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The Commodities Bubble: History Repeats Itself

Posted on 12 February 2016 by VRS  |  Email |Print

All bubbles share similar characteristics. It all starts with strong demand for some object, whether it’s stocks, homes, commodities or tulips. In commodities, a bubble formed on hopes that China’s rapid growth would feed an ever-expanding appetite for raw materials.
Moreover, in 2008, China launched a huge $586 billion economic stimulus plan, leading to higher demand for commodities and, therefore, rising prices. But prices weren’t reflecting real growth, either. They were inflated as fake demand was created on the construction of excessively extravagant government buildings and uninhabited “ghost cities” in China………………………………………..Full Article: Source

Tullow Oil chief: Crude oil price to jump to $65

Posted on 12 February 2016 by VRS  |  Email |Print

Oil prices should recover in the second half of this year and end 2016 at between $60 and $65 per barrel, Tullow Oil chief Aidan Heavey has said. Heavey, but said the second half of this year should see signs of recovery both for Tullow and the broader industry.
He added that a more gradual rise from $60/$65 per barrel could be seen in 2017 — came a day after prices saw their third biggest daily fall in eight years and a month after they hit 12-year lows of around $28 per barrel. Yesterday they were hovering around the $30 mark………………………………………..Full Article: Source

Indian Gold Demand Seen Rising in 2016

Posted on 12 February 2016 by VRS  |  Email |Print

India’s gold demand is likely to rise this year as investors have factored in interest rate hikes by the U.S. Federal Reserve, while the turmoil in stock markets is making the metal attractive, the World Gold Council (WGC) said on Thursday.
Stronger demand from the world’s second-biggest gold consumer could support the global bullion price, which is trading near its highest in 8-1/2 months. “Overall demand is seen promising since rate hike uncertainty is behind us,” Somasundaram PR, managing director of the WGC’s Indian operations, told Reuters………………………………………..Full Article: Source

No reversal of commodities price slump soon

Posted on 10 February 2016 by VRS  |  Email |Print

Anglo American’s chief executive said on Monday the mining industry had itself to blame for oversupply in the market and cannot rely on a reversal of the commodities price slump anytime soon. Mark Cutifani told a mining conference that for some producers, adjusting supply to align with decreasing demand growth may not make sense as they seek to maintain market share and drive competitors out of business.
“This strategy generally has a net negative effect,” Cutifani said. “Moreover, we can’t rely on a reversal of this price slump any time soon. 2016 is already shaping up to be the most challenging yet. Opinions are divided on whether we have reached the bottom of the cycle … So things may still get worse before they get better………………………………………..Full Article: Source

$1200 Gold ‘Breaks Downtrends’, Defies 2016 Price Forecasts

Posted on 10 February 2016 by VRS  |  Email |Print

Gold prices recovered most of a 1.1% overnight drop from yesterday’s 8-month high of $1200 per ounce in London trade Tuesday, rising back to $1198 as European stock markets slumped again, and the Dollar fell on the FX market, following a 5% plunge in Japanese equities.
China and most of Asia remained shut for the Lunar New Year, the heaviest consumer gold-buying spree outside India’s autumn festival of Diwali. Major government bond prices rose, pushing 10-year US Treasury yields down to new 12-month lows at 1.73%, while US crude oil held below $30 per barrel – a level seen on the way up in 2002………………………………………..Full Article: Source

Gold Prices: The Surprising Reason to Be Bullish on Gold Prices

Posted on 08 February 2016 by VRS  |  Email |Print

Usually low inflation is bad news for gold prices. But according to one analyst, the economy’s recent bout of deflation could actually be bullish for precious metals. Gold prices are soaring. Year-to-date, the yellow metal is up more than seven percent. The move is unexpected, given most analysts expect gold prices to fall during periods of low inflation.
According to Boris Schlossberg, the reason is simple. In an interview with CNBC, the BK Asset Management currency strategist explained that investors can pile up their hard-earned banknotes under the mattress and get zero percent, which would be better than paying banks to keep their money………………………………………..Full Article: Source

Gold Resilient as This Year’s Best Commodity

Posted on 04 February 2016 by VRS  |  Email |Print

Gold climbed to a three-month high, helping propel Newmont Mining Corp. to its biggest gain in seven years, as mining shares rallied amid diminishing expectations for more U.S. rate increases.
Futures broke above the 200-day moving average, while an index of 14 gold producers tracked by Bloomberg Intelligence climbed to the highest since October. Holdings in exchange-traded funds backed by bullion grew for a 12th day, the longest run in three years………………………………………..Full Article: Source

Emerging Stocks Drop With Commodities as Growth Concern Lingers

Posted on 03 February 2016 by VRS  |  Email |Print

Emerging-market stocks fell the most in a week as oil deepened its decline and concern mounted that the contagion from China’s economic slowdown is spreading. A gauge of developing-nation exchange rates dropped for a second day, led by the Russian ruble.
South African equities slid for a second day as the World Bank said the continent’s second-largest economy is flirting with stagnation. The Ibovespa fell the most since August 2011 as Brazilian commodity exporters including Vale SA slid with raw-material prices………………………………………..Full Article: Source

No trust between OPEC, other oil producers

Posted on 03 February 2016 by VRS  |  Email |Print

OPEC won’t be able to agree with other oil suppliers on decreasing oil prices, as there is no trust between the sides, and each of the parties will play by its own rules, believes Svyatoslav Pavlyuk, a Ukrainian expert on energy efficiency.
Pavlyuk, who heads the Kiev office of the ‘Energy Efficient Cities of Ukraine’ Association, told Trend Feb. 2 that oil producers began to supply oil at low prices in order to take additional market segments. “Thus, market shares have been violated, and other oil suppliers will fight for them by reciprocally lowering the prices,” added Pavlyuk………………………………………..Full Article: Source

Gold is Winning Believers in 2016

Posted on 03 February 2016 by VRS  |  Email |Print

It’s been a lonely few years for gold bulls. Extraordinary monetary stimulus from the Federal Reserve — a pairing of ultra-low interest rates and quantitative easing (bond buying) — was supposed to drive rampant inflation, which in turn was supposed to drive investors to the relative safety of gold.
It didn’t play out that way, of course. Gold prices finished 2015 near a six-year low and down more than 40% since 2011′s all-time high. But each passing day in 2016 seems to turn market watchers bullish………………………………………..Full Article: Source

Time For a Good Gold-to-Silver Ratio Play For Traders? - Peter Hug

Posted on 02 February 2016 by VRS  |  Email |Print

Is a major upside number for gold in the cards? Or is the choppy action making investors wary? In the first trading day of February, gold has once again topped the $1,122 chart point. The metal is currently trading near a 3-month high. It has been a good start to the year for gold, with the market up nearly 6% in the past month.
‘You want to express a major upside number for gold but the choppy action makes investors wary,’ said Kitco Metals’ Global Trading Director, Peter Hug. Speaking with Kitco News, Hug added, ‘A scenario similar to 2008-2011 may yet develop but I cannot in good faith just throw out an absurd upside target. The cross-currents in the market continue to suggest upside momentum for gold, but the move is likely to be jerky.’……………………………………….Full Article: Source

2016: The Year of the Commodities Buyer

Posted on 01 February 2016 by VRS  |  Email |Print

A world “drowning in oversupply” of oil and other commodities could make 2016 a super-cheap year for Asia’s major resource importers such as China and Japan. However, the drag on growth for commodity exporters is putting yet more pressure on emerging markets, according to the World Bank.
In a January 26 report, the Washington-based lender cut its forecast for crude oil prices to just $37 a barrel, down from $51 in its October projections, while also cutting price forecasts for 37 of the 46 commodities it monitors………………………………………..Full Article: Source

Silver Price Breaks Higher on Rising Anxiety

Posted on 01 February 2016 by VRS  |  Email |Print

Echoing the perilous financial market volatility of late, silver prices have gradually moved to the highest levels since December as growing risk aversion and shifting sentiment see safety bids gain momentum. While not necessarily indicative of a resumption of the trend higher that began in the depths of the last financial crisis, several factors are pointing to increased potential gains in the precious metal as investors are forced to pivot from yield to quality in an effort to hedge against ongoing turmoil.
While inflation may remain low, dragging on prices over the medium-term, tightness in the physical supply chain alongside increased interest in hedging against uncertainty of monetary policy and central banking continue to contribute to upside in silver………………………………………..Full Article: Source

How to play commodities ahead of the Fed

Posted on 28 January 2016 by VRS  |  Email |Print

Is the Fed about to give commodities a much-needed boost? Gold tempered recent gains ahead of the Federal Reserve statement Wednesday. But if the central bank sounds dovish in its release at 2 p.m. ET, gold and other metals could be ready to surge.
In December, the Fed raised the federal funds rate for the first time in almost a decade. However, Phillip Streible of RJO Futures said he doesn’t expect another rate hike for the rest of 2016. The absence of further rate increases should lead to a weaker dollar and higher gold prices………………………………………..Full Article: Source

Precious Metals Glitter as Haven in Rubble of Resources

Posted on 28 January 2016 by VRS  |  Email |Print

As oil’s slump prolongs the worst resources rout since the 2008 financial crisis, the allure of precious metals is at least giving some commodity investors a return on their money. The Bloomberg Commodity Index, which tracks returns from 22 raw materials, dropped to a 25-year low earlier this month as gauges of energy, industrial metals and agriculture slid.
By contrast, a measure of precious metals climbed. Gold’s appeal as a safe haven is “back in vogue” on concerns about further contagion from China, volatile stock markets and tensions in the Middle East, Citigroup Inc said in a Jan. 19 report………………………………………..Full Article: Source

Weaker Gold Price On Tempered Dovish Fed Statement

Posted on 27 January 2016 by VRS  |  Email |Print

The gold market — expecting extremely dovish comments from the Federal Reserve Wednesday, following its monetary policy meeting, could be disappointed, creating some selling pressure according to some analysts.
Comex February gold futures pushed to nearly a three-month high Tuesday as the U.S. central bank started the first day of its two-day meeting and last traded at $1,118.3 an ounce. According to some analysts, gold prices are benefiting in part because of shifting interest rate expectations. In December, the Fed indicated that they expected to raise interest rates four times in 2016 with the next rate hike scheduled for March………………………………………..Full Article: Source

Are You Ready for the Commodities Bull Market?

Posted on 26 January 2016 by VRS  |  Email |Print

Something’s not right… Crude oil didn’t crash into the mid-twenties for no reason. World leaders and academics are to blame. They think higher taxes, more regulation, printing money and lower interest rates will solve their problems. Yet, this has crashed the world economy before our eyes.
Commodity prices don’t lie — they’re telling the real story. When politicians hunt down every spare cent, businesses won’t invest and consumers won’t spend. They’ll save for a rainy day. It’s why industrial commodities (i.e. iron ore, nickel, copper, zinc, lead…) are crashing. There’s less demand for goods in an oversaturated market………………………………………..Full Article: Source

Gold is back in fashion after $15 trillion global decline

Posted on 26 January 2016 by VRS  |  Email |Print

The $US15 trillion rout in global equity markets since May is reawakening the lure of gold for investors seeking safety. Hedge funds more than doubled their net-long position in bullion last week, just three weeks after they were the most- bearish ever.
Investor holdings of gold through exchange-traded products are expanding at the fastest pace in a year, and the value of the ETPs has jumped by $US3 billion in 2016. Bullion has seen a revival of its appeal as a haven after being mainly ignored last year in the face of the Paris terror attacks in November and the Greek bailout negotiations in July………………………………………..Full Article: Source

Will Gold Be The Beneficiary Of Oil, Equities Plunge?

Posted on 25 January 2016 by VRS  |  Email |Print

Global stock markets were in turmoil again this week, with the Dow plunging 566 points on Wednesday before recovering to a 250-point loss, and the S&P 500 index bleeding over 3.5 percent to hit an intraday low of 1,820, the worst showing since February 2014.
The Toronto Stock Exchange, heavily weighted towards mining and oil stocks, at one point was over 400 points down, giving investors an eerie déjà vu of the financial crisis as the S&P/TSX composite index ended the day under the psychologically-important 12,000 mark………………………………………..Full Article: Source

The world economy: Who’s afraid of cheap oil?

Posted on 22 January 2016 by VRS  |  Email |Print

Low energy prices ought to be a shot in the arm for the economy. Think again. The world is drowning in oil. Saudi Arabia is pumping at almost full tilt. It is widely thought that the Saudis want to drive out higher-cost producers from the industry, including some of the fracking firms that have boosted oil output in the United States from 5m barrels a day (b/d) in 2008 to over 9m b/d now.
Saudi Arabia will also be prepared to suffer a lot of pain to thwart Iran, its bitter rival, which this week was poised to rejoin oil markets as nuclear sanctions were lifted, with potential output of 3m-4m b/d………………………………………..Full Article: Source

Citi upgrades 2016 gold price forecast, lowers palladium

Posted on 22 January 2016 by VRS  |  Email |Print

Citi revised upward its 2016 gold forecast because of fears that China’s slowdown will spread to other parts of the globe, tensions in the Middle East and slumping equities around the world. The bank now expects prices to average $1,070 this year, a 7.5-percent upgrade on previous expectations. The spot gold price recently traded at $1,095.40/1,095.80 per ounce, down $3.50 on the previous close.
“Gold’s safe-haven rationale is back in vogue for the time being on fears of further China macro contagion, whipsaw equity markets, and geopolitical issues in the form of rising Arabian Gulf tensions,” the bank said………………………………………..Full Article: Source

Everyone hates commodities

Posted on 20 January 2016 by VRS  |  Email |Print

Commodities have no friends at the moment. From energy to softs to base and precious metals, prices have been hammered almost unilaterally across the board, weighed down by a combination of a strengthening US dollar, increased supply, tepid demand and, as a consequence, mounting disinflationary pressures.
The paragraph below, from Macquarie Bank’s commodity analyst team, is reflective of the broader investor mood when it comes to commodity markets - they hate them. The world simply hates commodities at the moment. Prices keep on falling, producers are in a battle for survival and, more worryingly, demand isn’t reacting that positively as of yet………………………………………..Full Article: Source

Gold is good

Posted on 20 January 2016 by VRS  |  Email |Print

Declining Chinese demand has caused commodities like iron ore and many base metals to fall in price but gold remains pretty strong according to an expert. The analyst says the historically high gold price and outlook is bolstering the balance sheets of gold miners, and explorers should benefit over the next 12 months.
Mining and resources analyst Ryan Armstrong from Taylor Collison says siginificant interest in Australian gold is driven by the low US exchange rate. “With the market volatility gold is a bit of the ‘go-too’ precious metal,” he said………………………………………..Full Article: Source

It’s time to count the winners in the commodity crash, not just the losers

Posted on 18 January 2016 by VRS  |  Email |Print

With oil at prices lower than we have seen for more than a decade, the stock markets down on average 15 per cent in the first 15 days of the year, and commodities at record lows everywhere, it does not take gloomy weather to tell us there is panic in the air.
But as I combed through the global commodities data to try to work out what is going on, I stumbled across one particular chart that amazed me – in the National Geographic of all eccentric places. Innocently enough it traced cement production worldwide since the year 1900………………………………………..Full Article: Source

Gold again emerging as a safe haven

Posted on 18 January 2016 by VRS  |  Email |Print

The year has begun on an optimistic note for gold, up three per cent in a fortnight when most other asset classes are down, with some like crude oil having plunged over 20 per cent and equities down sharply. The unusual thing about gold’s rise is that the dollar index has not fallen during the period. Normally, they move inversely. This suggests gold is emerging as a safe bet in times of uncertainty.
Uncertainties could emerge in various forms, from terror attacks or crashing oil prices or the G7 central banks losing their credibility. Although many still see the recent spike in gold as temporary given that the yellow metal is seeing resistance at higher levels, voices have started emerging in support of gold. If uncertainties increase, some experts believe gold could rise as much as 20 per cent in 2016………………………………………..Full Article: Source

Will China and commodities spring back in 2016?

Posted on 15 January 2016 by VRS  |  Email |Print

Reading others on 2016 it sounds as if it will be a re-run of 2015. It’s often safest and easiest to forecast little change. A trend is a trend, after all, until it reverses. Calling major turning points is never easy — it usually means standing out against the herd of other commentators. The quiet life is to predict more of the same, and more of the same is what often happens.
Last year, many were writing that inflation would stay low, interest rates would stay lower for longer, and shares should do better than bonds. They did for a bit in China, they did all year in Japan, and just about did better in parts of the EU and the US………………………………………..Full Article: Source

Barclays cuts 2016 average gold, silver price forecasts

Posted on 15 January 2016 by VRS  |  Email |Print

Barclays has pegged average gold prices at $1100/oz for 2016 (compared to previous forecast of $1,150/oz), $1200/oz for 2017. Average silver prices would be at $14/oz for 2016 (compared to previous forecast of $16/oz), $15.75/oz for 2017 (compared to previous forecast of $16.75/oz).
Barclays forecast average copper price at $1.98/lb for 2016 (compared to previous forecast of $2.55/lb), $1.90/lb for 2017 (compared to previous forecast of $2.30/lb). Average zinc price has been forecast at $0.75/lb for 2016 (compared to previous forecast of $1.04/lb), $0.85/lb for 2017 (compared to previous forecast of $1.15/lb)………………………………………..Full Article: Source

OPEC High Output Strategy Working, Reducing Non-OPEC Oil Production

Posted on 13 January 2016 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries’ (OPEC) strategy on maintaining high oil output is working, as non-OPEC countries have lowered their production, UAE Energy Minister Suhail Mazrouei said Tuesday. Earlier in the day, Brent crude reached a 12-year low, majorly due to prolonged global oversupply and the OPEC unwillingness to cut production out of fear of losing market share.
“My assessment of that strategy is that it is working,” Mazrouei said at an energy forum in Abu Dhabi, as quoted by UAE-based newspaper The National. “We have seen a major reduction in the yearly production of non-Opec – it is a fundamental change.”……………………………………….Full Article: Source

Commodities behind 2016’s big political risks

Posted on 12 January 2016 by VRS  |  Email |Print

The slump in oil prices is frightening stock traders, but the impact on geopolitical stability may prove to be more alarming this year. Low commodity prices could exacerbate tensions and conflict in the Middle East, increase public protest in Latin America, and worsen industrial action in Africa’s resource-rich countries, Verisk Maplecroft, a global political risk consultancy, warned in a 2016 outlook report.
“Verisk Maplecroft highlights low commodity prices as one of the primary drivers of political risk for investors in major producing countries across Africa and Latin America, while the increasing international threat posed by the Islamic State and rising tensions between Iran and Saudi Arabia, are flagged among the foremost geopolitical risk multipliers,” the consultancy said in the report………………………………………..Full Article: Source

When Will the Commodities Bloodbath End?

Posted on 11 January 2016 by VRS  |  Email |Print

It was a bloodbath for commodities in 2015. Brent crude oil fell 45.7% for the year, the most out of any commodity. From its high of US$127.07 per barrel, Brent’s been smashed by more than 70% in the past 18 months. It’s now trading at US$33.55 per barrel.
Other big losers were nickel (down 42.6%), heating oil (down 41.4%), and gas oil (down 40.2%). Copper lost a quarter of its value, declining for a third straight year. It’s the longest slump for the base metal since 1998. Among other base metals, zinc was down 25% and aluminium fell 18% for the year. Even gold languished at multi-year lows, down about 10%. It was unable to attract buyers………………………………………..Full Article: Source

Outlook For Gold In 2016

Posted on 11 January 2016 by VRS  |  Email |Print

The early stage of the interest rate increase cycle is bearish for gold. There are currently no catalysts for gold to rise. The price of gold is likely to continue to fall in 2016.
My thesis was that there is no positive catalyst for gold and that the price would continue to fall. My forecast turned out to be correct as the price of gold fell 12% from $1207 to $1061 since the article was written. I explained in the article how a rising dollar is likely to be bearish for the price of gold………………………………………..Full Article: Source

Commodities Rout Forces Resource Firms to Cut Further

Posted on 08 January 2016 by VRS  |  Email |Print

Mining, oil companies must search for new savings as hopes of a commodity-price rebound fizzle on weak Chinese demand. Resource companies are facing renewed pressure to cut spending and investor payouts after a deepening commodities rout erased billions of dollars in shareholder value on Thursday.
Oil and mining companies that expanded rapidly over the past decade when commodity prices soared have already slashed tens of thousands of jobs and mothballed billions of dollars of projects. Now they must search for new savings as their long-held hopes of rebounding commodity prices fizzle on weak Chinese demand………………………………………..Full Article: Source

‘Commodity catastrophe’ looks set to continue in 2016

Posted on 08 January 2016 by VRS  |  Email |Print

Early days of 2016 seem to be echoing those of last year, and with further negative data coming out of China there could still be plenty of pain in commodities, particularly in the energy and metals complexes.
The statistics are ugly: the benchmark index S&P GSCI ended 2015 with the first three-year consecutive loss in its history, a total of 55.6%; in December, the S&P GSCI Total Return recorded a new maximum drawdown of 80.5% from its peak in July 2008 and posted its fourth biggest annual loss in history since 1970 at 32.9%………………………………………..Full Article: Source

Time for gold to glisten again as a safe haven?

Posted on 08 January 2016 by VRS  |  Email |Print

As global equity markets tumble, analysts say it could be time for gold to shine once more as a safe buy in times of market turmoil. Spot gold prices rose for a fifth successive day on Thursday, with bullion up about 4 percent since the start of the year. Prices topped $1,100 an ounce for the first time in nine weeks as the dollar fell after concerns over the Chinese economy hit global stocks.
“With equity markets tumbling, escalating tensions between a Saudi-led Sunni bloc against Iran, ongoing hostilities in Syria, North Korea testing what it claims to be a hydrogen bomb, the once precious yellow metal is looking perky,” BBH strategists led by Marc Chandler said in a note on Thursday………………………………………..Full Article: Source

Reversion to commodity mean: The force awakens

Posted on 07 January 2016 by VRS  |  Email |Print

There’s a funny fact (touted by gold enthusiasts) about the purchasing power of gold. For most of history — with few exceptions — an ounce of gold has been able to buy you pretty much the same sort of thing: a good quality pair of shoes, a belt and a suit.
Somewhere in our psyche, the suggestion is, that’s how much we’d ever really forgo to obtain a little lump of gold: the combined value of what it costs to clothe ourselves properly (since clothes wear and tear over time and always need replacing). What it also suggests is that any time the gold price trades at more than the collective value of a good pair of shoes, a belt and a suit, chances are it’s massively overvalued………………………………………..Full Article: Source

Gold might be the way forward, says UBS

Posted on 07 January 2016 by VRS  |  Email |Print

2015 was a volatile year for the stock markets and 2016 opened with a near obliteration of Chinese stocks on the first day back. And for this reason, technical analysts Michael Riesner and Marc Muller at UBS told clients in a research note on Wednesday morning that they should plough into gold (emphasis ours):
Gold has been trading in a cyclical bear market since 2011. In 2016, we expect gold and gold mines moving into an eight-year cycle bottom as the basis for the next multi-year bull market. Initially, we see gold profiting as a safe haven and as of 2017, gold could profit from the US dollar moving in a major top and starting a bear market………………………………………..Full Article: Source

Does Chinese slowdown alter the Indian commodities scene?

Posted on 06 January 2016 by VRS  |  Email |Print

China’s stock market crash on Monday, which sent equity markets across the globe cracking, has turned investor sentiments negative. A slowdown in China is a global worry, particularly for commodities, as the dragon country consumes about half the world’s metals output and is also the second largest market for oil. However, for India, which is a net importer of commodities, lower prices can be a blessing.
In 2014-15, India’s total commodity imports were $448 billion while exports were $310 billion. Of the total imports, about 13.5 per cent, or $60.4 billion, was from China. With a slowdown in China and a slump in commodity prices, mainly metals, Indian steel and iron ore manufacturers may suffer as their realisations take a knock………………………………………..Full Article: Source

Gold regains status as safe haven asset again?

Posted on 06 January 2016 by VRS  |  Email |Print

Gold has finally responded to the falling equity markets rather than the volatility in the dollar at the start of this year, possibly reviving its role a safe haven asset. However, it is early days still and the lack of a more significant rally makes me wonder whether this latest rise will prove to be another ‘dead-cat’ bounce.
Global stock markets have fallen sharply at the start of this year and although Wall Street staged a mini recovery late in the day on Monday, US index futures have turned lower once again, tracking the renewed selling pressure in Europe. No one seems to be too sure why the markets have dropped this viciously………………………………………..Full Article: Source

Commodity exposure in 2016 requires care

Posted on 05 January 2016 by VRS  |  Email |Print

Having serially disappointed investors for a while, commodities could well offer investors one of the most compelling investment opportunities in 2016.
The sector’s attractiveness is likely to increase as the year proceeds, offering multiple entry points for potentially attractive medium-term return opportunities. Exploiting them will require emphasis on portfolio construction, with the design of the right investment vehicles as important as careful asset selection………………………………………..Full Article: Source

One analyst predicted 2015 gold price down to the dollar

Posted on 05 January 2016 by VRS  |  Email |Print

The London Bullion Market Association on Monday announced the winners of its gold price forecast competition for 2015. The survey of 35 analysts had predicted a narrow trading range for gold in 2015, forecasting an average of $1,211 a troy ounce with a range between $1,085 to $1,356 over the course of the year.
That proved too optimistic with gold averaging $1,160 in 2015. The winner of the 2015 competition, Bernard Dahdah of French investment bank Natixis, got it exactly right with a forecast of an average $1,160 for the year. Dahdah’s range was fairly wide, predicting a low of $950 and a high of $1,400………………………………………..Full Article: Source

What commodities will look like in 2016

Posted on 04 January 2016 by VRS  |  Email |Print

No asset class has had it as bad in 2015 as commodities. Economies and firms have struggled to stay afloat as prices have fallen to unforeseen levels. The credit of commodity-linked firms has become one of the biggest risk in global markets. The good news: Most say it can’t get worse. The bad news: No one knows when it will get better.
Optimistic forecasts say 2016 will mark the bottom of commodity prices. Pessimists see the depression in prices continuing. But if this is the trough that follows the commodity supercycle, then the recovery may take longer as these cycles often span out over years. That doesn’t rule out the possibility of short-term price spikes along the way………………………………………..Full Article: Source

Seven magnificent commodity bets for 2016

Posted on 04 January 2016 by VRS  |  Email |Print

It’s always tempting for commodity analysts to issue forecasts for the coming year, even though we intrinsically know that the future is inherently uncertain and even the most reasoned expectations can be easily confounded by events. With that in mind, and with a nod to my fellow Australians’ love of a punt, I’ve decided rather to do a list of bets I may be tempted take in commodity markets in 2016, assuming I was allowed to wager.
1. Crude oil will trade both below $30 a barrel and above $60 in 2016: Logic and momentum suggest the first part of this bet is a no-brainer, with both Brent and WTI crude already having tested below $35 (Dh128.45) a barrel. The second part relies on history repeating itself insofar as when the bottom is reached, the rebound tends to be rapid………………………………………..Full Article: Source

2016 Looks Like Another Bad Year for Gold

Posted on 04 January 2016 by VRS  |  Email |Print

Largely influenced by U.S. monetary policy and dollar flows, the price of gold has fallen about 10% in 2015 as some investors sold the precious metal to buy assets that pay a yield, such as equities. “The key factor for gold remains the strong dollar and that ultimately trumps all other issues including the economy and the geopolitics,” said Ross Norman, chief executive of bullion broker Sharps Pixley.
The dollar was on track for a 9% gain this year against a basket of major currencies, making dollar-denominated gold more expensive for holders of other currencies. Other precious metals have also been hit by dollar strength and the gold slump, and were headed for sharp annual declines………………………………………..Full Article: Source

Not so shiny: A bad year for commodities (Video)

Posted on 30 December 2015 by VRS  |  Email |Print

A multi-billion dollar lawsuit for the world’s biggest iron-ore miner, BHP Billiton, after a fatal dam burst in Brazil. And a sea of plunging commodity prices throughout the year. It could be an understatement to say it’s been a bad year for commodities. Head of Currency Strategy at CIBC, Jeremy Stretch says: “It’s been almost a perfect storm as far as the commodities sector has been concerned.”
Iron ore, copper and nickel all showing the same trend, down. Conspiring against the sector, Jeremy Stretch from CIBC lists the slowdown in China, commodities priced in a strengthening dollar and basic laws of supply and demand. Jeremy added: “I think there’s also a legacy of the significant increase in investment that we’d seen over the course of the last decade or so, almost on the presumption that the Chinese growth miracle or the Chinese growth backdrop would continue at the same degree or pace.” ……………………………………….Full Article: Source

Gold and Silver Forecast 2016

Posted on 30 December 2015 by VRS  |  Email |Print

Forecasting today’s volatile, high-frequency machine driven and manipulated futures markets using fundamental analysis is futile, as a great many precious metals bulls will attest. To complicate matters, an obsession with Fed policy dominates all markets. Officials at the Federal Reserve are often less than forthcoming and are just as bumbling as the Soviet bureaucrats when it comes to centrally planning our economy.
Nevertheless, beneath all of the artificial influences and all of the leveraged paper, the gears of the physical market for gold and silver still turn. We can be sure prices will reflect actual supply and demand for physical metals at some point, even if we do not know when. With that in mind, here is a look ahead to 2016………………………………………….Full Article: Source

Gold: What Really Drives Prices?

Posted on 29 December 2015 by VRS  |  Email |Print

What stops a trend? There are a litany of answers that can fill in here, and many of them are ‘right’ to some degree or have at least some pertinence, but if you really get down to brass tacks – what is it that kills a trend? At it’s core, all trends stop (and all prices are driven) for two very simple but related reasons: New buyers/sellers or a lack thereof. That’s really it.
Much of financial media is focused on the inputs compelling those forces, but in it’s most simplistic form – price action is really just driven by sentiment. It’s the reasons driving that sentiment that has the world transfixed on the news. If something really bad happens, a bunch of new sellers will often want to jump in the market and this can drive prices lower………………………………………..Full Article: Source

Will 2016 herald recovery, consolidation of commodities?

Posted on 28 December 2015 by VRS  |  Email |Print

If 2015 was the year in which the growing oversupply of key commodities led to a rout in prices, will 2016 bring the point of capitulation, leading to consolidation and the start of recovery? That would certainly be the hope of many beleaguered commodity producers, be they members of OPEC, shale gas drillers in North America or the big companies that bet their futures on what they thought would be China’s endless appetite for coal, iron ore, copper and liquefied natural gas (LNG).
But the problem with hoping for a rationalisation of supply is that everybody wants someone else to shut down or cut production. Everywhere in commodity markets, producers are still following the tactics that have largely failed for the past few years………………………………………..Full Article: Source

Seven (possibly) magnificent commodity bets for 2016

Posted on 28 December 2015 by VRS  |  Email |Print

It’s always tempting for commodity analysts to issue forecasts for the coming year, even though we intrinsically know that the future is inherently uncertain and even the most reasoned expectations can be easily confounded by events.
With that in mind, and with a nod to my fellow Australians’ love of a punt, I’ve decided rather to do a list of bets I may be tempted take in commodity markets in 2016, assuming I was allowed to wager. 1. Crude oil will trade both below $30 a barrel and above $60 in 2016………………………………………..Full Article: Source

2016 will be a year of living dangerously for the global economy

Posted on 28 December 2015 by VRS  |  Email |Print

Economic forecasting is a mug’s game. One thing that has been learned from the financial crisis and Great Recession is that even those equipped with the most sophisticated models get it wrong, sometimes spectacularly. So it is with both humility and trepidation that I will try to fulfil a promise made last week and make predictions for what is going to happen in 2016. In all honesty, the future is unknowable and anybody who says otherwise is lying.
So, with that caveat, here’s what I think might happen. At some point, a recovery built on booming asset prices, weak growth in earnings and rising personal debt is going to lead to another huge financial crisis - but not in the next 12 months………………………………………..Full Article: Source

Why commodities were cool to the Fed

Posted on 21 December 2015 by VRS  |  Email |Print

After keeping its interest rates close to zero for six years, the Federal Reserve last week raised rates by 25 basis points. But other than oil, no other commodity in the global market has reacted sharply. In the case of oil too, the reaction was partly due to the news of higher US crude inventories. The key reason for the Fed rate hike turning a non-event for commodities was that the news was already discounted by the market.
Commodities from oil to base metals and gold have been in a freefall since 2012, even as the US Fed began to talk of tighter money policies. The US Dollar index (which measures the value of the greenback against six major currencies) has rallied since then to hit the 100-mark, gaining 24 per cent. Copper and aluminium have dropped 30 per cent and gold has plunged almost 50 per cent………………………………………..Full Article: Source

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