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Dow Chemical Says Lower Oil Price to Boost Global Economy

Posted on 23 October 2014 by VRS  |  Email |Print

Dow Chemical Co. (DOW), the largest U.S. chemical maker by sales, said this year’s plunging oil prices will stimulate national economies and help rather than hurt its plastics business next year. Lower oil prices should help increase gross domestic product in the U.S., the U.K, Japan and China, Howard Ungerleider, chief financial officer of Midland, Michigan-based Dow, said on a conference call with analysts today.
The positive effect will become more visible through 2015, he said. “Low oil price means more demand in the GDP,” Chairman and Chief Executive Officer Andrew Liveris said on the call………………………………………..Full Article: Source

International demand for gold continues surging

Posted on 23 October 2014 by VRS  |  Email |Print

Demand for gold continues to be robust and has indeed increased significantly in recent weeks despite gold’s most recent paper driven gold weakness. Demand in China and India surged again and gold reserve diversification by the central bank of Russia hit a new record high in September as geopolitical tensions rose.
The seemingly insatiable appetite of the growing Indian middle class for gold is causing the government in India to again consider imposing sanctions on the importing of gold. Gold imports into India in September were worth $3.8 billion. This figure is almost double the $2 billion spent by Indians in August as, once again, the Indian middle class, like their Chinese counterparts, used the opportunity of a weakened gold price to increase their holdings………………………………………..Full Article: Source

Factors Affecting Precious Metals

Posted on 23 October 2014 by VRS  |  Email |Print

Since the dawn of civilization, precious metals — especially Gold and Silver — have been recognized as stores of value and have been used as money for transaction purposes. Even today, in the presence of stocks, bonds and a number of alternate investment options, they are a very popular source of investment.
They neither yield dividends nor interest and they don’t convey an ownership interest in a firm or stock — in fact, they actually come with additional storage and safeguarding fees. But still, they are an important component of individual as well as institutional investors’ portfolios. Apart from acting as investment vehicles, gold and silver also have a strong jewelry market and are used for manufacturing purposes in some industries………………………………………..Full Article: Source

Can gold bounce back? Here’s why experts feel that you should give yellow metal a miss this Diwali

Posted on 22 October 2014 by VRS  |  Email |Print

What will you buy on muhurat day? Will you stock up on equities or will you go for gold? To some buyers, gold might appear very attractive right now. The domestic gold price is down more than 18% from its all-time high of Rs 33,265 per 10 gm recorded in August 2013. The past 15 months, in fact, have been devastating for gold investors. The price of the yellow metal has slipped, turning conventional wisdom on its head. Even now, analysts believe that gold faces headwinds that could take prices down in the near to medium term.
This is not good news for buyers getting ready for Dhanteras shopping. After all, their blind faith in gold had delivered handsome returns in the past decade. This changed last year, with gold churning out losses for investors who bought the yellow metal on the muhurat day in 2012 and held it till the 2013 Diwali. ……………………………………….Full Article: Source

Can gold bounce back? Here’s why experts feel that you should give yellow metal a miss this Diwali

Posted on 21 October 2014 by VRS  |  Email |Print

Gold is a good hedge against inflation and global investors get on the gold train only when they fear that inflation will go up. After fears of inflation, the European Union (EU) region is facing the threat of deflation, mainly due to the fall in global commodity prices. The international crude oil (Brent variety) is now trading at $83 per barrel, a two-year low.
Most global agriculture commodities are also at multi-year lows. The inflationary pressure has ebbed significantly in the US as well. Investors deserting gold: Investors have also deserted the gold market. The gold holdings of the SPDR Gold Trust, the largest gold ETF in the world, are down 44% from their peak of 1,353 tonnes in December 2012. They don’t see any upside potential now from the current levels. “Gold is no more in a buy zone………………………………………..Full Article: Source

Supply Deficit Unlikely To Help Copper

Posted on 21 October 2014 by VRS  |  Email |Print

The copper market may end up in deficit this year, but that won’t do much for the metal’s price, analysts said. Instead of an earlier predicted supply glut, the copper market will likely finish 2014 with a deficit of around 150,000 tons, said Edward Meir, an analyst at INTL FC Stone., in a presentation at the LME Metals Seminar in London.
That forecast jibes with the International Copper Study Group’s revised outlook, which foresees demand lagging supply by 270,000 tons. Earlier this year, the ICSG predicted a 400,000 ton surplus………………………………………..Full Article: Source

Falling oil prices put pressure on Russia, Iran and Venezuela

Posted on 20 October 2014 by VRS  |  Email |Print

The silver lining in the recent financial market turbulence has been the continued decline in the price of oil, which is down about 25 percent since June. In addition to creating a windfall for U.S. consumers — one analysis reckoned the savings could amount to $600 per household — the drop, if sustained, will place considerable pressure on three problematic petrostates: Russia, Iran and Venezuela.
The aggressively anti-American foreign policies pursued by all three countries in recent years have been financed in large part by soaring oil revenue. Though separated by culture and continent, the regimes of Vladi­mir Putin, Ali Khamenei and Nicolás Maduro have in common autocratic government and ambitions to dominate their regions………………………………………..Full Article: Source

Russia can withstand lower oil prices but not for very long

Posted on 20 October 2014 by VRS  |  Email |Print

Russia does not face an immediate threat from the sharp fall in oil prices over recent months. While the economy is heavily dependent on oil, the country’s accumulated reserves and the floating rouble will mitigate the shock, and Russia should be able to withstand levels of $80 to $90 a barrel for about two years. But in the longer term, persistently low prices – reinforced by the pressure imposed by western sanctions – could pose an existential challenge to Vladimir Putin’s regime.
The 25 per cent drop in the oil price over the past three months did come as a shock to the Russian government. The latest draft of the 2015-17 budget assumes a price of $100 a barrel (and average annual gross domestic product growth of 2.6 per cent)……………………………………….Full Article: Source

Hedge Funds Say Oil Is Going to $0

Posted on 20 October 2014 by VRS  |  Email |Print

Supply and demand are what typically fuel oil prices . However, market fundamentals aren’t the only factors at play. Speculators, like hedge funds and other big money investors, play a role in the price of oil as well. They can push it up past market fundamentals or, as they have recently, cause it to plunge — the latest dip sent global oil benchmark Brent down 25% to around $85 per barrel, and U.S. oil benchmark WTI even lower.
Energy traders are betting that oil prices will keep falling. In a recent Bloomberg article, Citigroup’s global head of energy strategy, Seth Kleinman, was quoted as saying that, “several big, smart commodity hedge funds said oil is going to zero.” He went on to say, “they are being somewhat dramatic, but they were incredibly bearish.”……………………………………….Full Article: Source

Commodities Extend Decline to Five-Year Low on Oil to Tin

Posted on 17 October 2014 by VRS  |  Email |Print

Commodities extended declines to a five-year low led by industrial metals and oil on speculation supplies are more than sufficient with prices of everything from gasoline to food falling.The Bloomberg Commodity Index (BCOM) fell 0.6 percent at 12:55 p.m. in London after dropping to the lowest since July 2009. Zinc declined 3 percent, nickel retreated 2.5 percent and West Texas Intermediate fell below $80 a barrel for the first time since June 2012.
A Bank of America Corp. survey of fund managers this week showed the lowest optimism in the outlooks for economic growth and inflation in two years, pushing them to increase their cash balances and avoid commodities. An index of food prices compiled by the United Nations dropped to the lowest since August 2010 last month and regular gasoline prices in the U.S. are the lowest since February 2011………………………………………..Full Article: Source

How Has The Federal Reserve Impacted Gold Since 2009?

Posted on 17 October 2014 by VRS  |  Email |Print

The last five years will be forever marked on the history books with some of the most innovative, aggressive and controversial actions by the U.S. Federal Reserve ever. There are critics and there are fans of former Federal Reserve Chairman Ben Bernanke, and perhaps the jury is still out on his overall handling of the 2008-2009 global financial crisis.
After all, the massive programs that he left in place are just now starting to be unwound. There remain many hurdles and uncharted waters for the central bank to navigate through on its unprecedented unwind and exit of the massive and extraordinary monetary policy initiatives of recent years………………………………………..Full Article: Source

Investors cooling towards commodities

Posted on 16 October 2014 by VRS  |  Email |Print

Investors have been showing a more negative sentiment towards commodities in the past few weeks, ETF Securities has found. In its latest 10-page research note, the exchange-traded fund provider also noted that improvement in the US economy and labour market should benefit cyclical assets.
The report also noted that among commodities long gold and silver exchange-traded products saw $88m (£54.7m) and $46m (£28.6m) of outflows respectively because of negative sentiment, despite strong demand for the raw metals. According to the report, in the US, more than 50 per cent of silver demand had come from industrial applications………………………………………..Full Article: Source

Global Oil Glut Sends Prices Plunging

Posted on 16 October 2014 by VRS  |  Email |Print

Oil prices posted their biggest one-day drop in nearly two years Tuesday as a U.S.-led wave of crude has crashed into weak global demand, threatening the stability of some countries and providing an economic lifeline to others.
Tuesday’s slide of 4.5% by U.S. crude oil to $81.84 a barrel on the New York Mercantile Exchange left the price down 20% since the start of June. That was the lowest closing price since June 2012, and some analysts predict the price will fall as much as $10 a barrel lower………………………………………..Full Article: Source

World Economy Gives Investors Growth Scare as They Look to U.S.

Posted on 16 October 2014 by VRS  |  Email |Print

The global economy faces its biggest test of confidence since the European sovereign debt crisis as investors fear it’s running out of engines. Japan and the euro area are throwing up fresh signs of weakness by the day and emerging markets such as China are dragging instead of driving growth.
The sense of tumult is being exacerbated by war in the Middle East, the standoff in Ukraine, street protests in Hong Kong and the spread of Ebola to Dallas. The worry is that five years since the world limped out of recession, central banks have virtually exhausted their stimulus arsenals if activity keeps fading………………………………………..Full Article: Source

How will EMs be affected by commodity price declines?

Posted on 15 October 2014 by VRS  |  Email |Print

Credit Suisse has a new report out on the winners and losers of the recent rout in global natural resource prices. While everyone has been paying attention to the remarkable decline in the value of oil, agricultural commodities and industrial metals have also become a lot cheaper recently:
Unsurprisingly, Credit Suisse thinks Korea, which imports most of its raw materials, should be the biggest beneficiary, while the petro-dependent economies of Venezuela and Russia will feel the most pain. But there are a few surprises worth noting as well………………………………………..Full Article: Source

How To Use a Trend-Following Strategy In Commodities

Posted on 15 October 2014 by VRS  |  Email |Print

A recent article in the Financial Times highlights why, in part, the steam has gone out of the commodity markets. Judging the super cycle to be at and end investors have exited the market en mass in the belief no money is to be made from a falling market. After making 7% returns in the first half of the year from simply tracking the Bloomberg (formerly Dow Jones) Commodity Index, the third quarter has seen prices fall across the board.
According to the FT, figures compiled by Citigroup show net withdrawals from exchange-traded and commodity-linked funds totaled $8.2 billion in the 3 months to the end of September, canceling out inflows of $7.5 billion in the first half of the year………………………………………..Full Article: Source

Oil prices continue to slide on IEA report

Posted on 15 October 2014 by VRS  |  Email |Print

Global oil prices have fallen further after the International Energy Agency (IEA) reported higher output and cut its forecast for demand growth. Brent crude fell $2.72 to $86.17 a barrel before seeing a slight recovery, while US crude dropped $1.75 to $83.99.
The price of Brent has fallen by 20% since the summer on concerns of oversupply, as output increases and demand wanes. “Recent price drops appear both supply and demand driven,” the IEA said……………………………………….Full Article: Source

IEA, OPEC Officials Say Shale Can Cope With $80 a Barrel

Posted on 15 October 2014 by VRS  |  Email |Print

Most U.S. shale production would remain profitable even if oil prices fall to $80 a barrel, energy watchdog the International Energy Agency said Tuesday. Its estimate, which is shared by some OPEC officials, suggests crude prices could fall further before supply starts to come out of the market.
In its monthly report for September the IEA said “further oil price drops would likely be needed for supply to take a hit” because most of shale oil “remains profitable at $80 a barrel.” Its comments came as crude prices sank further Tuesday. At 1545 GMT, Brent crude oil for November delivery was down 2.5% to $86.76 a barrel on ICE Futures Europe, on track to settle at a fresh near four-year low………………………………………..Full Article: Source

OPEC ‘may no longer play swing producer role’

Posted on 15 October 2014 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries may no longer necessarily play a role of a swing producer in the oil market, the chief analyst of the West’s energy watchdog, the International Energy Agency, Antoine Halff said.
Higher cost projects including US shale, Canadian oil sands or deep-water Brazilian oil production may instead be required to cut output to balance the market when prices fall, he said. Two OPEC sources, meanwhile, said OPEC is unlikely to call an emergency meeting as proposed by Venezuela. The next scheduled OPEC meeting is on Nov. 27 at OPEC’s Vienna headquarters………………………………………..Full Article: Source

A Comeback for Platinum and Palladium?

Posted on 15 October 2014 by VRS  |  Email |Print

Platinum and palladium futures rose this past week as traders swooped in to take advantage of prices that have fallen as a result of the strong US dollar. Russian and Swiss central banks looked to take advantage of the lower prices by stockpiling platinum and gold, respectively.
The week’s biggest mover on the weekly Global Precious Metals MMI was the price of Japanese palladium bar, which saw a 4.2% increase to JPY 2,742 ($25.19) per gram. This comes on the heels of a 7.3% decline the week prior. The price of US palladium bar rose 2.6% to $779.00 per ounce after falling 3.4% during the previous week. The price of Chinese palladium bar fell 0.6% to CNY 174.00 ($28.33) per gram after rising 1.7% the week before………………………………………..Full Article: Source

Global Glut Keeps Pressure on Oil Prices

Posted on 14 October 2014 by VRS  |  Email |Print

Traders are becoming increasingly convinced that the world will remain awash in oil. Crude prices have tumbled more than 20% since mid-June. The global benchmark, Brent oil, dropped to a near-four-year low of $88.89 a barrel on Monday, and the U.S. benchmark dropped to $85.74, a 22-month low.
Instead of cutting back on output, to help reduce supplies and increase prices, oil producers—from U.S. corporations to oil-rich nations—are keeping the spigots open. And there is little sign that global demand will rise quickly enough to help erase the glut………………………………………..Full Article: Source

Why the gold rally might not last long

Posted on 14 October 2014 by VRS  |  Email |Print

Gold showed it still has a little more shine left to it. The precious metal bounced back to a three-week high after turning negative for the year. Investors have been flocking to bullion as the European economy and markets shake up. However, the rally in bullion may be short-lived because of strength in another safe haven, the U.S. dollar.
Gina Sanchez, founder of Chantico Global, expects gold prices to trade relatively flat, if not weaken, because investors are also piling into the dollar. “While we are seeing some negative sentiment around economic growth, the fact of the matter is that the U.S. is still growing better relative to the rest of the developed markets,” she said. “That’s causing a lot of money to flow into the U.S. dollar, and as the U.S. dollar continues to strengthen, that is bad for gold.”……………………………………….Full Article: Source

Commodities Drop Near 5-Year Low on Growth, Glut Concerns

Posted on 13 October 2014 by VRS  |  Email |Print

Commodities traded near the lowest since 2009 as oil extended a slide into a bear market amid signs of ample supplies, while industrial metals dropped on concern that slowing growth from Europe to China will sap demand.
The Bloomberg Commodity Index lost as much as 0.8 percent to 117.83, near a five-year low of 117.69 reached Oct. 3. The gauge fell the previous five weeks in the longest run of losses since April last year. It slid 12 percent last quarter, the most since 2008, on rising supplies of everything from oil to corn and as a stronger dollar made raw materials priced in greenbacks more expensive in terms of other monies………………………………………..Full Article: Source

OPEC Members’ Rift Deepens Amid Falling Oil Prices

Posted on 13 October 2014 by VRS  |  Email |Print

A rift between OPEC members deepened over the weekend, as producers in the cartel moved in different directions amid falling oil prices. Venezuela, which has been one of the most outspoken proponents of a production cut by the Organization of the Petroleum Exporting Countries, called over the weekend for an emergency meeting of the group to respond to falling prices. But Kuwait said Sunday that OPEC was unlikely to act to rein in output.
Saudi Arabia, meanwhile, appeared to expand on its recent move to defend its market share at the expense of other members by aggressively courting customers in Europe. Traders said Saudi Arabia is now asking for stronger commitments from some of its buyers in Europe, a move that would lock in those customers, including any new ones it would gain with recent price reductions………………………………………..Full Article: Source

Kuwait says OPEC unlikely to cut output to support prices -KUNA

Posted on 13 October 2014 by VRS  |  Email |Print

OPEC is unlikely to cut oil production in an effort to prop up prices because such a move would not necessarily be effective, Kuwait’s oil minister Ali al-Omair was quoted as saying by state news agency KUNA on Sunday.
Brent crude oil settled at $90.21 a barrel on Friday after earlier falling to $88.11, the lowest since December 2010, as Saudi Arabia said it raised production last month, adding to perceptions that the kingdom is looking to defend market share, rather than prices. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015………………………………………..Full Article: Source

Gold rebounds on reversal of macro dynamics, caution advised: Barclays

Posted on 13 October 2014 by VRS  |  Email |Print

Gold has rebounded on reversal of macro dynamics after witnessing intense downward pressure last week on stronger dollar nd firmer rates. With demand returning to India and China, precious metals seem to be a on a better footing. However, Barclays said it remains cautious on gold prices and continue to see the macro environment preseting headwinds and would look for opportunities to sell into a rally.
Gold prices are trading back above $1200/oz, buoyed by a relatively more supportive external environment w/w,as well as gold-specific factors turning comparatively positive.The FOMC minutes provided a boost to gold as markets concluded that the Fed may remain patient before moving to rate hikes. Meanwhile, physical demand has materialised at lower price levels………………………………………..Full Article: Source

Commodities under pressure as China continues economic realignment

Posted on 10 October 2014 by VRS  |  Email |Print

Commodity prices will continue to face near-term challenges that are linked to the dip in Chinese growth. However, support is likely to come from the country’s new economic agenda, Scotiabank VP and commodity market specialist Patricia Mohr told attendees at the recent Global Chinese Financial Forum.
Gold will come under greater pressure as the US recovery gathers pace, while some opportunities are apparent in base metals, particularly with zinc. “In addition, because of the tremendous expansion in US and Canadian oil and gas production, there are some excellent prospects in the pipeline and railways sectors,” Mohr said………………………………………..Full Article: Source

Commodity themes 2015: Expect metals to be bullish, Oil to fall further

Posted on 10 October 2014 by VRS  |  Email |Print

Amidst a strengthening US dollar, rise in equity markets, commodities are likely to underperform in the coming months. However, metals complex appears bullish,according to a new report titled Commodity Themes 2015 released by Deutsche Bank.
Brent oil physical fundamentals are weak and appearance of contango in Brent oil market will eventually be met with OPEC production cuts to tighten fundamentals and restore backwardation.Falling Brent crude oil prices are already impacting budgetary positions among the major oil producers. History shows that when OPEC takes action and cuts production, their efforts to stabilise and push oil prices are successful. However, this is contingent on world GDP growth in excess of 2.5%………………………………………..Full Article: Source

No Panic In OPEC Yet

Posted on 10 October 2014 by VRS  |  Email |Print

As Brent threatens to break $90, the lack of concern in most OPEC nations is interesting, but probably won’t last long. The fact that the dollar has appreciated in recent weeks is no doubt helpful to oil exporters, offsetting about one-third of the recent oil price decline. But the fear that the price will continue to slide as the market psychology appears to be increasingly bearish should motivate some to action.
The current dip in prices is hardly severe, more like the small drop in 1983 than the collapse in 1986. This is partly because temporary factors appear to be dominating oil price weakness, especially the worsening economic situation in Europe and parts of Asia………………………………………..Full Article: Source

CIBC: Gold prices likely ‘not too far from their cyclical lows’

Posted on 10 October 2014 by VRS  |  Email |Print

Gold prices are “probably not too far from their cyclical lows,” said CIBC World Markets in a commodity update released Thursday. The Canadian bank forecast gold to be around $1,300 an ounce at the end of 2015.
CIBC recounted factors that have pressured the metal since earlier in the year, including a renewed bid in the U.S. dollar, muted inflationary pressures and market chatter about the U.S. Federal Reserve eventually tightening monetary policy………………………………………..Full Article: Source

Commodities: Growth worries push oil and copper futures lower

Posted on 09 October 2014 by VRS  |  Email |Print

The commodity space was pressured lower on Tuesday as worries regarding weak growth in the Eurozone and Asia continued to filter through all asset classes. Concerns regarding excessive US dollar strength going forward seemed to be a common ‘talking-point’ in markets.
So much so that US Treasury Secretary Jack Lew told his audience at a speech delivered at the Petersen Institute that the US cannot be the world’s only growth engine. It was against that backdrop that front-month West Texas crude futures fell $1.6 to $88.85 per barrel on the NYMEX. Three-month copper futures were also lower, finishing the session down 0.6% to $6,670 per metric tonne on the LME………………………………………..Full Article: Source

Is OPEC heading for a sinkhole?

Posted on 09 October 2014 by VRS  |  Email |Print

Turmoil is rarely good for the bottom line. Saudi Arabia, Qatar and the United Arab Emirates are joining Washington’s anti-Islamic State air strikes within the borders of neighboring OPEC member Iraq. Fellow OPEC partner Nigeria just barely dodged an Ebola scare, while founding member Iran remains under sanctions aimed to curb its nuclear ambitions.
Meanwhile, Russia, which last year produced an estimated 10.4 million barrels of crude oil a day, doesn’t look set to extricate itself from Ukraine any time soon. Much of the oil-producing world is in turmoil, yet OPEC prices have fallen almost 20 percent since June. The reasons for this are complex, but include significant increases in the U.S. production of shale oil—also known as “tight oil”—over the past few years, which have eroded the American demand for imported oil………………………………………..Full Article: Source

It’s a super market price war! (in oil)

Posted on 09 October 2014 by VRS  |  Email |Print

That Saudi Arabia and the Opec cartel were going to be “disrupted” by North Dakota millionaires was hardly difficult to foresee. What was always harder to figure out, however, was how Saudi would react. Would Opec’s most important swing-producing state cave in and give up on market share for the sake of price control?
Or, conversely, would it be more inclined to follow along the lines of the Great UK Supermarket Price War, and enter a clear-cut race to the bottom? So far, it seems, the strategy is focused on the latter course. Which means people are finally beginning to wonder just how sustainable a path that really is………………………………………..Full Article: Source

Bitcoin speculators being crushed will they now move into silver?

Posted on 09 October 2014 by VRS  |  Email |Print

Every market has its favorite speculative asset and for the past few years the electronic funny money Bitcoin has ruled this roost. Yesterday Bitcoin rebounded from a 20 per cent sell-off over the weekend. But year-to-date speculators in this novel specie have lost 40 per cent of their money in dollar terms.
These are the same mad speculators who drove the silver price up to nearly $50 three years ago. Since then the shiniest of metals has crashed back to earth and now stands at an alluring $17 an ounce, precisely the point at which it previously began its almost 300 per cent price surge………………………………………..Full Article: Source

Rising supply in key commodities weighs on prices

Posted on 08 October 2014 by VRS  |  Email |Print

Commodity markets remain on the defensive with rising supply in many key commodities continuing to apply near-term downside pressure to prices. That, not least, is also due to current concerns about a slowdown in global growth and its potential negative impact on demand at a time where the dollar continues to go from strength to strength.
The adversity created by the current rise in the dollar looks set to be theme that will stay with us for the foreseeable future with analysts currently expecting the greenback’s ascent to continue. Some are now even talking about the rate against euro to return to parity which would represent a more than 25 percent appreciation from current levels………………………………………..Full Article: Source

Commodity super cycle going bust

Posted on 08 October 2014 by VRS  |  Email |Print

One of my key macro themes for next decade is the bust unfolding in the commodity super cycle. There are three macro forces driving this end: China’s structural rebalancing away from commodity-centric and debt-charged investment-led growth; the moderate rebound in US economic prospects, modest rises in interest rates and US dollar bull market; and, oversupply rushing to market in all sorts of commodities.
That gives you the rather sad combination of falling demand, increasing supply and a monetary headwind given most commodities are priced in US dollars, the complete inverse of the super cycle conditions that have prevailed through much of the post-millennial period………………………………………..Full Article: Source

Are Commodities Telling Us It’s 2008 Redux?

Posted on 08 October 2014 by VRS  |  Email |Print

We can look back to the 2008 global financial market meltdown and cite any number of warning signs that became so painfully obvious in hindsight. Perhaps the clearest warning sign that trouble was just around the corner began in July of 2008 when virtually all commodities entered into a steep tailspin which they would not pull out of for at least another 8 months:
Platinum, WTI crude oil, and copper offer a sampling of the steep downside reversals that commodities as a group suffered beginning in July 2008. Perhaps what was most interesting about the commodities collapse of summer 2008 was the consistent commentary that the bullish thesis for commodities (China, BRICs, global growth, etc.) was still very much intact even as prices continued to tumble………………………………………..Full Article: Source

EIA sees lower OPEC output, weaker demand growth in 2015

Posted on 08 October 2014 by VRS  |  Email |Print

The U.S. Energy Information Administration trimmed its forecast of world oil demand growth next year and made even deeper cuts in its outlook for OPEC production, the latest signs of a shift toward surplus supplies next year. The EIA cut its 2014 global demand forecast to 91.47 million barrels a day, compared with 91.55 million bpd expected last month, according to a monthly report from the agency on Tuesday.
As a result, it now expects consumption to rise by 1.24 million bpd, down 100,000 bpd from the previous month’s report but still higher than the 1 mln bpd increase estimated for 2014. On the backdrop of weakening demand, the agency curbed its forecasts for OPEC oil and other liquid fuels production to 35.51 million barrels a day in 2015, down 350,000 bpd from last month’s forecast………………………………………..Full Article: Source

Gold Can’t Hit Bottom If the Gold Bugs Keep Buying the Dips

Posted on 08 October 2014 by VRS  |  Email |Print

The gold market has had a rough go of it lately, with prices for the yellow metal falling from near $1,400 in March to just under $1,200 last week. But despite that, the gold bugs have maintained their bullishness, and that was clearly evident when the last price drop actually increased sentiment, rather than sapping it.
That’s a bad sign, MarketWatch’s Mark Hulbert said this morning on the MoneyBeat show. True bottoms form when sentiment is depressed. What’s happened recently, though, is that sentiment has actually gotten stronger even as the price fell under $1,200 last week (or, perhaps, because the price fell under $1,200). That’s not what normally happens………………………………………..Full Article: Source

Commodity Trading to Consolidate as Earnings Fall: Report

Posted on 07 October 2014 by VRS  |  Email |Print

Commodity trading consolidation will cut the number of major independent players to two or three in each asset class as the industry becomes less profitable, according to Oliver Wyman Group. “We predict that soon only two to three will remain due to an increasingly cutthroat environment,” consultant Oliver Wyman said.
Independent traders are facing increasing competition from oil majors, national energy companies and miners seeking to monetize production as well consumer companies trying to gain greater control over their supply chains, Oliver Wyman said. Traders are competing to secure flows of materials from coal to zinc by offering output deals with producers as margins shrink due to lower price volatility and more transparent markets………………………………………..Full Article: Source

Ag Commodities Pause As Rain Arrives, Buyers Move In

Posted on 07 October 2014 by VRS  |  Email |Print

Last week’s price action for the Ag commodities could best be described as a pause, following the long decline of the last few months, as the primary markets of corn, soybeans and wheat, finally found some support, moving sideways but with a mildly bullish tone. The catalyst was primarily twofold.
First was a change in the weather in the US with the recent benign conditions giving way to rain and as a result, a possible slowing of the crop harvests. The second, was bargain hunting with all three commodities looking increasingly oversold with the markets having now factored in the expectation of a record crops this year………………………………………..Full Article: Source

Australia’s Hockey Says Falling Commodity Prices to Hurt Budget

Posted on 07 October 2014 by VRS  |  Email |Print

Falling commodity prices will hurt Australian government efforts to rein in its budget deficit, spurring possible new savings measures, Treasurer Joe Hockey said. “Lower commodity prices in iron ore and coal are going to have an impact on our budget bottom line,” he said in an interview in New York. “There are many variables at play but there will be a negative impact.”
Iron ore has fallen 41 percent in China this year, according to Metal Bulletin, while steelmaking coal is trading at the lowest level in six years. The government aims to bring the budget back to surplus over the medium term after recording a deficit of A$48.5 billion ($42.5 billion) for the 12 months that ended June 30, Hockey said last month………………………………………..Full Article: Source

Long-term Forecast for Commodity Prices and Mining Industry Funding

Posted on 07 October 2014 by VRS  |  Email |Print

Rising global scarcity of resources – metals, minerals and energy – that an ever-increasing human population uses every day to sustain its unsustainable lifestyle, has been the most important topic since the burst of the dotcom bubble in 2000. The reason is simple: we live on a planet with a distinctly finite resource base and a rapidly growing population.
For over the last twelve years supply has struggled to keep pace with demand. Yet we experience a collective breakdown among junior miners of epic historical proportions. Confused investors have been questioning their portfolio strategies and have withdrawn their money from “value in the ground” to re-invest it into scarily overvalued internet companies with questionable earnings and even more precarious business models built on promises of more bites and bytes………………………………………..Full Article: Source

Precious metals: Industrial demand revival to turn silver into gold

Posted on 07 October 2014 by VRS  |  Email |Print

Silver may be the new gold. The reason is prices have fallen sharply compared to gold. As a result, the gold/silver ratio has risen to a five-year high. The ratio shows the ounces of silver you can buy with one ounce of gold. At present it is around 71, previously seen five years ago. A high ratio means silver is undervalued compared to gold and will fall much less versus gold, or when prices increase silver will rise faster.
In three months beginning June, international gold prices have fallen 8.8 per cent to $1211 an ounce while silver has fallen 19 per cent to $17.02 an ounce. The ratio increased from 63 to 71 in just three months………………………………………..Full Article: Source

We may be at the start of a commodity uptrend

Posted on 06 October 2014 by VRS  |  Email |Print

During this time, commodity performance was relatively weak. Finally, in 2013, commodities started to see shortages again. That continued through the second quarter of 2014 and performance made a comeback. However, since July, a combination of perfect weather for grains and fewer oil supply disruptions have built up inventories in several major commodities.
Precious metals have been down on decent retail sales in the US, but may strengthen, depending on Russia-Ukraine tensions. Also, gold, after having dropped significantly in the last one month, seems attractive to China for the mid-autumn festival and to India ahead of the Dhanteras and Diwali festivals in addition to the wedding season. Industrial metals is the only sector that has held strong, mainly from supply constraints and strategic stockpiles………………………………………..Full Article: Source

Robots replace humans in mines as commodity slump forces cost cuts

Posted on 06 October 2014 by VRS  |  Email |Print

Major mining firms could have converted around 40pc of their machinery to operate autonomously by the end of the decade. The world’s biggest mining companies are poised to aggressively slash production costs and introduce more automation into their most productive pits as slowing demand in China threatens to force almost a third of the industry out of business.
Experts expect that the major mining companies could have converted around 40pc of their machinery to operate autonomously by the end of the decade as high-tech robots and drones replace humans in a drive to maintain the bottom line and operating profits………………………………………..Full Article: Source

China Slowdown Cools Commodities

Posted on 03 October 2014 by VRS  |  Email |Print

China’s economic chill has sent shivers down the spine of the global resources industry. With prices of coal, iron ore and other commodities tumbling and mines shutting down, Beijing’s move to curb lower-quality imports has not helped sentiment, although many miners remain upbeat.
On Tuesday, coal miners in Australia’s resource-rich state of Queensland awoke to yet another mine closure, with Japan’s Sumitomo Corporation confirming it was placing the Isaac Plains mine near Moranbah on “care and maintenance” with plans to cease operations by January………………………………………..Full Article: Source

IMF calls for more global growth

Posted on 03 October 2014 by VRS  |  Email |Print

The head of the International Monetary Fund (IMF) has urged new momentum to fuel global economic growth that has recovered slower than expected. Christine Lagarde, the IMF managing director, said on Thursday that the main job now is to help the global economy shift gears and overcome what has been so far a disappointing recovery - one that is brittle, uneven and beset by risks.
“Yes there is a recovery but as we all know, and can all feel it, the level of growth and jobs is simply not good enough. The world needs to aim higher and try harder, to do it together and be country-specific,” Lagarde told an audience of mostly students and faculty at Georgetown University in Washington………………………………………..Full Article: Source

Fracking Revolution: U.S. Replaces OPEC as World’s “Swing Producer”

Posted on 02 October 2014 by VRS  |  Email |Print

After reviewing the numbers from America’s oil and gas patches, Per Magnus Nysveen of Rystad, an international oil consultancy in Norway, declared that the United States is now taking on the role of “swing producer” that used to be played by Saudi Arabia and other members of OPEC, the oil producers’ cartel.
Those numbers are impressive. Fracking technology has led to a 65-percent increase in U.S. crude oil output in just the last six years and, according to Wood Mackenzie, another highly regarded energy consultancy firm: “The shale industry is just starting out; it is not even a teenager yet…. There is still plenty of room for growth.”……………………………………….Full Article: Source

Investors Head for Exit as Commodities Extend Slump

Posted on 01 October 2014 by VRS  |  Email |Print

Investors are betting that the worst isn’t over for commodity prices that already are the lowest in five years. About $907 million was pulled from U.S. exchange-traded products backed by raw materials this month, the most since April, data compiled by Bloomberg show.
Expanding surpluses, a surging dollar and slowing growth in China helped send the Bloomberg Commodity Index to the lowest since 2009, reversing first-half gains fueled by a polar vortex and dead pigs in the U.S., and escalating tensions in Ukraine and the Middle East………………………………………..Full Article: Source

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