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The Chinese Gold Market Essentials Guide

Posted on 21 December 2015 by VRS  |  Email |Print

The unique structure of the Chinese domestic gold market, the SGE system, and why the amount of physical gold withdrawn from the vaults of the SGE (published on a weekly basis) can be used as a measure for Chinese wholesale gold demand is explained in part one: The Mechanics Of The Chinese Domestic Gold Market.
It also provides a basic understanding of contrasting metrics applied to measure Chinese gold demand, and the difference between SGE withdrawals and Chinese consumer gold demand as disclosed by the World Gold Council, which has aggregated to at least 2,500 tonnes from 2007 until 2015. For whatever reason, the World Gold Council and its affiliates continuously present feeble arguments that should explain the difference. The Chinese Gold Market Essentials debunk these arguments where necessary, back up by facts, and reveal genuine Chinese gold demand………………………………………..Full Article: Source

China’s steady-as-she-goes economy won’t rock commodity boat: Russell

Posted on 18 December 2015 by VRS  |  Email |Print

China is no longer a driver of commodity demand, rather it has become a constant factor that can be relied upon to import relatively steady volumes of major natural resources. Both China’s central bank and a respected think-tank expect further moderation in the economic growth rate next year, which underscores that the world’s second-largest economy is still undergoing a structural transformation, but is unlikely to fall victim to a hard landing.
The People’s Bank of China said in a paper published on Wednesday that annual growth will slow to 6.8 percent in 2016, from an estimated 6.9 percent this year………………………………………..Full Article: Source

What will happen to the gold market in 2016?

Posted on 18 December 2015 by VRS  |  Email |Print

What effect will the Fed’s decision have on the gold market over the next year? It is our view that the effect of the Fed announcement on the price of gold will be limited, as it has already been priced in. After all, the market has been anticipating this increase for almost a year and a half.
It is more important to understand that more than 90 per centof gold demand comes from outside the US, primarily the Asian economies – particularly China and India. In these economies local price matters most. So whilst the US dollar price is one driver of the gold price it, is not always the most relevant factor………………………………………..Full Article: Source

The good, bad and ugly: Gold review of 2015 and outlook for 2016

Posted on 17 December 2015 by VRS  |  Email |Print

“2015 has been a fascinating year for the gold market, with strong demand from central banks, Asian markets and the European bar and coin market,” said Alistair Hewitt, Head of Market Intelligence for the World Gold Council.
“The pro-gold schemes introduced by the Indian government and the further internationalization of the renminbi alongside the increasing transparency of Chinese gold reserves will continue to improve the market next year. Gold’s role as a portfolio diversifier, a wealth preservation tool and a tail risk hedge will continue to prevail due to expensive stock valuations and high liquidity risks. Finally gold’s cultural significance endures as we look ahead to 2016.”……………………………………….Full Article: Source

Commodities on track for recovery: Van Eck

Posted on 16 December 2015 by VRS  |  Email |Print

Van Eck Global’s commodity strategist, Roland Morris, said financial markets remain focused on weak demand for commodities, not taking into account relevant supply adjustments that could lead to a sector-wide recovery. Morris gave the example of US oil production, which peaked at 9.6 million barrels in 2011. He said production today is down to nine million barrels and is likely to fall below this in 2016.
“Not only has production on existing rigs been scaled back, but new deep water and oil sands projects that could have delivered between six and seven million barrels have been cancelled or pushed out beyond 2020,” he said………………………………………..Full Article: Source

Roach Sees Commodity Headwinds as Miners `in Denial’ About China

Posted on 16 December 2015 by VRS  |  Email |Print

Commodities are at risk of extending declines as China’s slowdown hurts demand and the world’s largest user shifts its economic model away from raw materials, according to Stephen Roach, who said some producers haven’t yet faced up to the change.
“The China factor can’t be emphasized enough,” Roach, a senior fellow at Yale University, said in a Bloomberg Television interview in Hong Kong on Tuesday. China “has been the most commodities-intensive story that the world economy has seen in the post-World War Two period. Now China is shifting the model to more of a commodity-light, services-led economy.”……………………………………….Full Article: Source

Don’t Expect Another China Commodity Super Cycle (Audio)

Posted on 16 December 2015 by VRS  |  Email |Print

“They (commodities producers) just don’t get this. They want China to go back to the old way, they think the slowdown is temporary, the government will stimulate it… and it will be back to the commodity super cycle again; that’s not going to happen,” says Stephen Roach, former non-executive chairman for Morgan Stanley in Asia.
He sat down with Bloomberg’s Bryan Curtis and Doug Krizner on First Word Asia to talk about the Fed and China’s changing economic landscape………………………………………..Full Article: Source

Gold investors sold the rumor of higher U.S. rates - will they buy the fact?

Posted on 16 December 2015 by VRS  |  Email |Print

Gold bulls hoping an anticipated rise in U.S. interest rates will paradoxically boost the metal’s price might just be disappointed, as the wider environment offers little to justify a rebound. Gold has fallen 10 percent so far in 2015, hitting its lowest in nearly six years largely on speculation that monetary policy will tighten.
In theory, higher interest rates weigh on bullion by lifting the opportunity cost of holding such a non-yielding asset. While expectations of a rate rise have driven selling, some bulls say it is so well priced into gold that the reality of any slow and gradual rise from record lows after this week’s forecast increase could reinvigorate investment………………………………………..Full Article: Source

Why low oil prices are bad news

Posted on 15 December 2015 by VRS  |  Email |Print

Crude oil dropped below US$35 a barrel for the first time in six years Monday, but what most media outlets report as good news is disastrous for some nations and Mother Nature after years of price-based fuel efficiency takes a back seat.
Leaders in oil-producing nations who depend on oil revenue to feed, house, and care for their poorest citizens are also struggling to maintain economic stability. In spite of falling prices per barrel, countries are still increasing production for fear of losing market share………………………………………..Full Article: Source

Not all positive, but commodities like Gold, wheat may not be a heartbreaker in 2016: Survey

Posted on 14 December 2015 by VRS  |  Email |Print

After the worst commodity collapse in a generation, there may be some glimmers of hope. Gold, wheat and natural gas probably will climb in 2016, according to a Bloomberg survey of 108 traders, analysts, economists and strategists across Asia, Europe and the Americas. It won’t all be positive. For oil, mired in the longest slump since 1998, bearish respondents said prices may drop below this week’s six-year low, while the survey showed overwhelming pessimism for copper.
The 2015 meltdown sent almost every commodity lower, shrinking profits for companies including South African mine owner Anglo American and energy producer Royal Dutch Shell. The world got stuck with raw-material surpluses after years of expansion met a slowing economy in China. ……………………………………….Full Article: Source

Commodity price slump of 2015 another reminder to go global

Posted on 14 December 2015 by VRS  |  Email |Print

A worse than expected global commodity price slump has dampened local sharemarket returns, prompting superannuation funds to switch money into international shares and alternative assets. “Lots of investors re-positioned themselves this time last year ahead of an expected continued downturn in iron ore, coal and oil prices but even many of them have been surprised by how hard the sell-off has been,” NAB Asset Management portfolio adviser John Owen said.
“Global equities have significantly outperformed over the past three years and offer more opportunities for diversification away from the local market that is dominated by banks and miners.”……………………………………….Full Article: Source

Gold to remain volatile as Fed meeting looms

Posted on 14 December 2015 by VRS  |  Email |Print

Gold is likely to remain highly volatile in the next couple of weeks on the US Fed’s imminent interest rate hike scheduled to be announced on Wednesday. Gold price, being inversely proportional to the economic growth, is set to move in the range of $100 until the first week of January 2016. Trade sources anticipate two kinds of scenarios emerging for gold price movement.
First, in case US Fed raises interest by 25-50 basis points, gold price would initially decline as a knee-jerk reaction. But, some trades might see this as an opportunity for entering in the gold space for longer -term prospects. So, gold price may recover later………………………………………..Full Article: Source

Don’t mourn the death of the commodities “super-cycle”

Posted on 11 December 2015 by VRS  |  Email |Print

It is hard to recall a time of such conflicting signals from the world economy. Oil and commodity prices are plummeting, promising £1 a litre at the pumps, but forcing crippling retrenchment on resource producing companies and nations.
This might suggest deeply impaired demand, and a world economy that is heading back into recession. In the United States, on the other hand, the Federal Reserve is preparing for its first rise in interest rates since the onset of the financial crisis. Over in America at least, policymakers fear an economy that needs reining in………………………………………..Full Article: Source

Winners and losers as commodities ‘super-cycle’ turns into mirage

Posted on 11 December 2015 by VRS  |  Email |Print

These are tough times for commodity investors and resources companies. The price of Brent crude has dipped below $US40 a barrel for the first time since 2009 and is down by 60 per cent since the middle of last year. The share prices of mining companies fell sharply after news broke that Anglo American had cut its ­dividend.
Commodities are the biggest story of 2015, not only in markets and economics but also in politics and, of course, the environment. Cheaper fossil fuels pose a risk to strategies for mitigating climate change. The collapse in prices is devastating for countries whose export earnings are dominated by commodities and that have squandered the proceeds of a commodities boom or siphoned them to private interests………………………………………..Full Article: Source

What will trigger gold to fall ‘drastically’

Posted on 11 December 2015 by VRS  |  Email |Print

Gold will continue to feel more pain over the next few days and may even fall “drastically” should investors see indications that there will be frequent interest rate increases in the US, an industry source told Gulf News. Retail gold prices in Dubai moved a bit higher on Thursday morning, but the bullion remained under pressure as the Fed meeting inches closer.
Early trade saw 24-carat rise 50 fils to Dh129.50 from a day earlier. The latest price is still way below the peak level achieved in October, paving the way for buyers to continue scoring some bargains. Dubai’s jewellery shops were retailing 22K at Dh122.75, while 21K and 18K traded at Dh117.25 and Dh100.75, respectively………………………………………..Full Article: Source

Gold To Benefit In 2016, ‘The Year Of Fear’ — Axel Merk

Posted on 09 December 2015 by VRS  |  Email |Print

One fund manager is expecting 2016 to be the year of fear. And as the Federal Reserve looks to raise interest rates, the place investors will want to be is gold, he said. In his 2016 outlook, Axel Merk, president & CIO of Merk Investments, warned that the “risk premia” in financial markets is starting to shift as the Federal Reserve tries to engineer an exit strategy from its years of ultra-loose monetary policy.
He explained that the shifting risk environment and reduced liquidity will lead to more volatility and that could be disastrous for complacent investors who have been chasing gains in equity and bond markets. “Complacently is going to lead to fear,” he said in an interview with Kitco News on Thursday………………………………………..Full Article: Source

Bullion demand won’t break

Posted on 09 December 2015 by VRS  |  Email |Print

Despite gold at near six year lows, global demand for physical bullion remains very high. This is clearly seen in the recent demand data from the U.S. Mint and other mints. It is also seen in demand data from GFMS and the World Gold Council which shows very robust demand from Germany, India and of course, China.
There is also the very high official demand from central banks and, in particular, the Russian central bank and the People’s Bank of China (PBOC). Today came news that China’s gold reserves rose by another 21 tonnes in November, the biggest bout of gold buying since China began disclosing monthly data on China’s gold reserves in June……………………………………….Full Article: Source

Where the Gold Price Is Headed Next

Posted on 08 December 2015 by VRS  |  Email |Print

The past week has to be one of the most volatile yet surprising, both up and down, in a while for gold – so where is the gold price headed next? On Black Friday, gold took a beating to become one of the best “sale items” on offer, as it hit $1,055.90 per ounce and the U.S. Dollar Index (USDX) closed above the 100 mark.
Then by Monday, Nov. 30, gold had risen to close at $1,064.50 in New York trading on a stronger dollar. On Dec. 1, it was mostly unchanged, bouncing between $1,065 and $1,070………………………………………..Full Article: Source

It’s going to get much worse for gold

Posted on 08 December 2015 by VRS  |  Email |Print

It’s been another tough year for gold. The precious metal has fallen 10 percent in 2015 and is tracking for its longest yearly losing streak since 1998. And according to one technician, the pain will continue heading into 2016.
“I think there’s still downside here,” Rich Ross said Monday on CNBC’s “Trading Nation.” Gold prices got a bid last week on the heels of a surprise stimulus package from European Central Bank President Mario Draghi as well as a strong jobs number on Friday. “However, we’ve seen those trends reverse, and I think ultimately gold is going to wilt over that pressure.” Gold closed Monday’s session down 1 percent………………………………………..Full Article: Source

The Commodity Landscape Heading into 2016

Posted on 08 December 2015 by VRS  |  Email |Print

The so-called commodities “super-cycle” came screeching to a halt in 2016 for exchange traded fund investors. China slowdown and a surging dollar have put stress on previously booming countries who rely on exports as crude oil led the way down.
Tom recently caught up with Kevin Baum who heads of commodities for Powershares to discuss what he makes of it all. What’s the best approach to getting commodities exposure in these difficult environments? The answer is a little more complex than that as you’d imagine but there are good, steady plays still available for those diligent investors who maintain their commodity exposure for diversification………………………………………..Full Article: Source

Are commodities poised for a recovery in 2016?

Posted on 03 December 2015 by VRS  |  Email |Print

By any measure, this has been a terrible year for commodity prices and commodity producers. Citigroup analysts said 2015 is shaping up to be an even worse year in this space than 2008, when the global economy collapsed.
But they actually think a “modest” recovery could be coming in 2016. Slowing economic growth in China remains a major headwind, but they said the “accelerated postponement” of new investments and closures of existing operations should eliminate much of the oversupply in the market. They also expect U.S. dollar appreciation to slow down, which is positive for commodities………………………………………..Full Article: Source

Vedanta CEO Says Commodities `Still Searching for the Bottom’

Posted on 02 December 2015 by VRS  |  Email |Print

Vedanta Resources Plc Chief Executive Officer Tom Albanese says metals markets are yet to reach a trough as producers battle to stay afloat with slowing Chinese demand and a looming U.S. interest-rate increase that’s curbing the appeal of commodities.
“The markets are still searching for the bottom,” Albanese, CEO of India’s biggest aluminum and copper producer, said in an interview with Bloomberg Television in London on Tuesday. “Supply is going to take some time to work out. It’s going to take some time before we see what actually happens with the Chinese economy. Is it a soft landing or is it something that’s more disruptive?”……………………………………….Full Article: Source

The Economic Loss From the Global Commodities Slump (Video)

Posted on 01 December 2015 by VRS  |  Email |Print

Carl Weinberg, chief economist at High Frequency Economics, Gemma Godfrey, founder and chief executive officer at Moo.la, and Jonathan Fenby, co-founder at Trusted Sources, discuss the negative global economic impact of lower commodities prices. They speak on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Rio Tinto And Vale Killed The Commodities Supercycle, Not China Or The Fed

Posted on 30 November 2015 by VRS  |  Email |Print

That the commodities supercycle is over is obvious: we can see that just by looking at the falling values of pretty much all of the commodities. However, there’s a number of implications of this being bandied about which are wrong. It’s not, for example, slowing growth in China which has killed it, nor will it be the Federal Reserve raising interest rates which gives it the final death blow.
It’s much more accurate to say that the producing companies, like say Rio Tinto or Vale in iron ore, which have killed off the cycle. And as a result of that we can’t quite say that falling commodity prices are symptoms of the global economy about to fall over into depression………………………………………..Full Article: Source

Maximum pain for commodities. Are we there yet?

Posted on 27 November 2015 by VRS  |  Email |Print

The dominant theme of commodity markets in recent months, in virtually every article or conversation at events, has been how much lower can prices possibly go. The answer is simple, they will stop falling when the point of maximum pain is reached.
With the prices of many commodities at multi-year lows and the broad Bloomberg Commodity Index close to its weakest in more than 16 years, many commodity producers, investors and traders are becoming desperate for any positive signs. But any bottoming of prices, or indeed the start of a rally, requires more than desperation, it needs fundamental re-alignment of the existing supply-demand balances………………………………………..Full Article: Source

Oil prices fall as expert predicts ’super contango’

Posted on 27 November 2015 by VRS  |  Email |Print

Oil prices have struggled amid ongoing anxiety over an excess of supply. In New York, light, sweet crude oil futures due for delivery in January surrendered small gains in Asia to move 24 cents lower, or 0.5 per cent, to $42.80 a barrel in the Globex electronic session. On London’s ICE Futures exchange, January Brent crude dipped 49 cents, or 1 per cent, to $45.68 a barrel.
These developments followed the Energy Information Administration’s announcement yesterday that US crude inventories grew by 1m barrels last week, reports MarketWatch. The figure was below the 2.6m-barrel growth forecast by the industry group American Petroleum Institute………………………………………..Full Article: Source

Ed Yardeni: Commodities Free-fall Not a Recession Indicator

Posted on 23 November 2015 by VRS  |  Email |Print

Tumbling commodity prices suggest the global economy is headed toward recession, but the free-fall has more to do with excess capacity than a warning about the world’s economic health, Newsmax Finance Insider, economist and market strategist Ed Yardeni said.
Very high capacity was built in anticipation of a commodity super-cycle, and the free-fall does not indicate pending doom, said Yardeni, founder and president of Yardeni Research Inc, at the Reuters Global Investment Outlook Summit in New York………………………………………..Full Article: Source

Is the low oil price good news for the economy?

Posted on 19 November 2015 by VRS  |  Email |Print

The global slump in the oil price over the past year has helped to alleviate concerns over the cost of living – and as wage rises pick up in the UK and US the windfall is giving a boost in real terms to average household incomes.
Direct derivative fuel products have fallen in cost, with petrol in the UK currently only a few pence above £1 a litre. Indirect savings in areas such as food, where lower transportation costs have contributed to persistent deflation, are also being made. These factors have been the primary cause of consumer prices in the UK being negative for the second month in a row for the first time ever in October………………………………………Full Article: Source

Don’t Bet on Asian Middle Class to Lift Gold, China Pioneer Says

Posted on 19 November 2015 by VRS  |  Email |Print

Gold bulls argue that the growing middle classes in China and India will boost demand as richer consumers covet more rings and pendants. Australia’s second-biggest producer cautions investors against getting too carried away by these forecasts.
“I just don’t think it’s a demand equation that’ll make a big impact,” Jake Klein, executive chairman of Evolution Mining Ltd. said Wednesday at the Bloomberg Summit in Sydney. He previously ran a producer that became the first foreign company to operate a gold mine in China. “Yes there’ll be increased physical demand, but the gold market is so dominated by financial issues, inflation and the U.S. dollar, that it’s not going to make a huge difference.”……………………………………..Full Article: Source

Commodities markets ‘too pessimistic’

Posted on 17 November 2015 by VRS  |  Email |Print

The renewed weakness in global commodity prices is obviously a concern for producers, but the current pessimism looks overdone, says Capital Economics. Key commodity prices - notably oil and copper - have been slipping over the past weeks, pulled down by worries about China’s growth and as chances grow that the US Federal Reserve will start lifting US rates in December, which has strengthened the greenback and in turn weighed on commodities.
The falls have been sufficient to drag the most closely watched commodity indices down to their lowest levels in more than 10 year, falling below the troughs seen during the global financial crisis of 2008 and 2009………………………………………..Full Article: Source

Trouble is brewing for commodities

Posted on 16 November 2015 by VRS  |  Email |Print

A perfect storm is gathering over commodity markets as the end of year approaches, with rising supplies hitting an increasingly steep Chinese downturn while the US Federal Reserve prepares to lift rates. The combination of fundamental and monetary forces is depressing the entire range of resource commodities and is likely to lead markets to overshoot. Iron ore prices, which have dropped 15 per cent over the past month to $US47.50 per tonne, could easily drop below $US40 before the year is out.
The International Monetary Fund warned G20 leaders over the weekend they should brace for a “bumpy” ride as the world economy dealt with the normalisation of US monetary policy, the slowing of China’s economy and end of the decade-long commodities super cycle. “In an environment of declining commodity prices, reduced capital flows to emerging markets and higher financial market volatility, downside risks to the outlook remain elevated,” its report to G20 leaders said………………………………………..Full Article: Source

Commodity rout deepens, like catching ‘falling knife’

Posted on 16 November 2015 by VRS  |  Email |Print

Commodity prices and energy stocks around the globe remained under heavy selling pressure entering the weekend, and analysts are warning the rout has not ended. “It’s going to take a while for this supply-demand imbalance to work out,” Wells Fargo senior global equity strategist Scott Wren said.
“To buy commodities here, it’s a catch the falling knife situation.” Commodity producers are facing a perfect storm: softening demand from a slowing China, a huge expansion in supply of commodities such as iron ore and oil, and a US dollar that is surging on expectations that the US Federal Reserve will begin lifting interest rates next month………………………………………..Full Article: Source

Why Gold and Other Commodities Are Getting Killed

Posted on 16 November 2015 by VRS  |  Email |Print

Commodities like gold, iron ore, and copper have been taking it on the chin of late as the globe prepares for higher interest rates in the U.S. and an even stronger dollar. The spot price for gold bounced around 5 1/2-year lows Friday morning with a troy ounce going for $1,083.44 in European trade, according to the Wall Street Journal.
Copper prices, often seen as a gauge of global economic health because of the metal’s widespread industrial use, also touched a six-year low of $4,787.50 per tonne, according to Reuters. Other commodities like iron ore and oil remain cheap too, with the latter falling as much as 2.7% on Thursday………………………………………..Full Article: Source

Gold remains the best insurance for a crisis

Posted on 16 November 2015 by VRS  |  Email |Print

As central banks race to devalue currency private individuals are hoarding record amounts of gold. The price of gold might be falling, but private individuals are buying record amounts of the precious metal, and as fears grow about the outlook for the global economy the long term attraction of gold remains.
The strength of the US dollar and the threat from rising interest rates have made it a tough year for gold. The yellow metal was down 9pc last week to reach a five-year low at $1,083, and that marks a 43pc fall from the all-time high of $1,900 reached in 2011………………………………………..Full Article: Source

Cap-and-trade cash grab

Posted on 16 November 2015 by VRS  |  Email |Print

Ontario’s carbon pricing scheme will deliver profits to polluters and the government, higher prices for consumers and insignificant environmental benefits. The outline released by Ontario’s Liberal government Friday of how it plans to introduce cap-and-trade carbon pricing to Ontario starting Jan. 1, 2017, is the most financially irresponsible document I have ever read in nine years of reporting on climate change and carbon pricing.
It will deliver undeserved, windfall profits to some of the province’s biggest industrial polluters and billions of dollars to government coffers, paid for by consumers through higher prices on most goods and services………………………………………..Full Article: Source

Jim Rogers on Commodities

Posted on 11 November 2015 by VRS  |  Email |Print

At age 73, Jim Rogers, the international investor who once motorcycled around the world to find opportunities, says he’s slowing down his investment activity a bit. But for Rogers, who fights Father Time with daily two-hour exercise sessions at his Singapore home, this step back is not a concession to age. It’s more about the limited opportunities he sees right now in the many markets he studies, due to his concern that mounting worldwide debt and too much easy money will lead to a global bear market.
Big problems are going to come from the U.S. essentially because it has been the American central bank which has been the most at fault. We’re the ones who started all this money printing and everybody else of course copied us, but it is the first time in recorded history that you’ve had all the major central banks printing staggering amounts of money: Japan, America, Europe, Great Britain, we’re all doing it………………………………………..Full Article: Source

Why I love commodities

Posted on 11 November 2015 by VRS  |  Email |Print

The popular commentary surrounding commodities is overwhelmingly negative. In the same way that investors could only imagine prices going higher in the midst of the “supercycle” — last decade’s belief that the world had a structural deficit of raw materials — today the general sentiment comprises mostly fear and negativity.
Let’s not forget, however, commodities is the ultimate cyclical asset, prone to dramatic booms and busts. And it has been like that for centuries: think about the tulip mania in the 1630s. But, with the right skills, one can succeed in the commodities sector. Combine a flexible approach to investing, a deep knowledge of the many distinct markets within the commodities sector and an ability to manage risks well, and the opportunity is there………………………………………..Full Article: Source

Don’t believe the ‘supercycle’ hype – commodities will bounce back

Posted on 10 November 2015 by VRS  |  Email |Print

China’s gross domestic product (GDP) growth is slowing – it might even have stalled completely. That means China’s demand for all industrial commodities is falling and is going to keep falling. And that means you shouldn’t invest in any of the big mining companies ever again.
Without China importing 50% of every commodity produced everywhere to build its millions of miles of super-fast railways, prices cannot rise, profits cannot rise and share prices cannot rise. Sounds like a familiar argument? It should do. It’s been in every paper and on every analyst’s lips all year. If you look at a couple of charts of commodity demand and prices you can see why……………………………………….Full Article: Source

Inside Ethiopia’s Commodities Pit

Posted on 06 November 2015 by VRS  |  Email |Print

In a small, tidy office on the top floor of the Ethiopian Commodity Exchange building in Addis Ababa, communications manager Tewodros Assefa draws two diagrams on a large glass window pane. The window overlooks the capital city’s new light rail line, a raised concrete snake that bisects the city.
This scene is unexpectedly sophisticated: a modern, first-world pastiche in a country better known, not always fairly, for poverty and chaos. Like the new metro, the Ethiopian Commodity Exchange — better known as ECX — is a physical expression of the Ethiopian government’s massive drive to change this image………………………………………..Full Article: Source

Gold, gold everywhere, not any drop to drink

Posted on 06 November 2015 by VRS  |  Email |Print

UBS looks at the fundamentals of India’s new gold monetisation schemes on Thursday and in the process comes up with one of the best summations we’ve ever seen on why gold investing in and of itself is stoopid — especially when done en masse by a relatively poor economy.
Indians directly or indirectly hold an estimated 22,000 tonnes of gold worth USD 800bn or 39% of Indian GDP (banking system credit is c50% of GDP). Gold thus held is problematic to some because unlike most capital goods it derives its expected value not from its ability to produce (directly or indirectly) goods or services that will meet the material demands of consumers. Instead it derives its value from investors’ collective perception of what it is worth………………………………………..Full Article: Source

India: Gold prices may fall this Dhanteras

Posted on 05 November 2015 by VRS  |  Email |Print

A silver lining in the form of lower gold prices this Dhanteras might be in the works for householders who have been singed by high dal and onion prices recently. Commodity futures market analysts till Wednesday evening have been betting on a fall in price around Dhanteras this Monday, mainly on grounds of a stronger dollar in the run-up to the first interest rate hike in the US in December.
Gold and dollar are negatively correlated. Commodity brokerages such as Angel Commodities and Inditrade have made a sell call at a little over Rs 26000 per 10 gm for targets ranging from Rs 25,700 to as low as Rs 25,400, excluding taxes. Jewellers confirm that footfalls could be higher if the rate declines further from Rs 26,000. “Amid a possible fall in rural demand because of deficient monsoon, which curbs their spending power, a fall in gold price will increase grammage buys,” said Saurabh Gadgil, owner of PN Gadgil Jewellers……………………………………….Full Article: Source

Why The Bear Market In Commodities May Be Ending

Posted on 03 November 2015 by VRS  |  Email |Print

Last week the Federal Reserve announced that it would delay the interest rate liftoff yet again, but while everyone seems concerned about nominal rates—the federal funds rate, in this case—real rates have already risen about 5% since August 2011. This “invisible” rate hike is much more impactful to commodity prices and emerging markets than a nominal rate hike, which is simply the “tip of the iceberg.”
Since July 2014, the U.S. dollar has appreciated more than 20%. This has had huge implications for net commodity exporter countries, both developing and emerging, which typically see their currency rates fluctuate when prices turn volatile………………………………………..Full Article: Source

Oil Price Paradox: Gasoline Could Be Even Cheaper

Posted on 03 November 2015 by VRS  |  Email |Print

The price of gasoline is declining more slowly than oil, illustrating how consumers aren’t fully benefiting from falling commodities prices. Typically, gas prices go up and down in tandem with crude oil, the main ingredient. But recently, oil prices have been falling much faster than gas prices. Drivers have paid at least $1 billion more for gasoline than they would have if the historical pattern had continued this year, according to government and industry statistics.
Regular gasoline prices have fallen more than 28% in the past year to an average of $2.18 for a gallon of regular unleaded. By comparison, Brent crude, the global benchmark for oil, has fallen more than 50% to about $50 a barrel………………………………………..Full Article: Source

Oil Prices Are Volatile. Get Over It.

Posted on 02 November 2015 by VRS  |  Email |Print

John Hofmeister, former president of Shell Oil USA, was opining on cable TV on Friday about the rebound of the oil industry and the need for prices to stabilize, saying “the volatility is killing the industry”. Like many, he notes that price volatility makes planning, investment and operations difficult.
This is a common complaint, not just among petroleum companies but governments of both oil importers and exporters. As far back as 1986 I found myself arguing that “volatility” had become a code word in the petroleum industry, with no one really interested in stability. Rather, consumers wanted low prices, even if volatile, and producers wanted high ones………………………………………..Full Article: Source

Oil Prices Are Volatile. Get Over It.

Posted on 02 November 2015 by VRS  |  Email |Print

John Hofmeister, former president of Shell Oil USA, was opining on cable TV on Friday about the rebound of the oil industry and the need for prices to stabilize, saying “the volatility is killing the industry”. Like many, he notes that price volatility makes planning, investment and operations difficult.
This is a common complaint, not just among petroleum companies but governments of both oil importers and exporters. As far back as 1986 I found myself arguing that “volatility” had become a code word in the petroleum industry, with no one really interested in stability. Rather, consumers wanted low prices, even if volatile, and producers wanted high ones………………………………………..Full Article: Source

Will Gold Bulls Finally Hit The Panic Button?

Posted on 02 November 2015 by VRS  |  Email |Print

The commodities market has been on the spot for the last 12 months and by extension over the last three years, if you include Iron, Copper and Aluminum. However, the most notable developments have come in the precious metals category and Oil and gas.
Specifically the prices of Gold and Oil have fluctuated extensively with Oil settling on a range of about $43 to $50 per barrel, while the price of gold has oscillated between $1,110 and $1,190 over the last two months. The price of oil is down 12% this year after making massive dips and spikes over the last 12 months, while gold remains barely unchanged………………………………………..Full Article: Source

No need for commodities investors to worry too much over Fed rate increase, analysts say

Posted on 30 October 2015 by VRS  |  Email |Print

US interest rates have long been regarded as critical in determining the outlook for commodities, but some analysts say investors need not worry too much about the US Federal Reserve reversing its monetary stimulus efforts in the near term, because commodity prices could rally even as US interest rates return to more normal levels.
Julian Jessop, chief global economist for Capital Economics, said in a report on Wednesday that it was widely assumed an increase in US interest rates might lead to lower commodity prices, as higher rates could result in slower economic growth, reduced demand for commodities, and increase the opportunity cost for investors holding commodities………………………………………..Full Article: Source

OPEC will cut production eventually

Posted on 30 October 2015 by VRS  |  Email |Print

If you’re in the oil business and wondering when prices are going to go back up, you could do a lot worse than asking Ken Hersh. The founder of NGP Energy Capital Management, an Irving-based firm that manages billions of dollars in energy investments, Hersh has developed the reputation of something of a guru on the world’s oil and gas markets.
And Hersh thinks sooner or later the Organization of Petroleum Exporting Countries, which represents the likes of Saudi Arabia, Kuwait and Venezuela, is going to “blink” and cut their production – reducing the global crude supply and theoretically raising prices………………………………………..Full Article: Source

Gold price nerves exposed in post-Fed dive

Posted on 30 October 2015 by VRS  |  Email |Print

Any lingering sense that gold traders have fully ‘priced-in’ the impact of an interest rates rise and are no longer in the thrall of the central bank’s indecision was blown apart on Wednesday. At first blush, the decision that ended the Federal Reserve meeting was no surprise – and should even, if anything, have helped gold.
Rate setters voted decisively against increasing interest rates, as they had been expected to do - non-yielding assets tend to suffer when rates rise and boost income-based returns available elsewhere………………………………………..Full Article: Source

Why Commodities Are Bad Investments

Posted on 28 October 2015 by VRS  |  Email |Print

Imagine an investment that has roughly the same moneymaking potential as stocks—but that tends to rise when stocks are falling and to fall when stocks are rising, and is a bit less volatile than stocks. In 2004, two Yale University professors published a groundbreaking paper that argued that commodity futures offered precisely that holy grail of investing.
Commodities, wrote Gary Gorton and Geert Rouwenhorst, achieved roughly the same returns as stocks from July 1959 through December 2004. But commodity prices tended to move in the opposite direction of stocks, were less volatile and were particularly profitable during periods of high inflation………………………………………..Full Article: Source

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