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Energy Economist: Shale oil’s response to prices may call for industry re-evaluation

Posted on 30 January 2015 by VRS  |  Email |Print

Shale oil’s investment cycle is shorter and its decline profile sharper than conventional oil production. Current indicators suggest legacy declines from shale will catch up fast with the industry. This points to a sharp deceleration in US shale oil output. But, while conventional oil takes time to slow down, it also takes time to speed up.
It will be shale that is best placed to benefit from any oil price recovery, as Ross McCracken, managing editor of Platts Energy Economist, explains in this month’s selection from the publication. The full analysis can be found in the February 2015 issue, which is also issue 400 of Energy Economist. Global crude oil production has only fallen in six years since 1984 and then generally as a result of geopolitical disruptions to supply or restraint by OPEC, rather than as a reaction to price………………………………………..Full Article: Source

Physical gold demand likely positive for price in 2015: GFMS

Posted on 30 January 2015 by VRS  |  Email |Print

Underlying physical demand is starting to pick up in 2015 and will “give the market longer-term ballast” although more headwinds remain before a return to a bull market, analytical company GFMS said Thursday. In conjunction with Thomson Reuters, GFMS said in its Gold Update 2 report that professional investors are absent as the dollar “remains king. Fresh professional investment is unlikely much before there is clarity on the Fed’s timing over rate hikes.”
Continued monetary easing in Europe, Japan and China will support the dollar in the medium term, pointing away from gold investment, “especially as US equities, on an historical multiple at least, are not over-extended.” It also cautioned that recent strength in the gold price, which has been as high as $1,307/oz so far in 2015, has been driven by short-covering, not fresh long positioning………………………………………..Full Article: Source

Is Aluminum the New Doctor Copper?

Posted on 30 January 2015 by VRS  |  Email |Print

When you’re ill, it often pays to get a second opinion. For many years now, investors have turned to ‘Doctor Copper’ for an indication as to the health of the global economy. The red metal is used in everything from construction to white goods to kitchenware, and so it’s seen as a pretty accurate indicator of economic health.
But some argue copper’s lost its mojo. According to Eugen Weinberg, head of commodity research at Commerzbank, all the red metal tells us about is the state of some large emerging markets, and, more specifically, China. It may even be in danger of going the way of the Baltic Freight Index – a previous barometer for trade activity based on transportation rates that has fallen out of favor (and was replaced by the Baltic Dry Index)………………………………………..Full Article: Source

Why Jim Rogers Is Wrong About Hot Commodities

Posted on 28 January 2015 by VRS  |  Email |Print

“If you’ve got young people who don’t know what to do, I’d urge them not to get MBAs, but to get agriculture degrees,” – Jim Rogers. “All your viewers who got MBAs made a terrible mistake; they should try to exchange them for farming degrees or mining degrees”. – Jim Rogers speaking to a Bloomberg anchor.
In 2004, Jim’s book Hot Commodities was published. In the book he focuses specifically on sugar and coffee due to favourable supply demand issues. Over the few years following publication both commodities rallied hard producing gains of 155% and 232% respectively………………………………………..Full Article: Source

Gold’s First Big Test In 2015

Posted on 26 January 2015 by VRS  |  Email |Print

Some of you might think that Gold has already passed its first big test in 2015 by price being up better than 9% in this young year, despite the Dollar’s rising as well. But regular readers know such positive correlation with the Buck is not a big deal for us, our having demonstrated time and again in these updates that Gold plays no currency favourites.
Moreover, last April we wrote a Gold Update similarly entitled “Gold’s First Big Test In 2014″: ’twas just before StateSide Tax Day, which a year prior in 2013 infamously marked the unrelenting unraveling of Gold’s price from the 1600s down into the 1100s in just over 11 weeks………………………………………..Full Article: Source

Best and worst commodities in 2014

Posted on 23 January 2015 by VRS  |  Email |Print

Commodities are hugely cyclical as is all too evident at the moment, with oil and metal prices in steep decline. A look at what did well in 2014 and what didn’t reveals how fortunes change and unearths a number of surprises. Website Visual Capitalist has run an infographic illustrating the annual returns for all commodities last year - the Periodic Table of Commodity Returns - with accompanying comment.
First, the two worst performers in 2014 were the two best performers the previous year: oil and natural gas. This speaks to the short-term volatility of commodities, as well to the fact that investors need to be looking to the long term. While something may swing up and down in a short time horizon, in the long term it may prove to fulfill the investment thesis based on supply and demand fundamentals……………………………………….Full Article: Source

Declining Commodity Prices Ahead With Weak Global Economy

Posted on 22 January 2015 by VRS  |  Email |Print

Oil may be holding above $40.00 per barrel, but investors shouldn’t get too comfortable. The chart foreshadows oil prices could falter and maybe even drop below $40.00. It’s true that speculation has influenced the direction of oil to some degree, but much of the negative sentiment has to do with a declining global economy that shows some despair.
And while gross domestic product (GDP) growth in the U.S. is pretty decent, what we are witnessing in the global economy cannot be saved by what is happening domestically. That suggests weaker oil prices ahead—along with weaker commodity prices overall………………………………………..Full Article: Source

Oil price drop is ‘economic warfare against US enemies’

Posted on 22 January 2015 by VRS  |  Email |Print

The current oil price decline can be explained by heavy selling in US future markets which is part of an all-out economic war between the US and countries like Russia, Iran and Venezuela, says financial journalist, Willem Middelkoop. The current price can only partially be explained by technical factors like growing US oil production which increased by a million barrels per day in the last year.
But I think it’s quite reasonable to expect that the price declines, which we’ve seen over the last few months, were also caused by heavy selling in the American future markets, and you could call that a form of economic warfare – it is an [all]-out economic war between the US and Russia now. If we see who has more problems [caused] by current oil – they are Russia, Iran, Venezuela – these countries can be seen as enemies of the US………………………………………..Full Article: Source

IMF lowers growth outlook for commodity exporters

Posted on 21 January 2015 by VRS  |  Email |Print

The International Monetary Fund (IMF) has lowered its 2015 growth forecasts for commodity exporters, including South Africa, saying the projected growth rebound for commodity-exporting developing countries will be weaker than had been forecast in the fund’s October World Economic Outlook (WEO).
The WEO Update, released on January 20, lowered South Africa’s 2015 gross domestic product (GDP) projection to 2.1% from 2.3% in October, which was in line with the IMF’s 2014 Article IV Staff Report on South Africa released in December. The fund decreased its 2016 GDP growth projection for South Africa by 0.3 of a percentage point to 2.5%………………………………………..Full Article: Source

Is the Oil Price Collapse Temporary?

Posted on 21 January 2015 by VRS  |  Email |Print

What can we expect from the oil price in next six months and beyond? And what impact does this have on the expectations for global growth. If the collapse of crude oil quotes was temporary, it would only add noise to the global economic landscape and, apart from fuelling volatility, would have no lasting consequences.
Yet, there are reasons to believe the fall is not temporary. As Saudi Arabia has made crystal-clear, its strategy is to preserve global market share, not support market prices. This is rational: back in the early 1980s, Saudi Arabia did the opposite, cutting production to support prices, thereby subsidising its competitors, especially outside OPEC. Only in late 1985 did Saudi Arabia reverse gears and double production to regain market power………………………………………..Full Article: Source

Tough Times Ahead For Commodities After Harsh Shakeout

Posted on 20 January 2015 by VRS  |  Email |Print

After one of the worst years in memory for commodity funds, even the few managers who found a way to make money last year say they expect a difficult start to 2015. Collapsing oil and grain prices caused havoc for commodity funds in 2014, with the average actively managed fund in the Lipper Global Commodity sector losing 14.35 percent. Big names abandoned the field altogether, and investors redeemed billions.
A handful of managers were nevertheless able to exploit the sudden mid-year surge in volatility and the fall in prices. But even they expect a difficult 2015 with pressure on prices to fall further………………………………………..Full Article: Source

Not your usual oil-price decline effect

Posted on 20 January 2015 by VRS  |  Email |Print

Yup. Analysts and economists still can’t decide whether the fall in oil prices is net positive or net negative for the global economy. Unfortunately for the net positive camp, it looks increasingly like global demand and growth figures are beginning to side with the negativity team.
Indeed, the longer the oil price stays low, the more it looks like global stimulus hopes were overdone due to poor understanding of financial feedback loops in the commodity space. So what’s behind the anomaly? How did a whole school of economists get this potentially so wrong?……………………………………….Full Article: Source

Drought, Floods and Cold Save a Few Commodities From Rout

Posted on 19 January 2015 by VRS  |  Email |Print

Commodity investors at least have the weather on their side. While most raw materials are mired in bear markets, from oil to nickel to corn, cold spells and droughts are fueling a few rallies. The promise of a deep freeze last week in the U.S. sent natural-gas futures to their biggest gain in 11 months. Dry weather in Brazil, the top grower of coffee and sugar cane, sparked advances for both crops. Unusually heavy monsoon rains in Malaysia sent palm oil to the highest since July.
“The weather is always unpredictable and a wild card,” Donald Selkin, the chief market strategist at New York-based National Securities Corp., which oversees $3 billion, said in a telephone interview Jan. 16. “These products are marching to their own tune — for now.”……………………………………….Full Article: Source

Latin America 2015 outlook darkens as commodities sink

Posted on 16 January 2015 by VRS  |  Email |Print

Latin America has embarked on a painfully long period of greater austerity, and lower commodity prices and economic growth will barely pick up speed this year, a Reuters poll found Thursday. With nose-diving oil and metal prices weighing on government finances and jeopardising investments, economists in the quarterly poll chopped 2015 growth forecasts again for the region’s seven largest countries, from Mexico to Argentina.
Brazil is now expected to grow a meager 0.5 percent in 2015, down from an estimate of 1.1 percent in the prior survey and barely up from an expected 0.2 percent growth in 2014………………………………………..Full Article: Source

Why 2015 will be the year for gold: Top analyst

Posted on 16 January 2015 by VRS  |  Email |Print

Suddenly, gold is getting its groove back. After two straight years of losses, gold is off to its best start to year since 2008. And, according to one well known analyst, 2015 could have gold bugs smiling.
Sterne Agee’s precious metals and mining analyst Michael Dudas said that gold should continue to benefit from central banks’ efforts to devalue their currencies. Gold prices rose more than 2 percent Thursday to a four-month high after the Swiss National Bank shocked the world and said it would abandon its euro currency peg. The precious metal is now up more than 6 percent year to date………………………………………..Full Article: Source

Has gold finally bottomed?

Posted on 16 January 2015 by VRS  |  Email |Print

As more and more of the market turns bullish on the metals, I think it may be time to be looking for a set up for lower lows within the next few weeks. I know that sounds quite counter-intuitive, but that is simply how markets — and especially metals — work.
In November, as the metals and mining stocks were bottoming, more and more articles were coming out about how it is time to sell metals. It was the column written by Howard Gold on Marketwatch, calling for the same, which prompted me to write my column at that time. However, unlike all the others being published at that time, I was looking to the long side………………………………………..Full Article: Source

Why commodities are taking a beating again

Posted on 15 January 2015 by VRS  |  Email |Print

Commodities took a beating Wednesday, as prices for everything from industrial metals to grains slid on global growth concerns. Copper, which is often seen as an important indicator of global growth because of its use in industry, fell as much as 5 percent on Wednesday.
A host of other commodities, including palladium, rice and oats, also saw multiple-percentage point drops on the day. Although separate factors weighed on each asset, some factors affected the international commodities market. That said, some expressed that the pain could soon be drawing to an end for traders………………………………………..Full Article: Source

Expect ‘a rough 6 months’ for commodities: Analyst

Posted on 15 January 2015 by VRS  |  Email |Print

Volatility in commodities will continue as long as Saudi Arabia’s next moves are unclear, RBC Capital Markets’ chief commodities strategist told CNBC on Wednesday. Meantime, Helima Croft said, she expects “a rough six months.”
In an interview on “Squawk on the Street” Croft said she thinks the Saudis will be prepared to keep prices down only for the next six months to “bleed out as much non-OPEC oil production as they can.” “We have a situation where the crown prince’s son is quite senior in the oil ministry, and there are some reports in The Wall Street Journal that he’s not entirely happy with the lower-for-longer strategy. So I think we should look if there is a shift in Saudi strategy,” Croft said……………………………………….Full Article: Source

Nichols: Gold price has cleared top two hurdles in 2015

Posted on 15 January 2015 by VRS  |  Email |Print

Gold on Wednesday continued its strong 2015 run with futures contracts on the New York Mercantile Exchange adding as much as $10 an ounce to change hands for $1,244 an ounce, the highest since October 22. Gold has now advanced nearly 5% so far this year and is up sharply from close to four-year lows of $1,143 hit early November.
Expert commentator and economist Jeffrey Nichols of American Precious Metals Advisors, argues in his latest missive titled Gold: Pregnant with Possibility on Wednesday that in 2015 gold will shake off three years of underperformance and continue its long term uptrend:……………………………………….Full Article: Source

Commodities Fall as Stockpiles Mount Up

Posted on 12 January 2015 by VRS  |  Email |Print

Two years ago, Daniel Nilsson ’s family bought a hotel in the town of Pajala, Sweden, some 50 miles above the Arctic Circle. The nearby Kaunisvaara iron-ore mine had just started production, and the Nilssons installed new meeting facilities and revamped the nightclub. “We wanted to give the locals and the people working in the mines a great hotel to come to,” said Mr. Nilsson, its 28-year-old manager. “That’s why we bought it—we saw a future for it.”
But the price of iron ore sank last year, and with it the Lapland River Hotel’s fortunes. In October, the mine’s owner, Northland Resources , stopped operations. Two months later, Northland filed for bankruptcy………………………………………..Full Article: Source

Commodities: Deflation And The Future

Posted on 12 January 2015 by VRS  |  Email |Print

The year 2014 was the worst year for commodities in the past five and one-half years… since 2008 in the Great Recession. Prospects for a recovery in commodities prices are not good: market expectations for inflation over the next ten years has dropped from 2.30 percent last January to 1.55 percent now.
Can economic growth be rising in an environment where commodity prices are falling? Earlier in the current economic recovery, commodities seemed to be the darling of investors because the policy of quantitative easing on the part of the Federal Reserve seemed to spur on dreams, in the short run, of a bubble in commodity prices………………………………………..Full Article: Source

Gold and Oil: Who’s going to bottom out soon?

Posted on 07 January 2015 by VRS  |  Email |Print

In recent days, I have encountered a few questions related to gold and whether it would be right time to invest. In November, we had expected an uptrend in gold in the beginning of New Year and now the break of $1200 resistance levels, analysts may be watching for the next breach at $1230, 1250 upto $1280 per ounce levels.
Time and again I have told that gold price in India is basically a function of global spot prices plus import duties and local taxes. Gold demand has been fairly inelastic in the country with higher prices only raising the urge to buy more so that they don’t end up buying at still higher prices………………………………………..Full Article: Source

If gold’s going to be a winner in 2015 then silver will be the real champion as financial markets implode

Posted on 07 January 2015 by VRS  |  Email |Print

Gold and silver prices have jumped since the start of 2015 as safe haven and dollar diversification plays. But this will be nothing compared to the upside gain to come as financial markets really lose it. Precious metal investors know from long experience that when gold prices go up silver does even better and vice-versa.
Silver is in a tighter market than gold and with a smaller available supply then a rise in demand has a disproportionate impact on its price. It’s also an alternative to gold as prices rise because it is cheaper. The gold-to-silver price ratio is historically very high at the moment at 75, so silver prices have plenty of room to outperform and close up this gap………………………………………..Full Article: Source

2 Reasons Why Silver Will Rebound in 2015

Posted on 06 January 2015 by VRS  |  Email |Print

According to the World Silver Institute 2013 silver demand outstripped supply and the institute expects this to occur again for 2014 and 2015. This is because of growing demand for using silver in a range of high-tech industrial applications including photo-voltaic cells, electronic touch screens, light emitting diodes, and interposers for the stacking of semi-conductor chips.
Over the last 100 years, the gold-to-silver ratio has on average required 47 ounces of silver to purchase one ounce of gold. But since the peak of the gold bull market in 2011 where only 44 ounces of silver was required, the ratio has widened to now need 75 ounces of silver to purchase one ounce of gold………………………………………..Full Article: Source

Commodity bear market over: Boockvar

Posted on 05 January 2015 by VRS  |  Email |Print

Be a contrarian this year; buy commodities and don’t pile on to the bullishness of the U.S. dollar, Peter Boockvar, chief market analyst at The Lindsey Group, told CNBC. That’s because he believes the commodity bear market that started in September 2011 when gold topped out is coming to an end.
“Oil is the last major commodity to really crash which tells me this is the end of the commodity bear market. Oil will be the last one to recover but gold, agriculture [and] industrial metals will be the first to recover,” Boockvar, also a CNBC contributor, said……………………………………….Full Article: Source

Known unknowns dim global market outlook

Posted on 05 January 2015 by VRS  |  Email |Print

When you see 2015 financial and commodity markets forecasts that list 10 reasons why those markets will collapse this year, or bring in talk of the Black Death as the most pertinent portent for what is now occurring, it’s probably wise to resist the temptation to stick one’s neck out.
So let us remain content with listing all the known unknowns. First, though, that Black Death thing: with the news that yields on German bonds actually went negative last week, and eurozone governments can now borrow at less that 1 per cent, one commentator argued nothing of this low yield/low interest rate magnitude had been experienced since the 14th century, when England defaulted on Italian loans and the Black Death carried off at least 25 million people………………………………………..Full Article: Source

Commodity supply, global growth outlook & US dollar to continue to play dominant roles in 2015

Posted on 02 January 2015 by VRS  |  Email |Print

In the third quarter of 2014, commodity price weakness was one of the most dominant themes in financial markets. Most commodities we track were not able to withstand this strong down trend. Oil prices dropped because of ample supply, political factors, concerns about the demand outlook and a higher US dollar. Precious metals were also hit hard. Silver was the worst performing precious metal, while gold was the best performing one, while still losing 8%.
Base metals, except nickel, did relatively well, because of a lower sensitivity to the US dollar and a less substantial supply overhang. Commodity supply, the global growth outlook and the US dollar, will continue to play dominant roles in the first quarter of 2015. Oversupply will remain a challenge for energy markets. This will continue to depress oil prices in 2015, in our view………………………………………..Full Article: Source

Gold retains position as safe haven for 2015

Posted on 02 January 2015 by VRS  |  Email |Print

The metal is the only store of wealth that has a proven track record over thousands of years, and experts predict prices to remain at $1,200 in the year ahead. Gold has retained its place as a safe-haven investment in 2014, despite the rising strength of the US dollar and turmoil elsewhere in commodity markets.
The price has remained stable and what’s more, experts believe that the long- term outlook for the precious metal is well supported over the coming year.. The price of gold looks set to end the year almost unchanged on 12 months, closing last week at around $1,175 (£755) an ounce after starting the year at $1,205. Fears of a crash in the price were overblown………………………………………..Full Article: Source

Gartman: If you buy one thing in 2015, buy this

Posted on 02 January 2015 by VRS  |  Email |Print

It’s hard out there being a commodities king this year. Oil got crushed. Copper was obliterated. And soybeans got mashed. But Dennis Gartman has his eye on one commodity that met a particularly cruel fate in 2014: Gold
Despite bullion being just pennies away from posting its first back-to-back yearly loss since 1997, the self-proclaimed commodities king and author of the eponymous Gartman Letter told CNBC.com’s “Futures Now” on Tuesday that he sees gold enjoying a solid 2015. “My better trade for the year will be the same trade that has been the better one for this year and the better one for the previous year, which is to be an owner of gold,” said Gartman………………………………………..Full Article: Source

Credit Suisse: Gold Looks Likely to Fall in 2015

Posted on 23 December 2014 by VRS  |  Email |Print

Credit Suisse is bearish on gold headed into the new year, and one of the firm’s trading strategists recommends options on the SPDR Gold Shares (GLD) to capture additional prices declines.
Victor Lin on Credit Suisse’s trading strategy team recently noted the firm’s bearish outlook on gold in 2015. Their dim view on the yellow metal is premised in part on the potential for the Federal Reserve to raise interest rates, which could makes holding gold less appealing relative to bonds:……………………………………….Full Article: Source

Why Opec is increasingly irrelevant

Posted on 18 December 2014 by VRS  |  Email |Print

Ali al-Naimi, Saudi Arabia’s oil minister, expects the oil market ‘to stabilise itself eventually’. When the Saudis, the leaders of Opec, decided at the cartel’s recent meeting in Vienna to maintain their oil production levels, it sent a strong message to the world: the market, not Opec, should decide oil prices. As a result, oil prices dropped, falling below $60 per barrel this week.
This is a big change for the world’s largest oil exporter, which has in the past attempted to manage the global oil markets by altering production levels. The Kingdom essentially decided to pursue a policy that not only preserves its market share in the long term but also heralds the coming end of Opec as a united organisation that still has a collective say in export decisions…………………………………….Full Article: Source

Silver Prices to Outperform Gold in 2015

Posted on 18 December 2014 by VRS  |  Email |Print

I know it’s a bold prediction: silver prices are going to surprise investors and provide them with better returns than gold bullion. I say this because both the fundamental and the technical pictures for silver continue to improve. The supply of silver produced continues to dwindle, while demand for the metal is robust. This is the perfect recipe for higher prices.
In Canada, a major gold-producing country, in the first nine months of 2014, mines produced 373,828 kilograms of silver. In the first nine months of 2013, Canadian miners produced 510,390 kilograms of silver—representing a 26% decline in silver mine production…………………………………….Full Article: Source

Get Ready for Gold Prices to Break Out

Posted on 17 December 2014 by VRS  |  Email |Print

Gold is unquestionably the most frustrating trade I’ve ever tried to make in 20 years of investing. The main problem is there is simply no way to predict gold prices or even attempt to ballpark where gold prices might go in any given time period. Gold prices are subject to so many crosscurrents that trying to trade the yellow metal has always flummoxed me.
About the only thing you can count on with respect to gold prices are a few indicators that might give you a leg up in trading. We may have confirmation of direction from those indicators in the next few days. You just need to decide if you want to go long, go short or stay away from gold altogether. I suspect that whichever way gold breaks, it is likely to be for a significant time period……………………………………..Full Article: Source

Gold and Silver Outlook for 2015

Posted on 17 December 2014 by VRS  |  Email |Print

In the past 12 months, gold has traded as high as around $1,380 an ounce and as low as about $1,140 an ounce. From its starting point at around $1,220, though, the change is just $10 an ounce at the current price around $1,210. Since June, when oil prices started falling and the dollar began strengthening, gold has lost about $100 an ounce.
Silver is down about $5 an ounce, from around $21 to around $16 since June. From their June prices, then, gold is down about 8% and silver is down about 25%. The story is significantly different for gold and silver mining companies. Rising mining costs and low prices have plagued the miners for more than two years, and share prices have dropped by 50% to 75% over that time for the firms we are looking at now…………………………………….Full Article: Source

Predicting The Oil Price: Smart Vs Lucky

Posted on 16 December 2014 by VRS  |  Email |Print

Paul Krugman made the point recently that the only stock market forecasters who correctly predicted a market drop were those who always predicted falling markets. This is known as the ‘stopped watch’ approach to forecasting: constantly make one prediction and eventually the market will move in that direction.
Especially for oil prices, which are highly variable, this works wonders to the point where the great Adam Sieminski often joked that you should predict the price or the date, but not both………………………………………Full Article: Source

How Will Fed Meeting Impact Gold Price?

Posted on 16 December 2014 by VRS  |  Email |Print

The US Federal Reserve will hold 2014’s last policy meeting on 17-18 Dec. How the meeting will impact the gold market? “The gold market will point upward in the short term if the Fed announces to leave its rate unchanged at lows for a considerable period at its final policy meeting of 2014,” an analyst from Jinyou Futures said.
The recent rally in gold price was due mainly to weakness in global equities markets, growing risk aversion sentiment, and short covering, the analyst added. “The gold price, however, will fall in the medium and long term due to pressures from market expectations towards the hike in US’s interest rate,” the analyst predicted………………………………………Full Article: Source

Why Conventional Commodity Indexes Will Likely Disappoint

Posted on 12 December 2014 by VRS  |  Email |Print

I hate to pile on commodities funds, already beaten down by years of underperformance and outflows, but most are terribly flawed in both construction and premise. The static, long-only commodity futures indexes do not capture the biggest sources of profits that accrue to investors in commodity futures.
In fact, unlike with stocks and bonds, a long-only position in commodity futures is not always expected to provide an excess return above the risk-free rate. To understand why, it helps to think of the commodities futures market as an insurance market, where hedgers and speculators trade risks………………………………………..Full Article: Source

OPEC: RIP? Not So Fast

Posted on 12 December 2014 by VRS  |  Email |Print

Many observers have proclaimed the death of OPEC. This seems to be a premature judgment, and may reflect a misunderstanding of oligopolistic practices. The decision not to cut production is not a sign of the OPEC impotence as has been argued. If OPEC would have cut output, and lost market share as a consequence, would OPEC’s future really been brighter?
OPEC is an unusual oligopoly. Its market share is less than 50%. There are important political and economic differences between members. Discrepancies of size, oil reserves and population are significant. Nevertheless, it has survived for nearly 55 years………………………………………..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

Here’s What Investors Are Freaked Out About For 2015

Posted on 11 December 2014 by VRS  |  Email |Print

Global fund managers are most concerned about deflation in the coming year, according to Bank of America Merill Lynch. While the collapse of commodities caused by a rapid decline in China’s economy was investors’ biggest concern last December, deflation wasn’t explicitly on their radar.
“Interestingly, at the end of 2013, investors had started to become uneasy about the risk of inflation,” wrote BAML’s Savita Subramanian in the firm’s US Equity Strategy Year Ahead for 2015………………………………………..Full Article: Source

7 Questions Gold Bears Must Answer

Posted on 11 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. 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. If we’re in a bear market, then………………………………………….Full Article: Source

Industrial silver use will jump 27% by 2018 - CRU

Posted on 11 December 2014 by VRS  |  Email |Print

More and more applications for silver are being invented, discovered, and, importantly, commercialized, said a new report from the Silver Institute and CRU Consulting, stoking the growth potential from several of the most important industrial silver applications.
Total industrial silver demand is forecast to reach nearly 680 million ounces annually by 2018, according to the “Glistening Particles of Industrial Silver” report scheduled for public release Wednesday morning………………………………………..Full Article: Source

Gold Sees Safe-Haven Demand as World Stock Markets Sell Off

Posted on 10 December 2014 by VRS  |  Email |Print

Gold prices are solidly higher and have pushed well above the $1,200.00 level in early U.S. trading Tuesday. Safe-haven demand, short covering and bargain hunting are featured in the yellow metal. It’s a “risk-off” day in the market place Tuesday.
World stock markets were under pressure overnight, led by sharp declines in Asian shares, and the U.S. stock indexes are also lower in early dealings. February Comex gold was last up $22.00 at $1,216.00 an ounce. Spot gold was last up $13.30 at $1,218.00. March Comex silver last traded up $0.429 at $16.705 an ounce………………………………………..Full Article: Source

Is Gold Really the World’s Biggest Economic Bubble?

Posted on 10 December 2014 by VRS  |  Email |Print

One economist recently declared that gold in all shapes and sizes is “a 6,000-year-old bubble” and suggested that it “can be viewed as shiny Bitcoin,” or something similar to a pet rock. And the reality is: He’s right.
In the latest Global Economics View report, Citigroup global chief economist Willem Buiter provided his own perspective on the “Save Our Swiss Gold” initiative in Switzerland that would’ve required the Swiss National Bank to hold at least 20% of its assets in gold. The question on the minds of many in Switzerland was whether this would be a worthwhile initiative. Buiter was blunt. “The short answer is: no. The slightly longer answer is: absolutely not.”……………………………………….Full Article: Source

Jim Rogers Weighs in on Commodities Carnage

Posted on 09 December 2014 by VRS  |  Email |Print

As global commodities prices plummet, it’s incredibly convenient to pronounce the commodities super-cycle dead, isn’t it? Yet banks from Goldman Sachs to Citigroup to Deutsche Bank are on record as saying it’s over. The Rogers Commodities Index, which represents the value of a basket of 36 commodity futures contracts, is down 20% since mid-June.
But does incredible opportunity lie among the carnage? Well, I asked the Founder of the Index, celebrated hedge fund manager and bestselling author, Jim Rogers………………………………………..Full Article: Source

3 Things to Keep in Mind About Falling Oil Prices

Posted on 09 December 2014 by VRS  |  Email |Print

Ten years ago, the kind of steep drop in oil prices we’ve seen in recent weeks would have been cause for unmitigated celebration. Economists almost universally analogized higher oil prices to a tax, with the proceeds largely going abroad to OPEC oil-producing countries. So any reduction in oil prices was viewed like a taxcut. Who could be against that?
It’s an indication of how much has changed in energy markets over the past decade that fallen oil prices are viewed with mixed feelings. Yes, some consumers are understandably happy that gas prices almost everywhere have dropped below $3 a gallon. But others worry that the falling oil prices, now down to the mid-$60s per barrel, and possibly falling to about $60 per barrel, will crimp efforts by U.S. shale oil producers to pump more oil out of existing wells and, worse, induce them to quit looking for more………………………………………..Full Article: Source

Who’s Forcing Gold’s Price to Dip?

Posted on 09 December 2014 by VRS  |  Email |Print

In a blatant and massive market intervention, the price of gold was smashed on November 28. Right after the Commodity Exchange Market (Comex) opened on that morning, 7,008 paper gold contracts representing 20 metric tons of gold were dumped in the New York Comex futures market at 8:50 a.m. EST. At 12:35 p.m. EST, 10,324 contracts representing 30 metric tons of gold were dropped on the Comex futures market.
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………………………………………..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

Gold Price Will Regain Its Shine in 2015

Posted on 05 December 2014 by VRS  |  Email |Print

For all the talk of gold sinking remorselessly to $1,000 an ounce, the metal has risen to $1,200 per ounce and has held its ground. Have we seen the bottom? Money managers Doug Loud and Jeff Mosseri of Greystone Asset Management say that if we haven’t seen the bottom, we will soon.
I’m not sure that the shorts can get gold down to $1,000/oz. There is tremendous physical buying, particularly in Asia, and central banks are buying as well. The U.S. and Canadian Mints have stopped making silver coins because they’ve run out of silver. Demand for gold and silver bullion is quite high, but the paper market is about 50 times the size of the physical market. So games can be played in the paper market………………………………………..Full Article: Source

2015 Investor’s Guide: Don’t buy this, buy that—Energy and Mining

Posted on 05 December 2014 by VRS  |  Email |Print

Sometimes the smartest actions are the ones you don’t take. That old dictum seems relevant at a moment when the markets are a paradox: Each new high only makes many veteran investors more nervous that disaster looms. Between lofty valuations, slowdowns from Europe to China, conflict from Ukraine to Syria, the end of the Fed’s bond-buying binge, and more, there are many reasons for caution.
That’s why this year we decided to recommend not only investments to make but also ones to avoid. Smart defense is always wise, and the good news is that even in these precarious times, there are still opportunities to be found………………………………………..Full Article: Source

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