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Deutsche: Gold price has another 30% to fall – and soon

Posted on 30 July 2015 by VRS  |  Email |Print

On Tuesday gold stabilized but hovered near five-and-half year lows struck last week after a closely watched report showed global gold demand at the lowest in six years , followed by a prediction of a 30% fall from today’s levels.
Futures contracts in New York with August delivery dates were exchanging hands for $1,095.10 an ounce in after hours trade on Tuesday and flat compared to yesterday’s close in another day of light trading as anxious investors look for fresh direction for the metal………………………………………..Full Article: Source

HSBC downgrades 2015 gold price forecast

Posted on 30 July 2015 by VRS  |  Email |Print

HSBC has significantly downgraded its 2015 average gold price forecast, following the brutal sell-off seen in the market one week ago. HSBC now predicts that gold will average $1,160 per ounce in 2015 from $1,234 previously. The bank has also lowered its 2016 forecast by five percent from $1,275 per ounce to $1,205.
Nonetheless, the bank still believes that in the end, gold will recover from current levels, it said. Gold recently slumped to levels not seen since March 2009 at $1,077 per ounce, following a bear-raid on the market during early trading hours in Asia and what was the most illiquid period of business in the week………………………………………..Full Article: Source

End of Commodities Supercycle? (Energy Subset)

Posted on 28 July 2015 by VRS  |  Email |Print

About a decade ago, Goldman Sachs’ Arjun Murti suggested an oil “superspike” might send prices to $105 a barrel. There were two primary reactions to this analysis, first, that Goldman was just marketing its commodity indices, and second, that he/they were crazy. The former view probably continues to be held by some, the latter, not so much.
Murti’s later prediction that oil might hit $200 didn’t prove out, but the $105/barrel prognostication certainly held up. What many overlooked at the time of the initial $105/barrel prediction was that it reflected an estimate of how prices might respond to an oil supply disruption. As such, it was much more reasonable than the predictions of peak oilers like Matthew Simmons or T. Boone Pickens, who thought prices were on a permanent upwards trend because of geological scarcity………………………………………..Full Article: Source

Deutsche Bank: Just because all commodities are falling doesn’t mean there’s one driver

Posted on 27 July 2015 by VRS  |  Email |Print

Gold, copper, corn, wheat, iron ore. The list of commodities that have been falling and under pressure over recent weeks and months grows. It would be easy to think there is something they all have in common. A stronger US dollar, rising US interest rates, slowing Chinese growth?
Unlike Tolstoyan families, all unhappy commodities are alike whereas each happy one is happy in its own way. This time last year, with prices still strong, the average correlation among eight diverse commodities had fallen to a decade low of 10 per cent. Since then, amid a slump afflicting everything from gold and oil to copper and sugar, the correlation has increased to 20 per cent. Yet even though the overall CRB commodities index is approaching 2009 lows, the correlation is only half the level back then………………………………………..Full Article: Source

Moody’s Says Low Oil Price Here to Stay as Russia Bleeds Capital

Posted on 24 July 2015 by VRS  |  Email |Print

Low oil prices are just the tip of what ails Russia, according to Moody’s Investors Service. With its dependence on commodities and a slump in investment, Russia will have a hard time recovering from its record economic slump as global oil prices are bound to remain lower for a long time, Yves Lemay, managing director in the sovereign risk group at Moody’s in London, said in an interview on Wednesday.
As much as a quarter of Russia’s gross domestic product and two-thirds of its exports are linked to the energy industry, according to the rating company. “Our assessment is that low oil prices are here to stay,” Lemay said. “Without major investment in the infrastructure, modernizing the equipment, oil production in Russia is unlikely to rise and may slowly decline in the coming years.”……………………………………….Full Article: Source

Another grim year for commodities as global supplies rise: World Bank

Posted on 23 July 2015 by VRS  |  Email |Print

The outlook for commodities remains grim for this year, except that oil will fall a bit less than previously forecast, the World Bank said. Average prices for fuels such as crude, natural gas and coal will tumble 39 per cent from 2014, while those for materials like metals and fertilisers will fall about 12 per cent, the Washington-based lender said in its quarterly “Commodity Markets Outlook” released Wednesday.
“All main commodity price indices are expected to decline in 2015, mainly due to abundant supplies, and in the case of industrial commodities, weak demand,” the bank said in the report. Commodities are trading at their lowest in 12 years following a decade-long bull market fuelled by growth in developing nations such as China and India. The bank said that metals and coal consumption in particular may slow in China as the nation shifts to a more services-oriented economy and enacts policies to curb pollution………………………………………..Full Article: Source

World Bank projects crude oil to average $57/b in 2015, $61/b in 2016

Posted on 23 July 2015 by VRS  |  Email |Print

The World Bank on Wednesday revised upward its 2015 crude oil price forecast to $57/barrel from $53/b in April, with demand higher than expected in the second quarter, particularly in the US. However, large inventories and rising output from OPEC “suggest prices will likely remain weak in the medium-term,” John Baffes, the World Bank’s senior economist, said in a statement.
The bank said it expects the price to rise to $61/b in 2016 as supply growth slows. The price projections are included in the organization’s latest quarterly Commodity Markets Outlook………………………………………..Full Article: Source

Four signs of pain in commodities

Posted on 21 July 2015 by VRS  |  Email |Print

Oil has been reeling for about a year; now gold is getting slammed - not pretty for commodities investors. The Bloomberg Commodities Index dropped to a 13-year low Monday - weaker than after the banking meltdown of 2008 and the euro-zone crisis of 2012. From wheat, to copper, to natural gas, little has escaped the rout.
“Commodities are a mess,” Walter “Bucky” Hellwig, who helps manage $US17 billion at BB&T Wealth Management, said. “We are not looking to add to positions.” It’s the year’s worst-performing asset class, with the Bloomberg gauge down more than 7 per cent. In Monday’s drop, the value of holdings in exchange-traded products for gold plunged to its lowest since 2009. During a stretch of about 15 minutes in Asian trading hours, prices of the metal fell the most in two years………………………………………..Full Article: Source

China’s Commodities Crash Will Not Make Australia The Next Greece

Posted on 21 July 2015 by VRS  |  Email |Print

It’s entirely possible that the Chinese economy is in the middle of a massive crash: there’s well informed people asserting just that. It’s also entirely possible that Australia won’t have a happy time of it if that is indeed so: the country has waxed very fat off the commodities boom as China has developed at breakneck speed.
However, there’s then those saying that this will mean that the Australian economy will then suffer the catastrophe that has befallen Greece: and this just ain’t so. That is to misdiagnose what has happened to Greece: it’s not that its terms of trade changed, but that it wasn’t allowed to use the simplest and best method of altering an economy to deal with changes in the terms of trade………………………………………..Full Article: Source

How China affects commodity prices

Posted on 20 July 2015 by VRS  |  Email |Print

Over the last 20 years, China has emerged as a major player in the commodities market. Whether it’s a global commodity super-cycle or a worldwide rout, it is often explained in terms of the ‘China factor’. Most commodity commentators devote a lot of attention to China because it is not just a large importer of many materials, it is also a prodigious producer of some.
So can we quantify the China effect on different commodity markets? Consider Chinese demand first. The consumption boom across many metals in the past two decades was driven largely by China. A World Bank report shows that China consumed about half the 91 million tonnes of metals produced globally in 2012. This was up from a mere 4 per cent in 1990. In the same period, metal consumption at the OECD countries, for instance, remained unchanged………………………………………..Full Article: Source

Commodities: Off the Boil

Posted on 16 July 2015 by VRS  |  Email |Print

The recent commodity price ‘rally’ as some have described it has come to a halt. Further significant price gains in the near-term are unlikely. However, H2 2015 may provide some support for fundamentals. Nevertheless, returns will remain meagre and warning signs emanating from the macro environment (Grexit etc.) allude to the short-term nature of commodity investment flows.
Net inflows to commodities of almost $7bn in Q1 2015, followed by a month (April) when commodities outperformed most other asset classes (registering double-digit returns as oil prices rose 20%) gave promise to markets. But no sooner had the commodity bulls returned than the spectre of continued sluggish growth and amply supply came back to dent sentiment. Lets face it, the majority of commodities remain in good supply and so the run-up in prices Q1 proved short-lived………………………………………..Full Article: Source

Iron ore, commodities to fall: Citi third quarter outlook takes bearish view

Posted on 15 July 2015 by VRS  |  Email |Print

Citi expects iron ore prices to fall into the $US30s in the second half of 2015, with the prices of other commodities – coal, oil and grain – also expected to weaken. Citi’s third quarter outlook, titled Sorting through the asset market bargain bin, stated that “rebounding Australian exports, lower Chinese steel production, mine re-starts and ramp up of new supply are expected to push iron ore prices below $US40 per tonne.”
Iron ore was most recently trading at $US50.30 per tonne after falling to $US44.59 earlier in the month. “The iron ore market continues to suffer from the three Ds: weak Chinese steel demand, cost deflation, and deleveraging among traders and steel mills.”……………………………………….Full Article: Source

Global Implications of Lower Oil Prices

Posted on 15 July 2015 by VRS  |  Email |Print

While the dramatic drop in oil prices in the past year will mean significant losses in revenue for some exporting countries, consumers should be paying less for fuel—and have more money to spend. A new paper published by IMF staff suggests that higher spending will ultimately be good for global growth.
The decline in oil prices is certainly benefiting consumers, but not as much as we might have thought. Even though crude oil prices fell by about half between June of last year and by the end of the year, retail fuel prices on average globally have fallen by half as much, so by about a quarter, says Aasim Husain, co-author and deputy director in the IMF’s Middle East and Central Asia Department……………………………………….Full Article: Source

Barclays Is Negative About Commodities in Q3.

Posted on 14 July 2015 by VRS  |  Email |Print

Barclays see the greatest upside potential in the commodity area for Copper. In a research report revealed today, 12 July 2015, Barclays has shared its negative outlook for commodities in Q3. On April 20, Barclays announced plans to to exit most of its commodities activities which is in line with the negative expectations revealed.
Commodities revenue at the 10 largest banks fell 18 percent last year amid reduced volatility, Coalition, a London-based analytics company, said in February. At the same time, regulators are concerned that lenders might control prices if they both own and trade raw materials, or suffer losses that would endanger the financial system. Deutsche Bank AG and Bank of America Corp. are exiting some commodities activities, while JPMorgan and Morgan Stanley are selling units………………………………………..Full Article: Source

Will China’s crash trigger a new global recession?

Posted on 13 July 2015 by VRS  |  Email |Print

The weak post-2008 recovery in the global economy is drawing to a close. Greece, China, falling bond and equity prices, all point to trouble ahead. With one of the world’s most open economies, we in Ireland will be among the first to feel the draft.
Following the stunning success of the “no” camp in last Sunday’s referendum all eyes have been focused on Greece. Will the Mediterranean country be able to agree a package with its creditors that allows it to stay in the euro or is ‘Grexit’ finally upon us? If Greece does become the first country to exit the single currency what, if any, will be the consequences for the rest of the eurozone?……………………………………….Full Article: Source

Global agri-commodities’ price plunges to six-year low in June

Posted on 10 July 2015 by VRS  |  Email |Print

Global agri commodities’ prices declined to nearly six-year low in June 2015 due to bumper output of all products in value chain. Forecast for yet another year of better-than-expected production this year despite continuing apprehension over El Niño pulled commodities’ prices down.
Data compiled by the Food and Agricultural Organisation (FAO) of the United Nations, showed prices of global agri commodities fell by 0.9% in June. Weighed in terms of index known as FAO’s Food Price Index (FPI), prices of agri commodities stood at 165.1 points, a decline of 21% from a year ago and at its lowest level since September 2009………………………………………..Full Article: Source

Goldman Sees Negative Loop in Commodities From Excess Money

Posted on 09 July 2015 by VRS  |  Email |Print

It’s going to take a prolonged slump in commodities to break a cycle of too much money and excess production, according to Goldman Sachs Group Inc. The market is caught in a “negative feedback loop,” where lower raw-material prices are strengthening the dollar and lowering production costs for countries with weaker currencies, Goldman analysts wrote in a report.
That boosts the prospects of higher U.S. interest rates and a reduction in emerging-economy debt, according to the bank. Demand for commodities will subsequently decline, capping prices and further reinforcing the greenback, it said. “Commodity markets still have access to far too much capital relative to future demand and a declining cost structure,” analysts including Jeffrey Currie in New York wrote in the note………………………………………..Full Article: Source

China’s reduced appetite for commodities won’t be offset by India

Posted on 06 July 2015 by VRS  |  Email |Print

The decade-long commodity demand “super-cycle” induced by China’s unique, resource-intensive economic growth model is nearing an end, analysts say, and that will not change even if India changes course to follow suit. That means global demand for commodities will grow more slowly in the years ahead as India, despite a similar population to China, will not make up for China’s slowdown.
“Even if India were to emulate China’s growth path, it will take a long time before the country can compensate for the slowdown in Chinese demand for commodities due to India’s small base,” Vanessa Lau, a senior analyst at American brokerage Sanford Bernstein, said in a research report………………………………………..Full Article: Source

Global slump in agri commodities to persist: report

Posted on 02 July 2015 by VRS  |  Email |Print

A major factor driving lower food prices globally is lower oil prices that is pushing down energy and fertilizer costs, the report said, adding, this will remove incentives for production of bio-fuels. Better crop yields and a slower growth in global demand will lead to a gradual decline in real prices of major crops over the next decade, said the Agricultural Outlook 2015-2024 released on Wednesday.
However, crop prices are likely to remain at levels above those in the early 2000s, observed the report released by the Organisation for Economic Cooperation and Development (OECD) and UN’s Food and Agriculture Organization (FAO)………………………………………..Full Article: Source

Commodities Green Shoots Suggest Better H2 - Analysts

Posted on 01 July 2015 by VRS  |  Email |Print

Commodity prices have been largely flatlined in the past few months, and even on the year, would appear to be on life-support. Nevertheless, analysts see scope for commodity recovery in the second half of 2015 and point to several factors that could revive global investor interest.
The Thomson Reuters Jefferies CRB index stands at 227.2176 Tuesday afternoon, on the high side of a 223.1627 to 226.4730 range. The TRJCRB closed at 229.9579 December 31, and fell to 211.2690 January 29, covered to 229.5511 in mid February and then put in a 2015 trough of 206.8126 on March 18, the day the Fed took the word “patient” from the accompanying statement………………………………………..Full Article: Source

Bank for International Settlements warns of emerging market risks

Posted on 29 June 2015 by VRS  |  Email |Print

Economists and foreign investors may have overestimated the potential economic output of a quintet of Latin American countries by 2 percentage points, leading to the possibility of sharp financial outflows when reality sinks in. Separately, “massive borrowing” by emerging market companies has also left them vulnerable to funding reversals if and when investor sentiment towards EMs reverses.
These are among the warnings from the Bank for International Settlements, commonly known as the central bankers’ central bank, in its annual report, released on Sunday. Amid slowing economic growth across much of the emerging world, the BIS says that a “moderation” of growth from the very high rates seen in recent years is “probably unavoidable”………………………………………..Full Article: Source

25 Lessons on Commodity Investing

Posted on 26 June 2015 by VRS  |  Email |Print

Commodities can be very powerful investments but they also come with their fair share of risk. In recent years, investors and advisors have begun to adopt commodities into portfolios, as many have seen the benefits of adding these low-correlated assets to a group of holdings.
The launch of a robust lineup of exchange-traded products that utilize both physical commodities and commodity futures contracts has brought commodities to the masses; they’re no longer reserved for the largest and most sophisticated investors………………………………………..Full Article: Source

Testing Your Basic Commodities Knowledge

Posted on 26 June 2015 by VRS  |  Email |Print

The world of commodities has played an important role in the investing landscape over the years. Some of these hard assets are known for their low correlation to other asset classes, while others are known for their volatility and hefty price movements. Either way, commodity investing has only grown more popular over the years and has even made its way into the average retail portfolio.
The quiz below will test some of your basic commodities knowledge and how well you know the industry. Simply click on the answer that you believe is correct. Good luck!……………………………………….Full Article: Source

How El Niño affects commodity prices (Video)

Posted on 22 June 2015 by VRS  |  Email |Print

Cocoa, coffee and minerals are especially vulnerable to the weather pattern first named by Peruvian fishermen. The Economist explains how El Niño affects.…………………………………………Full Article: Source

Australia cuts farm commodity forecasts due to El Niño

Posted on 18 June 2015 by VRS  |  Email |Print

Australia on Tuesday slashed forecast production levels for wheat, cotton and other agricultural commodities in fiscal 2015/16 as an El Niño weather phenomenon grips the country and dries out farmland. Meteorologists warn the current El Niño, the second in five years in Australia, will persist until the end of the year.
“We should see an end to this El Niño by December, January at the latest,” Andrew Watkins, manager of climate prediction services for the Australian Bureau of Meteorology. In the year ending July 1, 2016, cotton production in Australia is forecast to reach only 520,000 tonnes down from a March forecast of 559,500 tonnes, according to the latest quarterly update from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)………………………………………..Full Article: Source

5 little-known facts about commodities

Posted on 17 June 2015 by VRS  |  Email |Print

Regardless of what you think about commodities futures, you’re probably wrong. That’s because commodities are one of the most misunderstood asset classes in the entire investment arena. And that’s really saying something, since there is considerable misunderstanding about other asset classes as well.
One reason there’s been so much misunderstanding about commodities futures is that, until now, long-term historical data were unavailable. So analysts were largely shooting in the dark when trying to draw statistically robust conclusions about those contracts’ behavior………………………………………..Full Article: Source

Hank Paulson says China risks ‘real damage’ to economy

Posted on 15 June 2015 by VRS  |  Email |Print

The Chinese government risks “real damage” to the economy if it does not hasten reform of China’s state-owned enterprises and overhaul a debt-fuelled growth model, Hank Paulson has warned. For more than two decades the former US Treasury secretary and Goldman Sachs chief has worked closely with pivotal Chinese political figures such as Wang Qishan, currently head of the Chinese Communist party’s anti-graft bureau, and visits Beijing frequently.
“Until the state-owned enterprises are put on a level and competitive playing field, it’s going to be difficult to have the marketplace work efficiently in some key sectors of the economy,” Mr Paulson told the Financial Times during a visit to the Chinese capital. “Reform of the SOEs has been moving too slowly.”……………………………………….Full Article: Source

Commodities: Where is the value?

Posted on 05 June 2015 by VRS  |  Email |Print

The prices of core commodities, including oil and iron ore, have plunged in recent years. Michael Hulme, commodity equities fund manager at Carmignac Gestion, analyses the areas still able to offer value as industries consolidate and respond to price changes
Though last year’s plunge in oil prices was partly offset by a near-50% rebound from March 2015 onwards, volatility continues to unsettle investors within the asset class. There is reason to be cautiously optimistic on the outlook for some commodities, particularly oil, which continues to gain ground as US shale production begins to fall. Our long run forecast remains $80 to $90/barrel………………………………………..Full Article: Source

Energy & Commodities Market Study

Posted on 03 June 2015 by VRS  |  Email |Print

The perfect storm in energy and commodities is the result of a confluence of events; any of which, in a “normal” market, would require time for the markets to absorb and return to equilibrium, according to a new report from SunGard.
These events are: weakening energy and commodities demand due to slow global economic growth, overinvestment in, and a return of previously constrained, production capacity leading to an extended period of excess supply, a strong dollar policy reducing the value of dollar denominated commodities and increasing regulatory intervention in commodities markets that impacts broad segments of the commodities value chain………………………………………..Full Article: Source

SocGen Deal Reflects Commodity Troubles

Posted on 28 May 2015 by VRS  |  Email |Print

Société Générale SA told Jefferies LLC that it’s interested in buying its Bache commodities-trading unit — but only parts of it, Christian Berthelsen and Tatyana Shumsky report. It’s an indication of how unattractive raw-materials trading is amid fewer profits and more regulation. SocGen expects to take more than 300 of Bache’s top clients by revenue, including producers and end users of materials ranging from crude oil to aluminum.
But many brokers on Jefferies Bache’s energy team are moving to U.K. brokerage ED&F Man Capital Markets after SocGen decided to absorb just a third of client assets. “This year has been a reality check for the industry,” said Matt Simon, head of futures research at consulting firm TABB Group LLC. “It’s a simple case of what the profitability is going to be. There’s lower commissions, fewer instruments you can profit on, stronger capital commitments and growing pressure on the business.”……………………………………Full Article: Source

Iron ore forecast cut 32% by Citigroup as demand to drop

Posted on 28 May 2015 by VRS  |  Email |Print

Global iron ore demand will contract over the 2020s as steel consumption growth in China peaks, according to Citigroup, which reduced its long-run price forecast for the raw material by 32 percent. The long-run estimate was cut to $55 a metric ton from $81 as the world’s major mining companies added more cheap supply, analysts including Ivan Szpakowski wrote in a report on Wednesday. From 2016 to 2018, prices may average $40, it said.
“The next decade is shaping up to be a complete reversal of the past decade,” Citigroup said. After a period of rapid demand growth, the entry of new miners and rising costs, the years ahead will see lower demand, marginal producers forced out and major miners dominating supply growth, it said…………………………………….Full Article: Source

Goldman Sticks to Commodity Bear Call as Copper Vulnerable

Posted on 26 May 2015 by VRS  |  Email |Print

Commodities will reverse a rally that started in March as a stronger U.S. dollar, cheaper oil and cooling China again pressure raw materials, especially copper, according to Goldman Sachs Group Inc. Copper will lose at least 16 percent over the coming 12 months on China’s weakening demand growth and slowdown in construction completions, analysts including Jeffrey Currie said in a report e-mailed Monday.
Oil in New York will fall to $45 a barrel by October while the dollar continues its rise, pushing commodities prices lower as production costs slide. “We see downside pressures on commodity prices re-emerging,” the analysts wrote in the report. “The recent rise in commodity prices is clearly at odds with our lower-for-longer bearish view across the complex.”……………………………………….Full Article: Source

Africa’s economy to strengthen in 2015 despite Ebola, oil price

Posted on 26 May 2015 by VRS  |  Email |Print

Africa’s overall economy should advance in 2015, expanding by 4.5 percent, showing resilience despite weak commodity prices and the devastating Ebola epidemic, an annual report published Monday said. And future growth could be spurred by the continent’s population doubling to two billion over the next 35 years, repeating in Africa the economic boom seen in Asia’s biggest countries.
“Africa’s gross domestic product (GDP) growth is expected to strengthen to 4.5 percent in 2015 and 5.0 percent in 2016 after subdued expansion in 2013 (of 3.5 percent) and 2014 (3.9 percent),” said the report, co-authored by the Organisation for Economic Co-operation and Development (OECD), the African Development Bank and the UN Development Programme (UNDP)………………………………………..Full Article: Source

Commodities, precious metals funds outflows biggest since 2013 -Lipper

Posted on 22 May 2015 by VRS  |  Email |Print

Investors in U.S.-based funds pulled $597 million out of funds that specialize in commodities and precious metals in the week ended May 20, data from Thomson Reuters’ Lipper service showed on Thursday. The outflows were the biggest since December 2013. Stock funds posted $1.7 billion in outflows over the latest week after attracting $3.7 billion in inflows the prior week.
U.S.-based non-domestic-focused stock funds attracted $3.3 billion of inflows, their 15th straight week of net new cash. “I’m speculating here but possibly stronger economic news caused investors to pull money out of commodities and into stocks,” said Patrick Keon, research analyst at Lipper………………………………………..Full Article: Source

Moody’s Predicts Big Jump in Oil and Gas Defaults

Posted on 20 May 2015 by VRS  |  Email |Print

So far oil and gas companies have largely weathered the sharp drop in oil prices with minimal carnage. But that carnage is coming, according to a new report from Moody’s Investors Service. Analysts at Moody’s predicts that the default rate for oil and gas companies with lower credit ratings — B2 or lower — could increase to 7.4% by March 2016 from 2.7%.
Moody’s Senior Vice President David Keisman said in the report that even if energy prices recover gradually to roughly $70 to $75 per barrel in 2016, the “weaker oil & gas issuers” will still be positioned for a “much greater risk of default.”……………………………………….Full Article: Source

Oil prices to recover, says BHP

Posted on 19 May 2015 by VRS  |  Email |Print

Cheap oil prices will not last for long, with significant rises to come in two to three years because of a lack of new discoveries, BHP Billiton’s petroleum boss says. Equally weak natural gas prices will take longer to bounce back though, according to industry leaders attending Australia’s largest oil and gas conference.
The predictions on gas are good news for consumers, particularly manufacturers, but not the energy companies that have invested an estimated $75 billion on three new liquefied natural gas projects in Queensland that about to come online………………………………………..Full Article: Source

Global outlook increasingly uncertain

Posted on 18 May 2015 by VRS  |  Email |Print

An increasing number of clouds are rolling in from Greece to Britain to the US, which may give investors a reason to pause their bullish bets on equities. Increasingly erratic and extreme shifts in asset pricing are unnerving investors everywhere.
On one level the backup in global bond yields makes sense. The deep-seated deflation that was built into bonds after last year’s oil price collapse now has to be rethought and repriced. But the speed and shock of the bond backlash has exposed illiquidity and overcooked, over-correlated investment positions………………………………………..Full Article: Source

Palladium to outperform platinum, move towards convergence – ANZ

Posted on 15 May 2015 by VRS  |  Email |Print

Palladium will continue to outperform platinum, with the prices of the two metals moving further to convergence amid differing fundamentals, ANZ Research said. Platinum was recently quoted at $1,149/1,155 per ounce, up $4 on Wednesday’s close and recovering from March’s sub-$1,100 lows – its softest since July 2009. Palladium, meanwhile, was last at $784/789, up $1.
“The price of the two metals should move closer to parity over the next few years, based on how we expect the market supply/demand balances to evolve,” the broker said in a note on Thursday. “But it is likely to be a long grind rather than a quick shift. In reality, this would just be a continuation of the downtrend in the platinum/palladium ratio in place since 2009,” it added…………………………………..Full Article: Source

EIA ups 2015 crude-price forecasts, cuts 2016 view

Posted on 13 May 2015 by VRS  |  Email |Print

The U.S. Energy Information Administration raised its 2015 forecasts for West Texas Intermediate and Brent crude prices in a monthly report issued Tuesday. The government agency said it expects WTI prices to average $54.32 a barrel this year, up from a previous forecast of $52.52.
The EIA, however, said it expects WTI crude to average $65.57 a barrel in 2016, down from the prior view of $70.07. Brent crude is forecast at $60.79 this year, up from a previous forecast of $59.39. The EIA said it expects natural-gas prices to average $2.93 per million British thermal units this year, down from the earlier estimate of $3.07………………………………………..Full Article: Source

ETFs poised to outstrip hedge funds

Posted on 08 May 2015 by VRS  |  Email |Print

The high-profile hedge fund world is about to be surpassed in terms of total assets by the unstoppable juggernaut that is the exchange-traded fund (ETF) industry, new research shows. Assets held globally in ETFs reached $2.93trn (£1.9trn) at the end of the first quarter of this year, according to research and consultancy firm ETFGI.
Meanwhile, a report from Hedge Fund Research has revealed there was $2.94trn in hedge funds at the same time. The difference in assets is the closest it has ever been (see top chart) and ETFGI predicts that given the much faster rate of inflows into ETFs seen in recent years, the tracker funds should overtake hedge funds within the second quarter of this year………………………………………..Full Article: Source

World Seen Saving $153 Billion on Food Bill After Costs Tumble

Posted on 08 May 2015 by VRS  |  Email |Print

Hefty supplies and cheaper shipping costs mean countries will pay less to import food than anytime in the past five years, the United Nations predicted. Food prices globally have fallen for most of the past year given an oversupply in everything from wheat to sugar and dairy, according to a report released Thursday by the UN’s Food & Agriculture Organization.
The group said the world food import bill may drop $153 billion, or 12 percent, to $1.13 trillion this year. While poorer countries, such as those in sub-Saharan Africa, will be able to get cheaper food in the international market, in some cases the benefit is diminished because their currencies have weakened relative to the dollar, the FAO said………………………………………..Full Article: Source

Gold an ‘unreliable’ hedge against geopolitical risk – SocGen

Posted on 08 May 2015 by VRS  |  Email |Print

Gold is not reliable as a hedge against geopolitical risks, Société Générale said on Thursday. The performance of the yellow metal in periods of regional military conflicts is mixed and it has not performed well consistently, the bank said in a note on Thursday.
One of the most recent examples is the annexation of Crimea by the Russian military during which gold initially rallied towards $1,400. “[But] the gold rally didn’t last very long and it wasn’t long before gold was trading at levels below when armed men seized Crimea’s parliament,” SocGen said………………………………………..Full Article: Source

Global surge in silver output passes SA by

Posted on 08 May 2015 by VRS  |  Email |Print

South Africa is Africa’s second-largest silver producer, but it is minuscule when compared with global supply, which last year notched up a 12th consecutive year of growth to reach 877-million ounces. Silver in SA is largely a by-product of other mining processes, and production has remained constant at about 2.8-million ounces a year over the past decade.
Silver is used mainly in industrial, jewellery and investment applications. The silver market ended last year with a 4.9-million ounce deficit, but the price fell 20% to $19.08/oz, the lowest average annual price since 2009, according to the 2015 World Silver Survey compiled by Thomson Reuters GFMS………………………………………..Full Article: Source

15 Precious Metals Terms All Gold Buyers Should Know

Posted on 07 May 2015 by VRS  |  Email |Print

For the sake of simplicity, “gold” in any of the definitions below can be replaced with silver, platinum, or palladium. 1. Ingot: A mass of metal formed into a convenient shape for shipping, storing, or further processing. Ingot and bar may be used interchangeably in regards to precious metals.
2. Bullion: Precious metals in the form of bars, coins, or other ingots. Not to be confused with bouillon, the French word for broth. 3. Circulated/Uncirculated: Circulated coins have been used as currency by the public, and uncirculatedcoins have not. Uncirculated coins are usually in much better condition than circulated ones………………………………………..Full Article: Source

How QE impacts commodities

Posted on 06 May 2015 by VRS  |  Email |Print

The economic cycle of depression/recession has created the need for Quantitative Easing (QE), the occasionally used and effective tool used by central banks across the globe. The world knows all about it and will be remembered for ages. Before we delve deep in to this topic, it is essential to understand the basic definition of this much hyped “Quantitative Easing” and how it is supposed to work.
Quantitative Easing can be defined as monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective. The new money swells the size of the bank reserves and lower interest rates will stimulate the economy by encouraging banks to make more loans which in turn boosts investment………………………………………..Full Article: Source

Africa and commodity prices: No longer the kiss of death

Posted on 24 April 2015 by VRS  |  Email |Print

In 2014 commodity prices tumbled. Many economists feared the worst for Africa. For decades the continent has been hopelessly dependent on commodities to power economic growth. When prices crashed, economies would go into tailspin. This time around, though, things seem different. The continent is holding up well.
The map above looks at how forecasts from the International Monetary Fund for African growth in 2015-16 have changed in the past year. Compared to what they were predicting in April 2014, the IMF now expects economic growth to fall in most African economies. For instance, the IMF now expects Nigeria to grow by 10% over the next two years, whereas in April 2014 it had predicted growth of 14%. Thus growth expectations have fallen by 4 percentage points, as the map’s colouring shows…………………………………..Full Article: Source

Continued Weakness in Commodity Markets May Signal Long Term Easing of Prices

Posted on 23 April 2015 by VRS  |  Email |Print

Well-supplied markets are continuing to drive down prices of commodities, across the board, says the latest issue of the World Bank’s Commodity Markets Outlook (CMO). Most indices edged further down during the first quarter of 2015, with food down 7.3 percent, crude oil down 13 percent and metals down 9 percent compared to the fourth quarter of 2014. Prices are expected to stay weak for the rest of this year, with only a marginal recovery expected in 2016.
“Surplus production and subdued demand due to weak global growth are continuing to depress commodity prices. The slowdown in emerging economies, coupled with a strong U.S. dollar, will likely keep the lid on prices. Although weaker prices will mean lower revenues for commodity exporting countries, they will help reduce current account and fiscal deficits in many commodity-importing countries,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group……………………………………Full Article: Source

Greece is ‘main threat to global economy’s recovery’

Posted on 21 April 2015 by VRS  |  Email |Print

World finance officials worry about unevenness of growth as the Greece’s debt crisis poses the biggest problem that now needs solving. World finance officials said they see a number of threats on the horizon for a global economy still clawing back from the deepest recession in seven decades, and a potential Greek debt default presents the most immediate risk to the recovery.
After finance officials wrapped up three days of talks on Saturday, the International Monetary Fund’s policy committee set a goal of working toward a “more robust, balanced and job-rich global economy” while acknowledging growing risks to achieving that objective…………………………………..Full Article: Source

Global financial risks have risen, says IMF

Posted on 16 April 2015 by VRS  |  Email |Print

The risks to global financial stability have risen, the International Monetary Fund (IMF) has said. In a new report, the IMF says that countries that export oil and other commodities have been severely affected. Some emerging economies have been hit by sharp moves in the global currency markets.
And the report says financial stability is still not “fully grounded” in the rich countries. “Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address,” said Jose Vinals, financial counsellor at the IMF………………………………………..Full Article: Source

Commodities squeeze growth

Posted on 15 April 2015 by VRS  |  Email |Print

Economic growth in sub-Saharan Africa is expected to slow to 4% this year, from 4.5% in 2014 on the back of falling commodity prices before picking up moderately next year, according to World Bank projections. This is while problems in the electricity sector continued to curtailed South Africa growth. The World Bank insisted that oil exporters such as Angola and Nigeria, were especially hard hit by sharply lower oil prices.
While in South Africa the energy power supply and policy uncertainty were having a negative impact. The World Bank’s Africa’s Pulse report focused on the continent’s economic prospects and pointed out that the downturn on growth largely reflected the fall in the prices of oil and other commodities………………………………………..Full Article: Source

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