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Commodity hedge funds out of favor, launches head for 8-year low

Posted on 25 June 2014 by VRS  |  Email |Print

Commodity fund launches have slowed dramatically, heading for an eight-year low, data from industry tracker Preqin showed, after years of weak returns and some high-profile fund failures in the commodities sector.
In the year through May, some 34 commodity funds were launched, the fewest since the first half of 2006. Last year, there were 89 commodity funds launched worldwide in the first half, Preqin’s data showed………………………………………..Full Article: Source

Interest increases for commodities

Posted on 24 June 2014 by VRS  |  Email |Print

Investor inflows into exchange traded products can broadly be divided into two camps: those that look to use mainly ETFs in specific equity and bonds markets for some tactical asset allocation plays, and those that are looking for exposure to specific and niche areas of the market, particularly commodities.
David Patterson, head of UK wholesale distribution for passive investment products at DeAWM, notes: “Once equity markets bottomed out after the 2008 crash, the recovery has seen US equities in particular show tremendous growth. Anyone holding an ETF tracking the S&P 500 for the past five years would have done extremely well – the index is up almost 200 per cent since the market bottomed out………………………………………..Full Article: Source

Will This Be the Next Chinese-Led Commodity Boom?

Posted on 24 June 2014 by VRS  |  Email |Print

Growing food is more about math and science than you might believe. That’s why increasing meat consumption in China has such vast implications for the world. A little simple math shows that companies like Potash and Mosaic are in the right business to take advantage of this Chinese trend, so long as the fertilizer industry is careful about supply and demand.
An example of China’s impact: If you want to see how big Chinese demand for key materials can be, look no further than the coal industry. Between 2000 and 2012, China’s use of coal increased from 1.5 billion tons to roughly 4 billion tons. Industrialization, economic development, and urbanization all backstopped that increase. That 2.5 billion tons, however, turned the coal market on its head, with rising prices drawing in new producers that eventually flooded the market with supply………………………………………..Full Article: Source

The downtrend in gold is under threat

Posted on 24 June 2014 by VRS  |  Email |Print

The rally in COMEX gold prices from $1,250 has gold bulls excited. After more than 2 years of falling prices is this finally the turnaround that gold bulls have been hoping for?
The gold chart doesn’t give a clear answer but it sets key trigger points that allow traders to make a better decision. Let’s start with the bearish view and look at features that suggest the rally is temporary and the downtrend will likely continue. There are three resistance features that can limit the rally………………………………………..Full Article: Source

Barings survey shows uptick in commodity demand

Posted on 19 June 2014 by VRS  |  Email |Print

Advisers are increasingly willing to recommend natural resources and commodities funds to their clients, according to a survey by Baring Asset Management. Nearly two in five (38 per cent) of intermediaries suggested they would recommend an increase in their exposure to the sectors, up from a quarter in the previous Barometer survey and the highest for nearly three years.
The research found one in six (16 per cent) were ‘very favourable’ towards natural resources/commodities from just 6 per cent in the previous Barometer. More than half (53 per cent) said they were currently ‘favourable’ towards global resources and commodities…………………………………..Full Article: Source

Global trends for commodities prices is positive

Posted on 17 June 2014 by VRS  |  Email |Print

For the last fortnight, global market sentiments were largely positive in the start of fortnight owing to number of factors. Major factors like US unemployment rate been seen below the US Federal Reserve target of 6.5 percent along with European Central Bank (ECB) cutting the minimum bid rates to 0.15 per cent supported an upside in the markets.
The ECB became the first central bank in the world to charge banks if they holding money which acted as a positive factor. However, in the later part of the fortnight markets began to take correction after unrest in Iraq which threatened to oil supplies………………………………………..Full Article: Source

Commodities Waking Up Because Of Events In Iraq?

Posted on 17 June 2014 by VRS  |  Email |Print

Markets have been quite complacent as of late, proven by incredibly low volatility across all asset classes (chart here and here). However, volatility could now start picking up with a potential crisis flaring up in the Middle East. On Saturday, the Guardian reported recent US reactions toward the Iraq Crisis.
The US is sending an aircraft carrier and two guided missile ships into the Persian Gulf, bolstering sea and airpower before a possible US strike on the jihadist army in Iraq in the coming days………………………………………..Full Article: Source

US shale boom stabilises global oil price

Posted on 17 June 2014 by VRS  |  Email |Print

The US recorded one of the biggest annual increases in oil production by a country last year thanks to the shale boom, according to BP’s annual review.
The 1.1 million barrels per day extra the US pumped helped offset slumps in production from countries like Libya, which is still gripped by civil war three years on from the Arab Spring………………………………………..Full Article: Source

Commodity finance in China: An assay-light strategy

Posted on 13 June 2014 by VRS  |  Email |Print

At the best of times, seizing collateral on defaulted loans in China is a fraught task, plagued by patchy enforcement. These are not the best of times in the port of Qingdao, a trading hub in the north-east. Police are investigating whether companies have committed fraud by pledging the same holdings of copper and aluminium to multiple banks, multiple times. The banks are scrambling to see how much of the metal sitting in Qingdao’s warehouses actually belongs to them.
More than just a fraud, the tale exposes China’s financial idiosyncrasies and the lengths to which firms sometimes go to borrow money. Regulators have tried to choke off credit to metal traders in recent years as part of efforts to slow pell-mell construction. Traders have devised a simple workaround………………………………………..Full Article: Source

Have large banks in China fallen victim to a commodities fraud?

Posted on 13 June 2014 by VRS  |  Email |Print

Large banks and trading firms are frantically trying to determine whether they have fallen victim to a suspected commodities fraud emanating from the giant Qingdao Port in northeast China.
Citigroup and several other big Western banks are concerned that their loans may lack the appropriate collateral of big stockpiles of copper and aluminum at the port. The banks have inspectors on the ground who are trying to assess whether enough of the metals are there………………………………………..Full Article: Source

Metals Maneuver May be Losing Shine

Posted on 13 June 2014 by VRS  |  Email |Print

Spiraling violence in Iraq and a possible resolution to South Africa’s mining strikes are adding a fresh element to a profitable metals trade. For the last several months, some investors struck a delicate balance using commodities whose prices were moving in opposite directions: buying futures in platinum and palladium, while betting against gold, several traders and brokers said.
Platinum and palladium were surging on a prolonged miners strike in South Africa, a key producer of both metals. Gold was losing ground, as a stabilizing U.S. recovery and buoyant stock markets eroded the need for the metal as a hedge against uncertainty………………………………………..Full Article: Source

Uncertainty over Iraq pushes oil price to three-month high

Posted on 13 June 2014 by VRS  |  Email |Print

Traders bet on advances by Isis militants disrupting supplies from one of world’s largest exporters. Escalating violence in Iraq sent the price of oil to a three-month high as traders bet that advances made by insurgents could disrupt supplies from one of the world’s largest oil exporters.
Brent crude futures rose 2% to $112.12 a barrel, the highest price since early March. The initially calm response to Sunni militants’ overrunning of Mosul, Iraq’s second largest city, on Tuesday turned to alarm as Isis, the al-Qaida splinter group, announced its intention to take Baghdad………………………………………..Full Article: Source

OPEC facing dark clouds on supply horizon

Posted on 13 June 2014 by VRS  |  Email |Print

OPEC faces a period of static oil prices as traders track supply-side uncertainties surrounding Iraq, Iran and Libya, as well as Ukraine, analysts said Thursday. The oil exporters’ cartel opted this week to maintain its crude output ceiling, expressing confidence in the market despite global tensions keeping prices high.
OPEC, which will convene again in late November to assess the state of the market, remains happy with Brent oil prices hovering close to $110, benefitting producers………………………………………..Full Article: Source

Forget OPEC, let’s talk about ‘NOPEC’: Insana

Posted on 13 June 2014 by VRS  |  Email |Print

With the U.S. leading the way in the fracking revolution, Canada in tar sands and with a newly liberalized energy sector in Mexico, North America could easily rival and exceed OPEC’s production of crude oil, natural gas, distillates and other petrochemical products—making North America the envy of the energy world.
Combined, NOPEC could become the “swing producer” of energy products in world markets, helping to drive down prices of energy products that are currently hostage to OPEC’s whims, geopolitical risk and, on occasion, excessive speculation that whips oil markets round and round………………………………………..Full Article: Source

Agricultural firms better bet than food commodities

Posted on 12 June 2014 by VRS  |  Email |Print

Agricultural shares will provide a better hedge against food price inflation than food commodities, BlackRock’s Desmond Cheung has said. The sector specialist, who runs the BGF World Agriculture + fund, said the farming sector was currently home to interesting opportunities for long-term investors.
‘While food prices spike and subside around episodes of supply disruption, companies in the sector have outperformed food commodities over the long term,’ Cheung said in an investor update………………………………………..Full Article: Source

Commodity shipping demand to surge

Posted on 11 June 2014 by VRS  |  Email |Print

Demand for ships to haul iron ore, coal and other cargoes poised to surge this year, outpacing expansion in the fleet of vessels that can transport the commodities, according to ACM Shipping Group, a shipbroker. Demand for ships to haul dry-bulk goods will jump 12 per cent this year while the supply of vessels expands 4.7 per cent, ACM said in a report on Monday.
Fleet utilisation will jump 7.3 per cent, the most in more than five years, and by a further 8.1 per cent next year, it estimates. Demand is strengthening because falling prices for iron ore are driving up shipments to China from countries including Brazil and Australia, ACM said………………………………………..Full Article: Source

Time to end use of commodities for credit in China

Posted on 09 June 2014 by VRS  |  Email |Print

The mad dash by banks and traders to see who owns what metal inventories at Qingdao port should help bring a swift, and much-needed, end to the practice of using commodities for credit. For the past few years, one of the known unknowns in the mainland’s metal markets has been the use of imports as collateral to secure financing for investments in higher-yielding assets, such as construction.
This has been most apparent in copper, with iron ore, gold, soya beans and other commodities also affected, with the consequent build-up of so-called dark inventories, which are stocks being held for purposes unrelated to supply and demand fundamentals………………………………………..Full Article: Source

Oil,Gas producers can make money capturing methane than flaring it up

Posted on 09 June 2014 by VRS  |  Email |Print

Until now natural gas producers were merrily burning up methane gas as there were no regulations stipulating its capture. “Up until now, companies have been perfectly content to do this because there were no regulations stopping them, nor any financial incentives and infrastructure to help them move this extra gas to market,” according to Keith Kohl, in Energy and Capital.
However, some states like North Dakota where its Industrial Commission have already stipulated oil and gas companies to submit a methane capturing plan with every new drilling permit they apply for.The goal is to motivate Bakken operators (shale energy) to capture 85% of the gas they produce by 2016 and 90% within six more years………………………………………..Full Article: Source

India may spark next commodity supercycle: HSBC

Posted on 06 June 2014 by VRS  |  Email |Print

India’s new government may be the catalyst for the next global commodity supercycle, according to HSBC. Narendra Modi’s landslide presidential election victory gave his nationalist Bharatiya Janata Party a strong mandate for reform, especially within India’s poor infrastructure sector - a key source of hard commodities demand.
India is already a large commodities producer but HSBC argues that if Modi increases infrastructure investment, demand for commodities such as steel and energy will outpace domestic supply, boosting global prices………………………………………..Full Article: Source

Have commodities funds finally turned the corner?

Posted on 06 June 2014 by VRS  |  Email |Print

The outlook for natural resources funds is at its most positive for many years, according to Investec’s Bradley George, but he warns more confidence is needed for the sector to rally in a meaningful way.
Following a period of very poor returns, commodity-focused funds have rebounded significantly since the start of the year. George, manager of the £150m Investec Enhanced Natural Resources fund, says he is far more bullish than he was this time 12 months ago as he thinks the trend should continue………………………………………..Full Article: Source

“Africa Rising” – but can it duck the commodity curse?

Posted on 30 May 2014 by VRS  |  Email |Print

The International Monetary Fund’s “Africa Rising” conference opened in Maputo with gushing descriptions about the “potential” and “opportunity” of the fast growing continent.
IMF chief Christine Lagarde, the guest of honour, told the gathering of politicians, aid workers and business types that “we are witnessing a moment of transformation in Africa.” Former US President Bill Clinton joined in via video to talk of Africa’s “remarkable economic progress.”……………………………………….Full Article: Source

Lower demand for commodities leads to higher commodity prices?

Posted on 29 May 2014 by VRS  |  Email |Print

China is the dominant consumer of commodities in the world, representing 40% of demand for industrial metals. Therefore, an economic slowdown in China should exert downward price pressure on commodities. That is only part of the story, however. In early 2014, commodities were at the top of the performance table for asset categories whilst the growth slowdown in China is common knowledge.
Koen Straetmans, Senior Multi-Asset Strategist at ING IM starts: “Two factors have played a specific role in the pricing of commodities this year: weather patterns and geopolitical risk………………………………………..Full Article: Source

Commodity prices hit post-recession high as global demand builds

Posted on 27 May 2014 by VRS  |  Email |Print

Commodity prices in Canada are at a post-recession high, according to new research by the National Bank of Canada. The country’s Western provinces in particular stand to gain from improved profits as global demand picks up and the U.S. economy continues to rebound, National Bank economist Stéfane Marion says in a research note published Monday.
“We calculate that the Bank of Canada’s commodity price index (BCPI) rose to a post-recession high in [the second quarter] when translated into Canadian dollars,” he said. The index measures the spot or transaction prices in U.S. dollars of 24 commodities produced in Canada and sold in world markets………………………………………..Full Article: Source

Barclays case doesn’t prove gold is always manipulated; that proof is elsewhere

Posted on 27 May 2014 by VRS  |  Email |Print

Commodity market analyst Dan Norcini yesterday ridiculed what he described as assertions that the British Financial Conduct Authority’s fining Barclays Bank for an incident of gold market manipulation “is proof positive that every single big move lower in gold is the result of evil, nefarious forces suppressing the price of gold on behalf of the government”:
Norcini didn’t identify the parties making such assertions but GATA is not among them. For the Barclays case establishes only that one investment bank manipulated the gold market at least once and that the mechanism of the daily London gold fixing facilitates such manipulation. The Barclays case does not establish that every big move lower in gold is a government operation………………………………………..Full Article: Source

Gold prices heading higher as Modi eyes change to India’s import rules

Posted on 26 May 2014 by VRS  |  Email |Print

New Indian government to look at relaxing restrictions aimed at curbing volume of gold the world’s most populous democracy can import. Gold has been one of the best performing commodity asset classes this year and the victory of incoming prime minister Narendra Modi in India’s recent elections is being tipped as a further signal for investors to stock up on the precious metal.
One of the first economic policies that the new Bharatiya Janata Party (BJP) government is thought to be considering would be to relax restrictions aimed at curbing the volume of gold that the world’s most populous democracy can import under the so called 80:20 rule………………………………………..Full Article: Source

Metals Could Be Set To Surprise

Posted on 26 May 2014 by VRS  |  Email |Print

A commodity downtrend was broken at the beginning of the year, and a relief rally started. After three years in a downtrend and quite a disappointing performance (both nominally and relatively), commodities are now surprising investors on the upside.
However, it is almost impossible to correctly predict whether this is the start of a new bull market or just a dead cat rebound. After all, every bull market starts with a relief rally, which manifests into more and more participation………………………………………..Full Article: Source

The great commodities shake-up

Posted on 23 May 2014 by VRS  |  Email |Print

Goldman Sachs this week became the latest bank to take a step back from physical commodities trading, after it was revealed that it was “exploring a sale” of Metro International Trade Services, an operator of warehouses that store metals traded on the London Metal Exchange.
With commodities revenues at the top ten banks tumbling and regulators clamping down, a number of top tier banks have done the same. It can be hard to keep up with what is going on in this sector……………………………………..Full Article: Source

Gold Has Worst Outlook by Credit Suisse as Crude Favored

Posted on 23 May 2014 by VRS  |  Email |Print

Gold has the worst prospects among commodities over the next 12 months and crude oil has the best, according to an investor poll by Credit Suisse Group AG. (CSGN).
Seventy-one percent of respondents said gold has the worst outlook, and 16 percent said copper will be the biggest loser, the bank said in an e-mailed report today. Forty-nine percent expect crude oil to be the best performer, followed by a 27 percent vote for corn, according to a survey of about 160 participants conducted this week……………………………………..Full Article: Source

Platinum jumps on South Africa strike fears

Posted on 23 May 2014 by VRS  |  Email |Print

Platinum has risen to its highest level since September on concerns that a crippling four-month strike at South African mines will not be resolved soon. The precious metal, which is used in vehicle catalytic converters and jewellery, climbed 1.7 per cent to a nine-month high of $1,489.20 a troy ounce, as the stalemate between producers and unions continued.
Mediated talks between Anglo Platinum, Impala Platinum, Lonmin and the main workers’ union began on Wednesday. But Lonmin told Reuters that the industrial action might go on “for much longer” because the parties were still so far apart……………………………………..Full Article: Source

Want to shift economy away from volatile commodities? Look at Singapore: ICAEW

Posted on 22 May 2014 by VRS  |  Email |Print

The three large Asean economies of Indonesia, the Philippines and Thailand, which are striving to shift from significant commodity dependence to high value-added exports, could do worse than to look at Singapore and Malaysia’s experience, said ICAEW’s latest Economic Insight report.
For instance, in 2012, 33 per cent of Indonesian exports consisted of fuels and related materials, and 12 per cent consisted of animal and vegetable oils, fats and waxes. In comparison, 19 per cent and 0.1 per cent of total Singaporean exports consisted of these two commodities respectively. Even then, many of these exports are simply passing through rather than produced by Singapore………………………………………Full Article: Source

Geopolitical Changes Keeping Investors’ Interest in Gold

Posted on 22 May 2014 by VRS  |  Email |Print

According to the World Gold Council (WGC), the gold demand in Q1 2014 was 1,074 tonnes, three tonnes lower than in Q1 2013. Consumer demand, especially jewellery demand, has continued to drive gold demand. Central banks have net purchased 122 tonnes of gold, the 13th consecutive quarterly rise while ETP outflows have dropped to 0.2 tonnes for the quarter.
While the WGC described that the fundamentals and long-term demand trend have remained robust, the world largest gold-backed ETP, the SPDR Gold Trust, has just seen its lowest holdings since December 2008………………………………………Full Article: Source

The World Is Running Out of Gold

Posted on 22 May 2014 by VRS  |  Email |Print

How much gold would you have if you stole every bit that’s ever been mined? Not much—you’d be able to make a cube of solid gold with 60-foot sides. There just isn’t that much gold in the world, and it’s getting harder and harder to find it. In fact, our love of gadgets may be part of the problem.
In a report from the Wall Street Journal this morning, we learn that we’re only two decades away from exhausting the world’s gold supply if mining continues apace. How could we be running out of gold? It’s simple. As gold boomed in the 90s and 00s, the easy-to-access deposits were sapped of their supplies. Now, the gold being discovered is way deeper into the Earth, which means that discovering it takes a lot more work before it can be extracted………………………………………Full Article: Source

China gold demand drops

Posted on 21 May 2014 by VRS  |  Email |Print

China’s gold demand fell 18 percent in the first quarter as investors in the world’s biggest user bought fewer bars and coins, offsetting record interest in jewelry, the World Gold Council said.
Purchases declined to 263.2 metric tons in the three months through March from a year earlier, the London-based council said in a report today. While jewelry consumption rose 10 percent, demand for bars and coins sank 55 percent, accounting for about 40 percent of the global decrease…………………………………..Full Article: Source

Africa investors turn away from commodities

Posted on 20 May 2014 by VRS  |  Email |Print

Foreign investors pouring money into Africa are increasingly turning away from commodities-led projects to tap into the growing consumer market, while smaller, less-established countries are also getting a bigger lion’s share. In its annual report on Africa released last week, EY revealed the continent became the world’s second-most attractive investment destination in 2013, just behind North America. In addition, Africa’s share of global foreign direct investment (FDI) reached its highest level in a decade, at 5,7%, while capital investments grew by 12,9% in the same period.
But 2013 also saw some major shifts in investment trends on the continent. Mining and metals, for instance, are no longer the main beneficiaries of FDI and the list of the top 10 countries in FDI projects showed some surprising trends…………………………………….Full Article: Source

Why is the West betting against climate change?

Posted on 20 May 2014 by VRS  |  Email |Print

With wildfires ravaging San Diego County, this year’s fire season is getting off to an early - and destructive - start. A hotter and drier Southwest may result in the loss of the lion’s share of its forests to fire before this century is done, if extraordinary measures to protect them aren’t soon undertaken. Instead of extraordinary measures, however, Washington has made only token efforts to address this looming crisis.
That danger is already here for much of the West. Drought in Southern California and Texas, and near-drought elsewhere, means that forests are tinder-dry and expected to get even drier during summer. Which is scary - considering so many Americans now live or spend their summers in the “wildland urban interface,” the wooded areas in the West where fire danger is the greatest…………………………………….Full Article: Source

China’s New Normal: Less Stimulus for Commodity Producers

Posted on 19 May 2014 by VRS  |  Email |Print

Many economists believe that growth rates are revert to the mean in the long run. This is because it becomes harder to grow as one becomes larger.
For over three decades, China managed to grow significantly faster than the mean growth rate. In good times, the nation’s economy grew by double digits. In bad times, China grew by 7%. As a result of great growth rates, China’s economy grew from $2 trillion a decade ago to $8 trillion today…………………………………….Full Article: Source

Goldman Says Commodities Appeal as World Economy Recovers

Posted on 15 May 2014 by VRS  |  Email |Print

Commodities as an asset class remain appealing as the global economic recovery extends into 2015, according to Goldman Sachs Group Inc.
The bank raised its 12-month allocation for commodities to neutral from underweight, analysts led by Jeffrey Currie and Damien Courvalin wrote in a report dated yesterday. They increased their three and six-month price forecasts for nickel and rolled the 12-month predictions for aluminum and zinc forward to higher levels………………………………………..Full Article: Source

Ezra Levant: Putin’s new OPEC

Posted on 15 May 2014 by VRS  |  Email |Print

Fracking might seem like a bright, inevitable future for plentiful, affordable natural gas. But it’s actually only one possible future. In places as diverse as France, Bulgaria and Quebec, where fracking is illegal, the future of natural gas is something else: a future of imported dependence. And that suits most of the world’s most powerful gas-producing nations just fine.
Remember that for some countries, such as Russia, gas is power. Not just electrical or transport power, but political power. These are places that had mapped out a future where natural gas was a central part of their economic sustainability and growth. Gargantuan sums of money are riding on the future of natural gas, trillions of dollars all told………………………………………..Full Article: Source

In Nigeria, Agriculture Is ‘The New Oil’

Posted on 15 May 2014 by VRS  |  Email |Print

When Nigeria announced recently that it had become Africa’s biggest economy, you could be forgiven for thinking that oil was the only reason. After all, Nigeria is the biggest oil producer in Africa. What many people didn’t realize was the growing role of agriculture in boosting Nigeria’s economy – and the lives of its large rural population.
I’ve seen close-up how hard it can be to succeed in agriculture – not only when I was president but also during the 35 years that I have been a farmer myself. So I’m proud that Nigeria is emerging as a leader in agricultural transformation in Africa………………………………………..Full Article: Source

8 Commodity Predictions For The Rest Of 2014

Posted on 14 May 2014 by VRS  |  Email |Print

We take a look at key areas of the commodity markets. There’s been no shortage of volatility in commodity markets this year. From coffee’s spectacular surge to copper’s brutal plunge, there’s been ample opportunity to generate hefty returns or losses.
In terms of sector performance, agriculture has been far and away the best performer so far in 2014. Led by coffee—which at one point was up a whopping 95 percent year-to-date—the sector has delivered fantastic returns for investors. At the heart of the increase in coffee prices has been the severe drought in Brazil. What has been called the worst drought in decades is expected to sharply reduce coffee supplies in the world’s largest grower and exporter………………………………………..Full Article: Source

Cool commodities? Mining stocks back in vogue

Posted on 13 May 2014 by VRS  |  Email |Print

Bashed, beaten and unloved, mining stocks have fallen out of favor with investors in the last two years as commodity prices showed signs of peaking. But just when things could have turned from bad to worse it appears that the basic resources sector is the new contrarian play for 2014.
Nothing sums up the change in opinion better than JPMorgan’s assessment of the situation in a research note on Monday. Detailing a rebound in activity, the U.S. investment bank has stated it is now “overweight” on the mining sector, after being “underweight” for the last two years………………………………………..Full Article: Source

Commodity exposure: What currently keeps us away?

Posted on 13 May 2014 by VRS  |  Email |Print

Financial, rather than industry players have become a much more important factor in the price action of almost all commodities. This in turn leads to greater price volatility, and greater correlation with other financial assets, therefore reducing the diversifying characteristics of the asset class.
That is not to say that there are no opportunities. There are. And we seek to take advantage of specific opportunities as we see them. But a blanket commodity-index exposure we believe has less value for these reasons, as well as for the simple fact that the broad commodity indices are overwhelmingly dominated by energy components………………………………………..Full Article: Source

Commodities perk up as prospects brighten

Posted on 12 May 2014 by VRS  |  Email |Print

Commodities generally had a rotten 2013, but some experts now say prospects are more exciting, especially given that returns from developed stock and bond markets have been lacklustre so far this year.
Last year was an annus horribilis for the gold price in particular, which fell 28 per cent, its worst annual performance in more than 30 years. The Dow Jones-UBS commodities index, which tracks the prices of 20 commodities and has a bias to energy and agriculture, fell nearly 10 per cent in 2013………………………………………..Full Article: Source

What Next for Commodities?

Posted on 09 May 2014 by VRS  |  Email |Print

China’s economy consumes more steel per unit of gross domestic product than anywhere else, but the emerging market is slowing down spending. The transition of China’s economy from a largely investment driven to consumption driven is underway. Production of steel in China in 2013 grew at a heady 9.3% to virtually match output from the rest of the world combined. China consumes almost half of the world’s steel.
This is outsized relative to other commodities and additional strong growth from this high base will be challenging. Pushing the fixed-asset investment model further, risks future economic shocks. China’s economy consumes more steel per unit of gross domestic product than anywhere else………………………………………..Full Article: Source

Less bullish on bullion: Gold bar demand dives

Posted on 08 May 2014 by VRS  |  Email |Print

China’s gold consumption in the first quarter of 2014 eased significantly from last year mainly because of reduced demand for gift-related gold bars, experts said on Tuesday.
In the January-March period, gold consumption was 322.99 metric tons, rising 2.45 tons or 0.76 per cent year-on-year. Gold jewelry purchases jumped 30.2 per cent to 232.53 tons, while gold bar consumption slumped 43.56 per cent to 67.95 tons, the China Gold Association said………………………………………..Full Article: Source

Assets Pour Into a Curious and Controversial Investment

Posted on 06 May 2014 by VRS  |  Email |Print

ETNs are exchange-traded notes, cousin of the far better-known exchange-traded fund, or ETF, and they have been at the center of some drama lately. Despite a drop in new launches and critical articles in the financial news media, ETNs are growing at twice the rate of ETFs — and not many things have grown faster than ETFs, except maybe the Internet.
Total ETN assets jumped 47 percent, or $8 billion, over the past 12 months, to $25 billion, compared to about 25 percent for ETFs. What makes all this so curious is that almost everything ETNs track you can get in an ETF, with less risk. So why on earth have these things captured $25 billion in assets, much less $25?……………………………………….Full Article: Source

2014: Year of Commodities (May)

Posted on 06 May 2014 by VRS  |  Email |Print

Thus far in 2014, April ended on schedule and May arrived as expected. Well-placed sources, wishing to remain anonymous as they are not at liberty to speak on the matter, suggest that June will also arrive on time. That seems to sum up the only accurate components of the consensus forecast for 2014. As the chart below portrays, just about everything else continues to do the opposite of what was generally expected by the popular seers on the future.
n the above chart are plotted year-to-date returns for several investment measures. Bars on the left, the ones continuing to show significant positive returns, represent the three components of the commodity sector. To the right, using red bars, are what would be commonly referred to as underperforming groups………………………………………..Full Article: Source

Commodities: Fallen angel rebounds

Posted on 05 May 2014 by VRS  |  Email |Print

The recent bout of vertigo in US technology and momentum stocks has coincided with another, less-heralded, reversal. Commodities, the fallen angel of the investment world, are on pace to have their best year since 2007. The first quarter of 2014 was only the second in the past 10 in which commodity indices outperformed their equity counterparts. In the second quarter, so far, that has accelerated.
Since the discovery in 2008-09 that commodities neither go up in a straight line forever nor pay a dividend, they have suffered a period in the wilderness with respect to investor demand. But they may be starting to emerge………………………………………..Full Article: Source

Is a Global Shale Revolution in the Cards This Year?

Posted on 05 May 2014 by VRS  |  Email |Print

While most shale drilling over the past few years has been concentrated in North America, where energy companies have used a combination of hydraulic fracturing and horizontal drilling to unlock a bounty of shale oil and gas, the practice is slowly but surely spreading to other parts of the world believed to contain sizable shale resources. Will 2014 be the year that global shale drilling takes off?
According to a new report by Wood Mackenzie, a leading energy research and consulting firm, 2014 is poised to be the most active year for international shale drilling, with oil companies planning to drill some 400 shale wells outside North America this year………………………………………..Full Article: Source

A return to commodities? Don’t bank on it

Posted on 02 May 2014 by VRS  |  Email |Print

Some of the world’s largest banks are ditching their commodities business in moves that will become increasingly hard to reverse as a result of increasing regulatory pressures, says Joe Parsons. Barclays last week became the latest major bank to announce it will exit the majority of its commodities business, which includes energy and agricultural trading.
The move came after rivals JP Morgan, Deutsche and Morgan Stanley also either sold or said they will scale down a large part of their commodities business. Banks have tended to exit and re-enter markets at different times due to cyclical factors such as prices, demand for financing and levels of risk, according to Douglas Ziruys, senior vice president, Europe, of Fimetrix, a market intelligence firm for financial institutions………………………………………..Full Article: Source

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