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Jim Rogers: Don’t rule out a bull run in commodities

Posted on 27 August 2015 by VRS  |  Email |Print

Oil prices are trading near a six-year low, copper futures have shaved off 20% year-to-date and wider panic has grabbed the commodities market in fears over a sharp slowdown in China. There are plenty of reasons to be downbeat on the resources industry at the moment, but don’t count out a comeback for the depressed sector, says commodities veteran investor Jim Rogers.
“As far as commodities are concerned, it’s all about supply and demand, and you’re having huge cutbacks in supply. We’re already having supply problems in some agricultural products and we’re going to have problems with oil products,” he said……………………………………….Full Article: Source

Commodity rout unlike 2008 recession, no China to the rescue

Posted on 26 August 2015 by VRS  |  Email |Print

With the prices of many major commodities currently plumbing depths last seen six years ago, what are the chances of a repeat of the China-led boom that lifted resources out of the 2008 recession funk? To answer the question it’s worth looking at what is the same and what is different about the weakness in commodity prices between 2008-09 and now, and the answer is not much is the same.
The main similarity is simply that prices are weak and have fallen precipitously in a relatively short period of time. Brent crude fell by about 75 percent between the all-time high in July 2008 and the low in December that year………………………………………..Full Article: Source

The 21 commodities that say China isn’t the problem: Russell

Posted on 26 August 2015 by VRS  |  Email |Print

One of the reasons advanced for the plunge in commodity prices is concern over the outlook for Chinese demand for raw materials as growth slows in the world’s second-largest economy. But these are fears not necessarily in evidence, as can be seen by trawling through the detailed customs data for July.
There were at least 21 commodities that showed increases in imports greater than 20 percent in July this year, compared to the same month in 2014. While it’s true that many of these commodities are minor, there are some fairly major ones showing strong growth as well, led by crude oil, which saw imports jump 29.3 percent in July from the same month a year earlier………………………………………..Full Article: Source

Copper: Why Price Of The Metal Could Affect You

Posted on 26 August 2015 by VRS  |  Email |Print

Why Should I Care About Copper? It is used in everything from cars to electricity transmission, so its price performance is considered an accurate reflection of the health of the global economy. Hasn’t Copper’s Price Been Falling Like Everything Else? Yes. Lower demand from China, the world’s biggest consumer of base metals, has meant prices have fallen to their lowest levels since 2009.
High-grade copper has fallen nearly 20% so far this year, helping to push Bloomberg’s Commodity Index to its lowest in 16 years. Although the metal is now trading at around $2.30 per pound - down from its record $4.60 in early 2011, the price hasn’t proved as volatile as the other commodities………………………………………..Full Article: Source

Commodities crash to ‘99 level on China fears

Posted on 25 August 2015 by VRS  |  Email |Print

Commodity prices hit their post-crisis peak in early 2011, and have generally been sliding since then. They are now down to where they were in 1999, before the 2000s commodities boom began. The Bloomberg Commodity Index of 22 raw materials from oil to metals lost as much as 2.2% to 85.8 points, the lowest level since August 1999.
Crude oil, aluminium, iron ore, copper, zinc, coal and other industrial commodities looked at a rout due to weaker demand from China, one of the world’s largest consumers of raw materials. China accounts for over 40% of global consumption of such commodities. Brent for October settlement declined as much as 5% to $43.28 a barrel on the ICE Futures Europe exchange, the lowest price since March 2009………………………………………..Full Article: Source

Why commodities have crashed

Posted on 25 August 2015 by VRS  |  Email |Print

Commodity prices have fallen to their lowest level since the financial crisis and — by at least one measure — to the lowest this century. While the natural resources sector has been caught up in fears about China’s growth slowdown, each commodity still has its own market dynamics. Here is a quick guide to what is happening.
Growing signs that the oil glut will persist has unnerved traders and investors. But it is China that is spreading real fear. The country has been a bigger contributor to oil demand growth than any other in the past decade, so any slowdown in the Chinese economy may spell bad news for crude consumption………………………………………..Full Article: Source

Looking for a safe haven? Here’s why gold won’t work

Posted on 25 August 2015 by VRS  |  Email |Print

You hear it again and again. When markets get volatile or uncertainties spike, buy gold. It’s traditionally considered one of the safer assets because it acts as a store of value. But the precious metal pays neither a dividend, coupon nor rent.
So we crunched the numbers using data analytics platform Kensho to find out whether gold’s safe haven status really holds up. According to statistics going back to 2005, a bet on gold in times of market turbulence is often no better than a coin toss………………………………………..Full Article: Source

Economy shaky amid delincing commodities, stocks and China slowdown

Posted on 24 August 2015 by VRS  |  Email |Print

We’ve had just over six years of quantitative easing. So how’s that working out? The US oil benchmark, West Texas Intermediate, has dipped below $US40 a barrel, its lowest level since 2009, the year QE kicked in. The Dow lost 1000 points last week, its worst weekly fall since October 2008 (the month after the Lehman Brothers collapse kicked off the GFC).
On Friday copper lost another $US50 to close at $US5040 a tonne; that day, and on Tuesday, it dipped below the critical $US5000 mark. Aluminium fell to a new low of $US1555/tonne. Nickel is back up over $US10,000 but, as it fell to $US9100 the week before, the reports are that traders are sitting on their hands waiting for another big dip. As it was, the metal lost $US215 on Friday to close at $US10,120/tonne. Tin dropped $US400 on Friday, closing at $US14,895/tonne………………………………………..Full Article: Source

Safe Haven Gold May Confirm Bullish Technical Cue

Posted on 24 August 2015 by VRS  |  Email |Print

As global investors dump stocks and risky emerging market assets, the safe haven U.S. dollar and gold prices have rallied. The daily gold chart could soon confirm a bullish technical signal that might encourage more speculative buying. If the price of gold - denominated in U.S. dollars - closes Monday above $1,173.04/oz, it will be inside the daily Bollinger uptrend channel and also above the Ichimoku Cloud resistance zone.
These two bullish signals could spur the pair toward the ceiling of the uptrend channel - currently at $1,209.15/oz. But if China’s central bank loosens monetary policy this week - as some are expecting - risk appetite could be revived and gold would then retreat. Gold is now trading at $1,158.10/oz from its Friday close of $1,160.65/oz………………………………………..Full Article: Source

Is China to Blame for the Commodities Slump? (Video)

Posted on 20 August 2015 by VRS  |  Email |Print

Sanford Bernstein Senior Analyst Paul Gait and Bloomberg’s Javier Blas discuss the commodities crunch as oil extends its decline and copper tumbles for a fifth day. They speak to Bloomberg’s Guy Johnson and Caroline Hyde on “Countdown.”.………………………………………Full Article: Source

Is gold’s steadiness now a warning about other markets?

Posted on 20 August 2015 by VRS  |  Email |Print

Gold bullion closed little changed at $1,117.50, platinum was off 0.3 percent, while silver and palladium were down close to three percent. The base metals sold off again yesterday with copper and aluminium setting fresh lows, with copper breaking below $5,000 to set a low at $4,983 and aluminium reaching $1,549.50. On average, the complex was off 2.1 percent.
This morning the base metals lie between being little changed or higher, with nickel up 0.7 percent at $10,425, aluminium is up 0.3 percent and zinc is up 0.2 percent, while the rest are little changed with copper at $5,014.50, Volume has picked-up to 4,360 lots……………………………………….Full Article: Source

Gold Jumps Most in a Week as FOMC Minutes Eases Rate Concern

Posted on 20 August 2015 by VRS  |  Email |Print

Gold advanced the most in a week after Federal Reserve officials said they need more evidence of strength in the economy and a pickup in inflation, reducing wagers that policy makers will soon raise U.S. interest rates.
Fed officials said they want more indications that the labor market is healing and that inflation is moving toward their goal, according to minutes of last month’s Fed meeting released Wednesday. The prospect of higher rates makes gold unattractive because the metal doesn’t pay interest………………………………………..Full Article: Source

China, Commodities, Currencies Challenge Emerging Markets (Video)

Posted on 19 August 2015 by VRS  |  Email |Print

Anastasia Amoroso, global markets strategist at JPMorgan Asset Management, discusses how the fall in global commodities prices impacts economies and currencies linked to the Chinese economy. She speaks on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Gold is undervalued for the first time since 2009

Posted on 19 August 2015 by VRS  |  Email |Print

The Bank of America Merrill Lynch survey of what fund managers are doing with their money shows a few similarities between the markets of today and the post-Lehman collapse of 2009. Investors are full of “bearish sentiment” with two-thirds saying a Chinese recession and an emerging market debt crisis are the two biggest tail risks out there. Tail risks being events you don’t expect to happen, but are possible.
Cash holdings are up at 5.2%, near the record 5.5% seen in the wake of the global financial crisis, while a slim majority say gold is undervalued. The last time the gold market had signal like this it was 2009 and the yellow metal more than doubled in price within two years………………………………………..Full Article: Source

Will a smaller global commodities appetite benefit Canada?

Posted on 18 August 2015 by VRS  |  Email |Print

Popular opinion suggests any slowdown in resource demand from China, which is becoming more desperate in its attempts to revive its flagging economy, will be especially bad for a commodity-dependent economy such as Canada’s. That may well be the case, but it does overlook at least one key silver lining. Sharply lower commodity prices are now offering Canada an opportunity to push the reset button on an economy that’s become distorted by an overdependence on resource markets.
Whether you’re talking about oil, coal, or copper, it seems as if all roads have led to China for going on 20 years. With the sun now appearing to set on China’s track record of robust economic growth, questions are now being asked about whether the country might follow the example of Japan’s economy, which set the world on fire decades ago before sliding into a protracted period of stagnation that it’s still struggling to shake off………………………………………..Full Article: Source

China Doubles Gold Buying, Yuan Devaluation the Big Focus for Bullion Gains

Posted on 18 August 2015 by VRS  |  Email |Print

Gold bullion rose near $1120 per ounce in London trade Friday, heading for only the second weekly rise in 8 as China followed this week’s Yuan devaluation by reporting additional gold reserves for the second time in a month. The Yuan rose slightly on the FX market, recouping a little of the week’s earlier 3.5% drop after the People’s Bank of China (PBoC) moved Tuesday to a ‘market determined’ reference rate for its currency.
Asian shares held flat, but Shanghai equities closed the week almost 6% higher from last Friday as China’s securities regulator said Beijing may reduce its recent intervention to support the market after this summer’s near 30% plunge. Eurozone stock markets fell again, with Germany’s Dax index dropping 4.5% for the week as the single currency extended its rise on the FX market………………………………………..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

6 Economic Factors Keeping Commodity Prices Down

Posted on 14 August 2015 by VRS  |  Email |Print

In today’s Outside the Box, good friend Gary Shilling gives us deeper insight into the global economic trends that have led to China’s headline-making, market-shaking devaluation of the renminbi. He reminds us that today’s currency moves and lagging growth are the (perhaps inevitable) outcome of China massive expansion of output for many products that started more than a decade ago. China was at the epicenter of a commodity bubble that got underway in 2002, soon after China joined the World Trade Organization.
As manufacturing shifted from North America and Europe to China –with China now consuming more than 40% of annual global output of copper, tin, lead, zinc and other nonferrous metal while stockpiling increased quantities of iron ore, petroleum and other commodities – many thought a permanent commodity boom was here………………………………………..Full Article: Source

Why tiny tin stands out in the commodities rout: Andy Home

Posted on 14 August 2015 by VRS  |  Email |Print

The commodities rout continues. China’s devaluation of its currency, or, officially, its “one-off move towards a market-oriented exchange rate” (delete according to preference), has sent industrial metal prices tumbling to fresh multi-year lows. Well, all except one. Step forward tiny tin.
On the London Metal Exchange (LME) three-month metal hit its six-year low of $13,365 per tonne on the last day of June, since when it has staged a modest recovery to a current $15,170. Tin is one of the least liquid contracts traded on the LME and often has a perverse tendency to decouple from the rest of the base metals complex before belatedly catching up with the broader trend………………………………………..Full Article: Source

Thanks to China, It’s Time to Look at Slumping Commodities

Posted on 13 August 2015 by VRS  |  Email |Print

The drop in Chinese construction is pulling the rug out from under commodity prices, so investors seeking to do some bottom fishing may want to get out their rods and reels, said Patrick Chovanec, chief strategist at Silvercrest Asset Management. “This is the point in the cycle where you actually want to start looking for value and getting ready for the next part of the cycle,” said Chovanec.
Regarding the Chinese decision to devalue its currency, Chovanec regards the policy as a mistake because it further limits the U.S. Federal Reserve’s ability to maneuver. The People’s Bank of China’s so-called “one-off” correction was taken a step further on Wednesday as the central bank devalued the yuan by another 1.6% after a 1.9% devaluation a day earlier………………………………………..Full Article: Source

Gold Gives Up Gains as Commodity Slump Revives Deflation Concern

Posted on 12 August 2015 by VRS  |  Email |Print

Gold gave up most of its earlier gains as the meltdown across commodity markets revived concerns over deflation, cutting the appeal of precious metals as a store of value. The Bloomberg Commodity Index of 22 components had its biggest intraday loss in a month, led by declines in wheat and oil. Investors dumped raw materials after China surprised markets by devaluing its currency, making imports of grains, energy and metals more expensive.
Gold earlier rose as China’s move spurred demand for haven assets, but as the losses in commodities deepened, bullion pared its advance. “Things would have to get really out of control for gold to achieve really higher levels and stay there,” Tim Evans, the chief market strategist at Long Leaf Trading Group Inc. in Chicago, said in a telephone interview………………………………………..Full Article: Source

Paulsen: ‘Excellent chance’ of commodity climb if dollar falls

Posted on 11 August 2015 by VRS  |  Email |Print

Commodity prices and related stocks rebounded Monday, and while it’s too soon to call a bottom following a rout in the commodity complex, closely followed market watcher James Paulsen said Monday the outlook could look brighter within a year.
The biggest factor in a commodities turnaround will be the dollar, the Wells Capital Management chief investment strategist said. If it continues to go higher, commodities will remain under pressure. However, Paulsen said he believes the greenback has been in “peaking mode” since March………………………………………..Full Article: Source

Rumors of commodities’ demise are not being exaggerated

Posted on 10 August 2015 by VRS  |  Email |Print

Commodities are the gift that keep on not giving. The sector is in the throes of an ‘annus horribilis’, having gotten wrecked over the past few years despite massive liquidity that should have boosted their value. Bullish investor after bullish investor has tried to call a bottom, in a set of calls that now appear ill-conceived and money losing.
In the past week, the S&P GSCI Commodity Index has dropped 3.4 in the past week, as crude oil plunged 7 percent to hit multi-month lows, and a host of metals fell alongside it………………………………………..Full Article: Source

Barron’s Likes Commodities; Cramer Doesn’t

Posted on 10 August 2015 by VRS  |  Email |Print

Over the weekend, it was reported that Warren Buffett’s Berkshire Hathaway is nearing a deal to buy industrial company Precision Castparts (PCP) for a price tag that could exceed $30 billion, according to the Wall Street Journal. And demand for U.S. Treasuries seems to be as strong as ever despite data that show that China has reduced its holdings recently in U.S. debt by about $180 billion, Bloomberg reported.
Benchmark 10-year yields fell only about 0.6 percentage point even though the largest foreign holder of U.S. debt pared its stake between March 2014 and May of this year, based on the most recent data available from the Treasury Department………………………………………..Full Article: Source

Why oil prices could stay lower for longer

Posted on 07 August 2015 by VRS  |  Email |Print

The oil market is setting up for a prolonged period of low prices, unless there’s a dramatic shift in strategy by producers. Those producers range from Saudi Arabia and Iraq, to the upstart shale drillers of Texas and North Dakota whose surprising success initially set off a market share battle with the world’s largest oil exporters.
“What you’re seeing now is the price crisis some had expected last winter. Just a few weeks ago, confidence was coming back and people were saying, ‘$70 was the new $100.’ Reality intruded,” said Daniel Yergin, vice chairman of IHS………………………………………..Full Article: Source

Byproduct of metal price meltdown is a higher silver price

Posted on 06 August 2015 by VRS  |  Email |Print

Silver futures trended weaker on Wednesday with September contracts down slightly to exchange hands at $14.55 an ounce in afternoon trade. Like gold, silver went off to the races at the start of the year to hit a 2015 high of $18.36 on January 22 before falling back to trade down 7% for the year. The precious metal is 28% below the level it was trading at a year ago.
A new report by Capital Economics sees a brighter outlook for silver in the second half and out to 2017. The independent research house says one of the primary reasons for the anticipated higher silver price is the nature of silver mine supply………………………………………..Full Article: Source

Is gold doomed?

Posted on 05 August 2015 by VRS  |  Email |Print

After gold declined to a 5-year low, the message is that gold is doomed. Is it really true? In the past few weeks, the price of gold has suffered a significant decline, indicated by multiple technical signals and triggered by China’s disappointing disclosure of its official gold reserves on July 17 and the following heavy selling in the Asian market.
Gold bullion dropped by 6% in July, significantly deteriorating the market sentiment toward the yellow metal. Indeed, the sentiment indexes fell to record lows. It seems that quite a few gold investors threw in the towel, as hedge funds became net-short in gold for the first time since 2006………………………………………..Full Article: Source

Gold drop on rates bet as palladium sinks to lowest since 2012

Posted on 05 August 2015 by VRS  |  Email |Print

Gold dropped for a second day as commodities slumped to a 13-year low and amid speculation the Federal Reserve will raise interest rates as early as September. Palladium traded at the lowest level since 2012.
Bullion for immediate delivery fell as much as 0.3 percent to $1,083.75 an ounce and was at $1,084.55 at 8:05 a.m. in Singapore, according to Bloomberg generic pricing. Prices have lost 8.4 percent this year. Gold tumbled to a five-year low in July as Fed Chair Janet Yellen said the central bank is on track for raising rates, curbing the appeal of bullion as it doesn’t pay interest like assets such as equities. ……………………………………….Full Article: Source

The real message of plunging commodities

Posted on 04 August 2015 by VRS  |  Email |Print

The Chinese stock market recently saw its biggest selloff in eight years as the dramatic 8.5-percent fall in Shanghai “A” shares also rattled markets around the world. For the past few weeks, China has been balancing its desire to keep the equity market from a complete meltdown, while still courting the international investment community with hopes of being a dominant player in the capital and currency markets.
But recently, the International Monetary Fund warned China’s government about its concern over limiting investors’ freedom to take equity out of financial markets. These concerns were raised when the IMF met with officials in to discuss the chances of including the yuan in the fund’s basket of currencies, also known as Special Drawing Rights………………………………………..Full Article: Source

Roubini: Combination of Factors Weighing on Commodities (Video)

Posted on 31 July 2015 by VRS  |  Email |Print

Roubini Global Economics Chairman Nouriel Roubini talks about the factors affecting commodity prices and the reduced pricing power of OPEC. He speaks on “Bloomberg Surveillance.”……………………………………….Full Article: Source

Is it Time to Buy Commodities?

Posted on 31 July 2015 by VRS  |  Email |Print

A quick glance at recent headlines would lead a reasonable person to assume that this year’s big losers are Greek and Chinese stocks . Yet, despite all the furor in the news , the Athens Stock Exchange is down less than 5 percent year-to-date, while the Shanghai Composite remains up more than 10 percent, according to Bloomberg data.
The real damage has been in the commodity complex. Through late July, year-to-date crude oil prices were down around 10 percent, platinum prices were off nearly 20 percent and coffee prices were down almost 30 percent, Bloomberg data shows. Based on the Bloomberg Commodity Index of 22 commodities, the overall complex is now trading at a 13-year low. Several factors account for the sell-off………………………………………..Full Article: Source

The Real Reason Gold Prices Are Falling

Posted on 31 July 2015 by VRS  |  Email |Print

Gold is in the news for all the wrong reasons at the moment. The price of the metal tumbled this month, maintaining its downward trend for the year. In fact, bullion had its worst month in over two years in July. At US$1,092, an ounce of gold is now worth what it was back in 2010.
Its future prospects, if analysts are to be believed, are worse still. A recent Bloomberg survey suggested that prices could drop to US$984 an ounce by January. That would represent a 10% decline from its present price point. A separate Bloomberg survey highlighted that over half of respondents believe gold is heading for its third consecutive annual loss in 2015………………………………………..Full Article: Source

Here’s Why Silver Prices are About to Soar

Posted on 31 July 2015 by VRS  |  Email |Print

If you’re looking to get rich in precious metals, this might be the most important message you’ll ever read. Because today, I’m going to show you why silvers prices could soon soar through the roof. If you want to get in on this opportunity, then you have to act fast.
Let me explain. If you take a look at what has been going on in the silver futures market, you’ll see that the grey metal is being oversold. At the beginning of this year, open interest in silver futures was around 150,000 contracts. Open interest refers to the number of futures contracts that are not closed or delivered. By July 28th, open interest in silver futures increased to around 190,000. That was a 26.7% increase in a less than seven months!……………………………………….Full Article: Source

Forget whether $100 silver is possible, how about $1000?

Posted on 31 July 2015 by VRS  |  Email |Print

I don’t know of many charts out there that a bullish investor since 2011 would look at with more disgust than the silver chart. It has been an exceptionally painful experience for those bullishly inclined since 2011. In fact, silver has dropped 70% from its 2011 heights to its recent lows, and it is still not done. But this story certainly has a “silver lining” for those who are willing to be a bit more patient.
On Aug. 30, 2011, I wrote my first public column about silver, which called for a market top in silver with a shorting target of 42.90, and that it must remain below 44.30 for the downside to ensue. Within the same column, I provided a downside target of 26.80 in the futures………………………………………..Full Article: Source

Gold price not being driven by fundamentals

Posted on 30 July 2015 by VRS  |  Email |Print

Since around mid-June, gold prices have come under substantial selling pressure. One of the main drivers behind this fall has been the on-going debate about interest rates. While the general narrative supposes that higher interest rates will have a negative impact on gold, I have often stated that this assumption is not correct.
The historical record shows that gold tends to rise with nominal interest rate rises – as was seen from 2004 to 2008 and in the 1970s – and the Fed is unlikely to raise rates in any meaningful way while deflationary forces persist. According to the WGC, although higher interest rates would make the dollar more attractive to investors looking for higher-yielding assets, the current narrative that this scenario would be bearish for gold is incorrect………………………………………..Full Article: Source

Warren Buffett once said that Gold is a way of going long on fear. Do you agree?

Posted on 30 July 2015 by VRS  |  Email |Print

The world market was awash with a swarm of gold bugs after the financial crisis of 2008. Gold bugs are advocates of investments in Gold as a safe haven and a guard against financial Armageddon, hyperinflation, currency collapses and geopolitical troubles.
A few years ago, gold bugs argued the precious metal was a can’t-miss investment given the ultra-loose monetary policies around the world and the prospect of higher inflation. However, you can’t find many gold bugs as the metal prices have taken a big tumble. The cumulative returns since 2010 for gold HAS almost BEEN nil compared to a return of 70 per cent by Dow Jones Industrial Average and 57 per cent by BSE S&P Sensex………………………………………..Full Article: Source

Goldman says Chinese metals in for a ‘hard landing’

Posted on 30 July 2015 by VRS  |  Email |Print

China’s statistics pose multiple difficulties for analysts, especially since they were called “man-made” by the current premier, Li Keqiang, in a US diplomatic cable. The country grew at 7 per cent in the second quarter of this year according to Beijing, but commodity prices, especially metals, have fallen to some of their lowest price levels in six years.
That is leading analysts to take a new stab at working out just how large the slowdown in commodity demand really is in the world’s biggest consumer. Working out China’s demand is not easy, however. In many cases, data are obfuscated by imports from Hong Kong, a Chinese territory, and the practice of importing metal as collateral to obtain bank loans………………………………………..Full Article: Source

How bad is July proving for commodities?

Posted on 29 July 2015 by VRS  |  Email |Print

Concerns about a slowdown in China, renewed strength in the US dollar and persistent supply concerns have combined to make it an ugly July for commodities. But just how bad has it been? The S&P GSCI total return index, which tracks the price of 24 commodities, has fallen through the bottom it reached during the the financial crisis and is at its lowest level since February 2002, writes Mamta Badkar.
Its 13.6 per cent decline this month makes July the seventh worst month on record for the index which dates back to 1970, according to data from S&P Dow Jones Indices. All of the 24 commodities in the index are down for the month, with the exception of lean hogs. Losses for the commodities in the index have only been so widespread once before - in September 2008………………………………………..Full Article: Source

Why China, commodities won’t sway Fed: Ex-Fed prez

Posted on 29 July 2015 by VRS  |  Email |Print

As the Fed headed into its two-day meeting, former Richmond Fed President Al Broaddus said Tuesday it’s a “very close call” on whether policymakers will decide to increase interest rates for the first time in nine years in September or December.
“I think the expectation right now probably has to be December,” he told CNBC’s “Squawk Box”—though he personally would like to see a September hike. “I think they’d like to get on with it. And they should get on with it.” The motivation behind his urgency has nothing to do with worries about a “big bulge” in inflation around the corner, said Broaddus. “I’d just like to see us get it off the table. … It’s a distraction.”……………………………………….Full Article: Source

10 Reasons to Love the Oil Price Drop

Posted on 29 July 2015 by VRS  |  Email |Print

Don’t let tumbling oil prices darken your outlook on stocks or the economy. Yes, U.S. crude prices have dropped into an official bear market, down around 20% since the beginning of June, which will undoubtedly hurt the oil industry and companies like Exxon Mobil (XOM) and BP (BP).
But there are a number of benefits from the decline. Here are 10 of them: Stocks Tend to Rally After Oil Price Drops. When the price of oil goes down, stocks tend to surge. That’s the conclusion of a study published in The Journal of Financial Economics in 2008 by professors Gerben Driesprong, Ben Jacobsen, and Benjamin Maat. They found that when oil prices moved down one standard deviation (that’s a price movement of about 11%) then stocks would rally by 1% the next month………………………………………..Full Article: Source

As Commodities Tumble, Don’t Count Out Gold

Posted on 28 July 2015 by VRS  |  Email |Print

The commodity collapse is undeniable. Just look to 2015 year-to-date returns: Oil has shed 16%, Nickel is down 25%, wheat has lost 15%, and sugar has plunged 28%. Yet the plunge in commodity prices doesn’t seem to be occurring in unison with the pace of global economic activity.
Precious metals seem the most oversold as judged by CFTC managed money speculative positions – perhaps the reasoning for Monday’s $9 bounce in COMEX August futures, which have gold at $1094.50, or $22.20 higher than Friday’s contract low price of $1072.30………………………………………..Full Article: Source

Global Growth Worries Pummel Commodities

Posted on 27 July 2015 by VRS  |  Email |Print

Investors are bailing on commodities amid mounting worries about the pace of global growth. New data showing China’s factory activity hit a 15-month low and a leaked Federal Reserve memo betraying concerns about how fast the U.S. is growing added to concerns Friday and accelerated the selloff of commodities—from oil to gold to copper.
Money managers reduced bets on higher oil prices to their lowest level in 2½ years, while ramping up bets on lower copper prices to their most bearish in two years, according to weekly data from the Commodity Futures Trading Commission. Money managers also turned net-bearish on gold futures and options this past week for the first time ever in data going back to 2006………………………………………..Full Article: Source

The negative feedback loop broadens the commodities sell-­off

Posted on 27 July 2015 by VRS  |  Email |Print

Goldman Sachs have been arguing since 2013 that commodities are caught in a “negative feedback loop between excess production capacity, US dollar appreciation and weaker EM economic growth”. They recently termed these three key themes the 3D’s of macro – deflation (excess production capacity and rising productivity), divergence (stronger US dollar and weaker EM currencies) and deleveraging (significant EM credit and macro imbalances).
“They are not only at the center of all of our views but have been a decade in the making and hence will likely take years to play out. Further, they are mutually self­-reinforcing. Lower commodity prices reinforce the US recovery and dollar appreciation; while weaker commodity currencies keep downward pressure on commodity cost curves (mainly through lower wage and energy costs),” say Goldman………………………………………..Full Article: Source

Here’s why gold is doomed

Posted on 27 July 2015 by VRS  |  Email |Print

A little less than four years ago, the world looked like it was about to end and gold hit an all-time high of $1,895 an ounce. The United States had manufactured a debt crisis, and Europe hadn’t been able to manufacture a solution to its actual debt crisis, so panicky investors sought safety in the same place they had for 5,000 years: a shiny rock.
The only problem, as you might have noticed, is that the world did not, in fact, end. It’s still here, so gold prices aren’t. The yellow metal has fallen 42 per cent from its peak and 8 per cent in just the last month, despite the fact that the Federal Reserve has printed more than $1.5 trillion in this time. That, after all, is what gold aficionados said would make its price go to the moon, if not infinity and beyond. So what’s happened? Well, exactly what economists said would happen………………………………………..Full Article: Source

Gold price meltdown points to its waning lustre

Posted on 27 July 2015 by VRS  |  Email |Print

Historically, gold buying has been fuelled in a scenario when the U.S. dollar has been weakening. This is how gold came to be bestowed a ‘safe haven’ status. The sharp decline in gold price early last week and the subsequent tepid buying of the metal in international markets point to gold’s clear falling out of favor among investors at least for now.
Gold fell below the $1,100 per ounce level and sought its lowest point since April 2010 while in India, it slid below Rs 25,000 per 10 gram levels, falling to its 5-year lows. An improving U.S. economy, a consequently stronger dollar, an expected rise in interest rates by the U.S. Federal Reserve and an expected slowing of demand for gold from China have been attributed as key factors for the bearish streak last week………………………………………..Full Article: Source

2017 could prove to be gold’s ‘magic’ year

Posted on 24 July 2015 by VRS  |  Email |Print

Gold might have lost 40 percent of its price over the last four years, capping a stellar 10-year bull run, but analysts are already predicting a possible bottom for the precious metal. Hovering around a five-year low on Thursday at $1,102 an ounce, gold has been hit by low inflation, a stronger dollar and fears over Chinese demand.
The precious metal has recently seen its longest losing streak in nearly two decades and a rout on Monday led to its deepest losses in nearly two years. Many analysts like Sandy Jadeja, chief market strategist at Signal Pro, see more short-term bad news for bullion. But, he told CNBC this week that 2017 would be where he starts “stepping in” to add more to his portfolio………………………………………..Full Article: Source

Gold: The Unusual Commodity

Posted on 24 July 2015 by VRS  |  Email |Print

Gold has had a challenging week. Its price has been very volatile due to the nature that it is driven by investor sentiment and economic confidence. Gold it is a peculiar commodity, in so far that it is very light considering its value and doesn’t spoil. Unlike corn or coffee it cannot be consumed, therefore it doesn’t have a kind of fundamental demand.
Yes, it is true that it can be demanded to be transformed into jewellery, but they are also a store of value. Therefore investors tend to seek shelter in gold, when times appear destitute………………………………………..Full Article: Source

Gold Price Headed to $450.00? $2,000 is More Likely

Posted on 24 July 2015 by VRS  |  Email |Print

A friend recently said to me, “No matter how you look at it, the gold price is going down to $450.00.” He argued that there’s simply no reason for the yellow metal to trade at $1,100 now.
He also added, “All the problems everyone was worried about are slowly diminishing and the precious metal is simply reacting to it.” Here’s a little background: he’s a trader. He looks for opportunities on a short-term basis and rarely bothers holding any position for longer than one month………………………………………..Full Article: Source

Is gold’s 50% bull market fall the launchpad for $8,800 an ounce?

Posted on 23 July 2015 by VRS  |  Email |Print

Will the author of ‘Hot Commodities’ and the man who spotted the boom in the sector before anybody else, Jim Rogers now start buying gold? He said earlier this year that he would when the bull market showed a 50 per cent retracement. That is to say the gold price had fallen to halfway between the $287 an ounce it was in 2000 to the $1,923 it reached in 2011.
Rogers astutely noted that he did not know a commodity market that had not corrected in this way before powering very much higher, and that has now happened. Perhaps he has already been out bargain hunting. After all that’s how this ex-hedge fund manager made another fortune in the 2000s, ahead of everybody else. He parked his money in commodities and went off for a three-year holiday with his then girlfriend and now wife………………………………………..Full Article: Source

Gold tumbles on global commodities rout, falling prices ahead of Fed’s rate hike prospects

Posted on 22 July 2015 by VRS  |  Email |Print

The rout in commodities deepened with prices heading for the lowest close since 2002 as the prospect of higher US interest rates sent gold tumbling. Raw materials are losing favour with investors as the dollar gains amid signals from Federal Reserve Chair Janet Yellen that the central bank may raise rates this year on the back of an improving US economy. Higher borrowing costs curb the attractiveness of commodities such as gold, which doesn’t pay interest or give returns like assets including bonds and equities.
The Bloomberg Commodity Index dropped as much as 1.1 per cent, falling for a fifth day in the longest stretch of declines since March.Gold futures sank to the weakest in more than five years while industrial metals, grains, Brent crude and US natural gas also slid as a measure of the dollar climbed to the highest since April 13………………………………………..Full Article: Source

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