 15 December 2014 by VRS  |  Email |Print

Agriculture financing giant Rabobank has published its outlook pertaining to global commodity markets in 2015, looking at issues of demand, supply and pricing across international commodities and forecasting a 12-month price outlook for 12 major commodities.
In the report, the bank’s Agri Commodities Markets Research analysts say fundamentals in the agri commodity markets appear more balanced through 2015, but they expect narrower trading ranges for many commodities versus 2014………………………………………..Full Article: Source

Avoiding Commodities when Investing for Retirement

Posted on 15 December 2014 by VRS  |  Email |Print

There are several reasons for restricting your commodities-based investing to your trading account and keeping it out of your retirement account.
As investors try to diversify the investments in their retirement account, the choice is often made to select a commodities-based ETF, or a commodities-based stock, such as a gold mining company. While some investment advisors suggest including small portion of commodities investments in one’s retirement account, they are recommended as a hedge………………………………………..Full Article: Source

Commodity Prices in 2014: What’s Behind the Plunge? Hint: It’s Not Just Oil

Posted on 15 December 2014 by VRS  |  Email |Print

Stock market investors have enjoyed a huge bull market ever since the end of the financial crisis, and it appears that stocks will once again post a winning year when 2014 comes to a close in a few weeks. For the commodities markets, however, it’s been a much different story, with commodity prices in 2014 on track to suffer their worst loss since 2008.
As much attention as crude oil has gotten lately, it’s far from the only commodity weighing on the overall market for physical goods. Let’s take a closer look at exactly what’s been driving the declines in commodity prices in 2014 and whether they’re likely to continue falling next year………………………………………..Full Article: Source

Price of Gold in 2014: Why It’s Gone Nowhere

Posted on 15 December 2014 by VRS  |  Email |Print

From 2001 to 2012, gold enjoyed 12 straight years of consecutive rising prices, and many investors hoped that the yellow metal would be able to sustain its bull market well into the future. Yet 2013’s $475 per ounce plunge in gold prices dashed those hopes, and this year’s failure for gold to regain any of that lost ground suggests that investors could have to wait a long time before prices start moving upward again.
Looking at how the price of gold in 2014 moved shows the crosscurrents that plagued investors throughout the year, as bouts of optimism gave way to the harsh realities of the mining industry and the supply and demand picture for gold………………………………………..Full Article: Source

Is the commodity crash,volatility in equities a danger sign for global economy?

Posted on 12 December 2014 by VRS  |  Email |Print

Energy prices have crashed to the lowest level in five years, so are metals and agri-commodities while volatility in equities have increased raising concerns about global economic growth. In a linear way, it is always easy to say that lower commodity prices signal the strengthening of recessionary trends or absence or recovery signals in the economy.
If that were so, every region should have the same economic growth but in reality Eurozone remains weak while US is on the edge of recovery with markets eagerly awaiting the likelihood of an interest rate hike. Asian giants China and India may have slowed down a bit but still not out of the reckoning.The market is awaiting the European Central Bank (ECB) monthly report in a short while from now………………………………………..Full Article: Source

Is Fracking the Cause of Slumping Commodities?

Posted on 12 December 2014 by VRS  |  Email |Print

What is fracking? Fracking is the process of injecting liquid at high pressure into subterranean rocks, fissures, etc., in order to force them open and allow more oil and gas to flow out of the formation, allowing it to be extracted at greater volumes.
Are you aware that fracking stocks are down 40% in just over 5 months? If that doesn’t sound like a bubble about to burst, I don’t know what does………………………………………..Full Article: Source

Oil Wars: Why OPEC Will Win

Posted on 12 December 2014 by VRS  |  Email |Print

In the green corner we have the US shale producers. In the red corner we have the oil exporting countries of OPEC. Assuming the fight is fought to a conclusion, who wins? OPEC wins. The US shale producers will shut down first. The reasons are: The US shale producers are motivated by economics, and all other things being equal will have an incentive to cut production at or around the point where production cost exceeds sales price.
The OPEC countries are motivated by social imperatives. They have historically used their oil wealth to finance social programs, build infrastructure and subsidize basic foodstuffs and other items such as gasoline (which costs one cent/liter in Venezuela)………………………………………..Full Article: Source

Three Events Driving Gold Prices Higher in 2015

Posted on 12 December 2014 by VRS  |  Email |Print

Uncertainty and fear are two of the biggest factors that move gold prices. If they increase, investors buy the yellow metal to hedge and protect their wealth. Going into 2015, I see these two factors coming into play and taking the precious metal’s prices higher.
At the very core, I am watching three events that will bring uncertainty and fear going into next year: The Federal Reserve’s move towards normalizing monetary policy and raising interest rates, Problems in the eurozone and the European Central Bank’s quantitative easing and China………………………………………..Full Article: Source

What Does 2015 Hold for Commodities?

Posted on 11 December 2014 by VRS  |  Email |Print

Year to date all the main commodity sub-sectors have lost money and the main index was down another 6% in November led by a very weak energy sector that collapsed by 13%. This continued a long, difficult period since the commodity index peaked in April 2011 since when it has fallen 27%. Can there be much further downside given that crude oil is down 45%, gold 38% and copper 35% from their 2011 highs, while corn and wheat have collapsed 58% and 35% respectively from 2012 highs?
All recent news headlines have unsurprisingly centred on the energy market, particularly crude oil. Having traded in a sideways pattern for much of the past four years – Brent mostly trended between $100-120 per barrel – oil prices have been in virtual freefall since mid-year as global demand subsided and supply continued to increase thereby raising inventory levels………………………………………..Full Article: Source

Bull Market Slows to a Jog in 2015

Posted on 11 December 2014 by VRS  |  Email |Print

BofA Merrill Lynch Global Research today released its outlook for the markets in 2015, forecasting that the bull market in global equities will continue next year but returns will slow to single-digit rates. Strong fundamentals and healthy growth in the U.S. economy support a case for investor optimism and opportunism; however, in the lower-return, higher-volatility environment projected ahead, selective allocation and defensive portfolio moves will be crucial for performance.
At the annual BofA Merrill Lynch Year Ahead Outlook news conferences held today in New York and London, analysts from the Institutional Investor magazine top-ranked global research firm summarized their outlook for the U.S. and global economies as cautiously optimistic………………………………………..Full Article: Source

Oil hits new five-year low as OPEC trims 2015 demand forecast

Posted on 11 December 2014 by VRS  |  Email |Print

Brent crude oil fell more than a dollar to a new five-year low on Wednesday as producers forecast lower demand for their oil next year. In a monthly report, the Organization of the Petroleum Exporting Countries ( OPEC) forecast demand for the group’s oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation.
The price of the North Sea oil benchmark has fallen more than 40 percent since June as new supplies of high-quality crude from North America have fed a glut in many parts of the world. “There is a growing realisation that the first half of next year is going to look very weak,” said Gareth Lewis-Davies, strategist at BNP Paribas. “You start to price that in now.”……………………………………….Full Article: Source

Oil Resumes Drop as Iran Sees $40 If There’s OPEC Discord

Posted on 11 December 2014 by VRS  |  Email |Print

Brent crude fell near to a five-year low as OPEC said it expects demand for its crude next year to be the lowest since 2003. West Texas Intermediate also sank. Futures slid as much as 2.2 percent in London. The Organization of Petroleum Exporting Countries lowered its estimate for demand for its crude in 2015 by about 300,000 barrels a day to 28.9 million.
Crude could fall as low as $40 a barrel amid a price war or if divisions emerge in OPEC, said an official at Iran’s oil ministry. The U.S. Energy Information Administration reduced its price forecasts for next year while also downgrading its production outlook for a second month………………………………………..Full Article: Source

Gold Prices Manipulated for Past Two Years?

Posted on 11 December 2014 by VRS  |  Email |Print

Since the beginning of 2013, gold’s price action has been irrational. The fundamentals are getting better for gold in respect to demand and supply, but we see sudden, wild swings, often to the downside, on no news and for no apparent reason.
Those who closely follow precious metal prices will agree with me on this: many times in 2014, it was common to wake up in the morning to new gold prices that are sharply down. When you look into the price action, you find a mysterious seller. He sells a significant amount of gold contracts on the paper market at times when not many participants are around to buy…so prices plunge………………………………………..Full Article: Source

Glencore forecasts copper deficit

Posted on 11 December 2014 by VRS  |  Email |Print

An expected copper surplus may not materialise next year, according to Glencore, the third-biggest producer of copper in the world. Strong Chinese demand and expected mining disruptions could lead to a deficit of up to 1.8m tonnes, Telis Mistakidis, head of copper at Glencore, said at the company’s investor day in London on Wednesday.
“We don’t see the surplus,” Mr Mistakidis said. “Every time we’ve come toward this so-called glut it kind of disappears.” Copper prices have fallen 12 per cent year to date on worries of falling Chinese demand and rising supplies. Most analysts and consultants are forecasting a surplus in the copper market in 2015………………………………………..Full Article: Source

China commodity imports show only stockpiling boosts demand: Russell

Posted on 09 December 2014 by VRS  |  Email |Print

It’s getting harder to pull together a convincing, all-encompassing narrative for China’s commodity imports, with the November trade data showing a fractured picture.
One of the market expectations has been that the sharp drop in many commodity prices would boost imports by the world’s biggest buyer, partly for stockpiling and partly to meet improving demand on the back of higher exports and domestic consumption. This theme may hold true for imports of crude oil and copper, but certainly doesn’t apply to iron ore and coal……………………………………….Full Article: Source

Global Shale Ambitions Wane as OPEC Price War Deepens

Posted on 09 December 2014 by VRS  |  Email |Print

Efforts to replicate the U.S. shale revolution are under threat as a price war by OPEC pushes crude to levels last seen during the global financial crisis. From the U.K. to Australia, countries without government-backed energy producers appear the most vulnerable to delays in extracting shale oil and gas. Even nations such as China and Argentina, where state-run producers have a government mandate to drill, could see a slowing in investment.
The Organization of Petroleum Exporting Countries, responsible for about 40 percent of global supplies, has maintained output in the face of an oil glut. The move has sent prices lower, challenging shale plays in the U.S., and the rest of the world where production is more costly………………………………………..Full Article: Source

Is There A Gold Shortage?

Posted on 09 December 2014 by VRS  |  Email |Print

Gold bulls are making a big deal out of negative Gold Forward Offer Rates (GOFO) rates, and they think this means there is a shortage. This simply isn’t the case, and the panicked scramble to get physical gold–while something to fear in the near future–simply doesn’t exist.
There are, however, other signs that it is beginning, and GOFO may be a useful tool in predicting this in the context of additional information………………………………………..Full Article: Source

Gold jumps above $1,200 on chart-based buying surge

Posted on 09 December 2014 by VRS  |  Email |Print

Gold jumped more than 1 percent on Monday on a brief surge of late-day technical buying as it breached the $1,200-per-ounce level long after the U.S. dollar dropped from a more than five-year high.
Spot gold was up 1 percent at $1,203.51 an ounce after briefly rising to $1,208.19. The metal lost 1.1 percent on Friday when U.S. data showed employers added the largest number of workers in nearly three years in November and that wages picked up. U.S. gold futures for February delivery rose 0.4 percent to settle at $1,194.90 an ounce………………………………………..Full Article: Source

Should Investors Reconsider Commodities?

Posted on 08 December 2014 by VRS  |  Email |Print

Commodity-related investments have unquestionably been an unloved and challenged area of the market over the last few years. The Morningstar Commodities-Broad basket category has fallen by more than 10% so far into 2014, making it the lowest returning asset class this year. Even more dramatically, the category is headed for its fourth annual decline.
Many commodities prices have collapsed dramatically in the last year and some, such as iron ore, are touching rock bottom prices, causing a renewed criticism of the sector. Commodities and resource equities have come under pressure for a number of reasons………………………………………..Full Article: Source

Forget the shale boom: will OPEC survive the post-Arab Spring times?

Posted on 08 December 2014 by VRS  |  Email |Print

Unprecedented events across the Middle East and North Africa have fundamentally changed the geopolitics of oil, writes Professor Mohammed Akacem in this thought-provoking analysis. The Organization of Petroleum Exporting Countries, OPEC, has decided to keep their output ceiling unchanged in the face of falling oil prices.
Despite the calls for reducing oil production by the price hawks to shore up sagging oil prices, the oil cartel decided to pass. While oil consuming countries are fixated on their dependence on the oil cartel, it is time to examine the reverse: how much are OPEC’s economies fixated on every oil price move and its impact, not only on their economies, but on their possible political survival?……………………………………….Full Article: Source

OPEC rocks

Posted on 08 December 2014 by VRS  |  Email |Print

Why are so many so glum about cheap oil? For years, the complaint has been that the high price of oil makes life difficult for people. These include ordinary American families for whom a $65 fill-up at the local Exxon became routine, as well as the many industries that rely on petroleum for their products.
Well, prices are now coming down (in real terms) to levels we haven’t seen in some time, and some people fret that this will be a bad thing. The most recent price drops were precipitated by a decision by the Organization of Petroleum Exporting Countries, or OPEC, not to cut its oil production………………………………………..Full Article: Source

Gold Bulls Return as Wagers on Stimulus Accumulate: Commodities

Posted on 08 December 2014 by VRS  |  Email |Print

Speculators boosted bullish gold bets to a three-month high on signs central banks will act to counter low inflation, reviving the allure of bullion as a hedge. The net-long position in New York futures and options climbed for a third week, the longest expansion since July, government data show. Short holdings fell to a 14-week low.
Futures rebounded 5.3 percent since touching a four-year low on Nov. 7. European Central Bank President Mario Draghi said last week that policy makers “won’t tolerate” a prolonged period of low inflation, as officials consider increasing asset purchases. China lowered interest rates to spur economic growth, while Japan has expanded its unprecedented stimulus program………………………………………..Full Article: Source

Why OPEC’s pain is China’s gain

Posted on 05 December 2014 by VRS  |  Email |Print

The collapse in oil prices couldn’t be better timed for China’s slackening economy, providing additional room for monetary easing and a boost to domestic consumption, say economists.
China is the world’s biggest and fastest growing oil importer, relying on imports for around 60 percent of its domestic oil consumption. Last year, the country imported over 280 million tonnes of crude oil, worth almost $220 billion, according to state-run news agency Xinhua. “[The] slumping oil price is the oil-guzzling dragon’s windfall gain,” Ting Lu, chief China economist at Bank of America Merrill Lynch (BofaML), wrote in a note………………………………………..Full Article: Source

India shows link between crude oil and gold prices

Posted on 05 December 2014 by VRS  |  Email |Print

A common theme in recent gold market reports is the link between price movements in the precious metal and crude oil. While there certainly appears to be a valid correlation in recent years, one that has strengthened in recent months, events in India show a different, unexpected link between the two commodities.
The Indian authorities caught the gold market by surprise on Nov. 28 by scrapping the so-called 80-20 rule, under which 20 percent of all imported gold had to be re-exported in the form of jewelry. Gold traders had been expecting a tightening of restrictions on gold rather than a loosening, and while a 10 percent customs duty remains, the likelihood is that India will now import more of the yellow metal and reclaim from China its title as the world’s top importer………………………………………..Full Article: Source

Managed futures funds ride high on back of tumbling oil price

Posted on 05 December 2014 by VRS  |  Email |Print

The tumbling price of oil may have hurt investors who owned commodities, roubles or oil companies, but has been a boon for hedge funds that use computer programs to follow market trends.
These funds, known as managed futures funds or commodity trading advisers, had their best month in more than 12 years in November, with several famous names recording double-digit percentage returns. The outperformance comes as some relief for the sector after several years of weak returns that had left some funds battling customer redemptions………………………………………..Full Article: Source

Falling commodity prices put a spoke in investment cycle hopes

Posted on 04 December 2014 by VRS  |  Email |Print

Falling commodity prices, especially of metals and crude oil, are good for the Indian economy as they cool prices, lower the import bill and help reduce government spending on subsidies. They also lower costs for companies that use commodities, especially those who produce consumer goods. The positive effects are indeed many, but one serious side effect could present itself.
Falling prices for metals mean lower realizations for producers. Their costs do not decline in kind, which means profitability gets squeezed. Lower profitability affects cash flows, while falling share values make it difficult to raise capital. It is normal for companies to seek to postpone capital expenditure (capex) plans in such a scenario, especially if they expect the situation to be a prolonged one………………………………………..Full Article: Source

Australia: Commodities gloom dampens festive spirit

Posted on 04 December 2014 by VRS  |  Email |Print

Far from expecting a customary Santa rally, investors should be bracing for the most torrid new year since the global financial crisis. Having been more than 3 per cent higher at one stage, the local bourse looks to be ending the year around 3 per cent lower and there are few obvious catalysts.
As IG Markets notes, a key buffer against the GFC — strong commodity prices — is sadly absent this time around. “2015 will be a tough year for the ASX,’’ the firm says. “Earnings per share growth looks like being severely affected by the downturn in commodities while defensive and bank stocks either look fully valued or will embark on a fiscal streamlining (cost cutting) to drive EPS growth.’’……………………………………….Full Article: Source

Collapse of oil prices leads world economy into trouble

Posted on 04 December 2014 by VRS  |  Email |Print

Opec, the oil cartel, believed it could help production. Instead, it ended up hurting itself as well as the Russian rouble, energy stocks and much more. The Organization of Petroleum Exporting Countries (Opec), the largest crude-oil cartel in the world, wanted others to feel its pain as oil prices collapsed.
“Opec wanted … to cut off production … and they wanted other non-Opec [countries], especially in the US and Canada, to feel the pinch they are feeling,” says Abhishek Deshpande, lead oil analyst at Natixis. But in its rush to influence others, Opec ended up hurting everyone in the process – including itself………………………………………..Full Article: Source

Market Manipulation of the Gold Market: US Resorts to Illegality to Protect Failed Financial Policies

Posted on 04 December 2014 by VRS  |  Email |Print

No relevant news or events occurred that would have triggered this sudden sell-off in gold. Furthermore, none of the other markets experienced any unusual movement (stocks, bonds, currencies). The intervention in the gold market occurred on the Friday after the U.S. had observed its Thanksgiving Day holiday. It is one of the lowest volume trading days of the year on the Comex.
A rational person who wants to short gold because he believes the price will fall wants to obtain the highest price for the contracts he sells in order to maximize his profits when he settles the contracts. If his sale of contracts drives down the price of gold, he reduces the spread between the amount he receives for his contracts and the price at settlement, thus minimizing his profits, or if the price goes against him maximizing his losses………………………………………..Full Article: Source

Scotiabank’s Patricia Mohr favours base metals in 2015

Posted on 04 December 2014 by VRS  |  Email |Print

I’m a little bit more optimistic for the base metals. In fact, I think when you look at the average prices this year you’ll discover that prices late this year are actually higher for most of the base metals than they were late last year. The one exception to that is copper, which is a little lower than it was in late 2013.
If you look at zinc, it was trading at about US$1 per lb. on Dec. 1, and the LME official cash settlement price at the end of 2013 was US89.03¢ per lb. Aluminum is averaging US95¢ per lb. this year and in December 2013 it averaged US78.8¢. Nickel is averaging US$7.30 per lb. and it was US$6.30 per lb. in December 2013. So many of the base metals, with the exception of copper, have actually edged up this year and it’s on fundamentals and despite vey lackluster global economic conditions………………………………………..Full Article: Source

Rabobank issues agri-commodity market outlook for 2015

Posted on 04 December 2014 by VRS  |  Email |Print

Rabobank has published its outlook for the global agri commodity markets in 2015, looking at issues of demand, supply and pricing across international agri commodities, and forecasting a 12-month price outlook for 12 major agri commodities. In the report, the bank’s Agri Commodities Markets Research analysts say that fundamentals in the agri commodity markets appear more balanced through 2015, but they expect narrower trading ranges for many commodities versus 2014. On the demand side, growth has slowed in recent years.
However, lower price levels should now encourage consumption growth, which will support prices. Rabobank says key variables to watch in the year ahead are U.S. dollar strength, uncertain Chinese demand growth, slowing biofuel demand, and oil price weakness. Stefan Vogel, global head of Rabobank Agri Commodities Markets Research, said, “2015 will be another interesting year for agri commodities. Macro drivers remain very much in play and price swings from supply and demand shocks are still likely, given that the stocks for most commodities are not yet at levels necessary to provide an adequate buffer.” (Press Release)

America defiant in ‘oil war’ with OPEC

Posted on 03 December 2014 by VRS  |  Email |Print

America’s energy industry is battling OPEC with a ferocity not seen since the 1980s. So far, it’s not backing down. The oil cartel’s decision last week not scale back on production was widely seen as an attempt to choke off the U.S. shale boom. OPEC figures that by driving down oil prices, North American producers will collapse.
Both sides are feeling the heat as oil prices stay below $70. Oil rich nations are losing out on much-needed revenue to bankroll their budgets, and many domestic energy players are feeling the pressure as well………………………………………..Full Article: Source

OPEC: Saudi Prince says Riyadh won’t cut oil unless others follow

Posted on 03 December 2014 by VRS  |  Email |Print

Saudi Arabia’s former spy chief Prince Turki said world’s biggest oil exporter won’t surrender market share to anyone. Saudi Arabia’s influential royal Prince Turki al-Faisal al-Saud has said the kingdom would only consider cutting oil production if Iran, Russia and the US agreed to match those cuts because it wants to protect its market share.
Speaking in London, the Prince who is a senior Saudi royal and the former head of the country’s spy agency, said that the kingdom would not repeat previous mistakes of surrendering its share of the global market for crude to its rivals………………………………………..Full Article: Source

Commodity prices: Why the selloff may continue in 2015

Posted on 02 December 2014 by VRS  |  Email |Print

Several of the world’s key commodities — including oil, gas, gold and corn — have been suffering the worst months of trading since the commodities crash of 2008. Back then, the main reason for downturn in prices was obvious: the credit crisis and subsequent panic about global economic growth.
Yet today, while global growth is more sluggish than hoped in certain parts of the world — particularly in China — the overall economic picture seems much brighter than in 2008………………………………………..Full Article: Source

Equity investors should heed message from commodities and bonds

Posted on 02 December 2014 by VRS  |  Email |Print

It is that season again when commentators review the year’s developments and what they imply for next year. A big surprise is the extent to which record equity prices have diverged from declining commodity prices and unusually low yields on government bonds. This historically unusual divergence can no longer be explained by big macro factors, and the bespoke explanations will be harder to sustain the greater the divergence as we enter 2015.
Had 2014 closed this past weekend, investors in US equity markets would have earned 12 per cent (as measured by the S&P 500). Meanwhile, commodity investors would have lost 9 per cent (as measured by the Thomson Reuters Commodity Index) at a time when the yield on the 30-year US Treasury bond has fallen 100 basis points to 2.89 per cent………………………………………..Full Article: Source

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