Mon, Jul 25, 2016
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Commodities Briefing 25.Jul 2016

Posted on 25 July 2016 by VRS |  Email |Print

Research firm Capital Economics blamed the US dollar strength for taking the wind out of the sails of mining commodities last week. “With a few exceptions, the prices of industrial commodities have taken another hit … pressured by profit taking and renewed strength in the US dollar,” the firm said in a weekly note.
Separately, the European Central Bank’s decision to keep interest rates on hold last Thursday hurt gold and silver. Though the ECB suggested asset purchases and potentially a rate cut could come at the September meeting………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

China Investment Corporation announced on Friday that its overseas investments generated a net return of negative 2.96 percent in dollar terms in 2015, falling from a positive 5.47 percent return for 2014, due to volatilities in international financial markets and foreign exchange losses triggered by an appreciating dollar.
A father and his daughter take part in the riddle-guessing contest at a KFC outlet in Zhengzhou, capital of Henan province, during this year’s Lantern Festival. The $814 billion Chinese sovereign wealth fund posted a net cumulative annualized return of 4.58 percent since its establishment in September 2007, compared with 5.66 percent in 2014………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Hopes have grown of reforms in the 13-year-old commodity futures market with Sebi likely to consider an advisory committee’s recommendation for new products and participants. Until now, trading of commodity futures has willy-nilly been the preserve of retail traders and a few corporates.
1. What can one hope to see? There may be introduction of options on gold, silver, possibly crude, refined soya oil and guar seed. Also, a few more new commodity futures contracts — tea, pig iron, brass, diamond, skimmed milk powder, egg, white butter — could be notified for trading on bourses like MCX, NCDEX and NMCE………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

The historic fall in oil prices has created a pileup of inventories, much of it stashed in tanks in the U.S. and other industrialized countries that are committed to disclosing the latest tally, but millions of barrels of oil are flowing to locations outside the scope of industry trackers.
Some countries, such as Russia and China, choose not to report their oil-storage levels. And traders and oil companies that park supertankers have no obligation to make public their supply. This makes for more cryptic and volatile oil markets. How much crude is in these locations, and how quickly it can be resold into the market, can affect oil prices………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

The U.S. Energy Information Administration says that American oil companies are getting closer to balancing capital investment and operating cash flows. This is great news for energy investors, but it doesn’t mean every oil company is worth investing in.
On July 18, the U.S. Energy Information Administration released a report that shows a great trend: U.S. oil companies have begun steadily narrowing the gap between capital investments and operating cash flows………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Towards the middle of the current trading year, a glut ridden oil market had started showing some signs of rebalancing. Decline in US oil production was being reflected in the data, much to the delight of the Organization of Petroleum Exporting Countries (OPEC).
So when the oil producers’ collective met at its Viennese Headquarters in June, there was some degree of satisfaction that a policy of keeping the taps open was finally hurting US shale. As such OPEC did what it has done since the supply glut came into view in July 2014, i.e. do nothing and offer no indication of its official production quota………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Despite low crude oil prices, global companies in exploration and production are keen to tap the opportunities in India, the “happening spot” for investments, Dharmendra Pradhan, Minister for State (Independent Charge) for Petroleum and Natural Gas, said.
Investor interest was apparent at a recent road show he had attended in the US ahead of the planned bidding for some of the small discovered fields. At $45-50 a barrel, oil prices are not lucrative for companies in exploration and production but “nobody wants to miss the bus in India,” he said………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Recent weakness in the gold price has the gold bugs latching on to the next big event that could force the yellow metal higher, the US election. And there is no surprise in knowing that a Donald Trump victory would be a big plus for the price.
Funny thing is though, so too would a Hillary Clinton victory, albeit not to the same extent that a Trump inauguration would serve up. That’s according to ABN Amro analyst Georgette Boele, the winner of the coveted Metal Bulletin precious metals analyst of the year award for 2015………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

HSBC cautions that gold could pull back to around $1,300 an ounce, but the retreat would be limited. The August futures did fall back as far as $1,310.70 an ounce in overnight screen trading. “Thin summer trading conditions may be as important a reason for gold edging lower than renewed expectations for a (U.S.) rate rise this year,” HSBC added.
“In quiet conditions, the gold market may gravitate to the vicinity of large round numbers, with $1,300/oz the closest and most obvious. That said, there may be limits to further gold declines. The U.S. presidential election is moving into full swing. Geopolitical risks remain, Brexit notwithstanding. This should help cushion declines,” analysts at HSBC added………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Even with the recent turmoil, the global economy is looking pretty resilient — at least that’s what metals investors are signaling. Over the course of about four weeks, the U.K. voted to leave the European Union, there was a failed coup in Turkey and Donald Trump bucked the establishment of the Republican Party to become its presidential nominee.
Rather than taking these events as ominous signs, hedge funds are jumping into the growth-dependent world of copper. The funds and other money managers more than tripled wagers on price gains for the metal last week………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

On the surface, gold and silver prices themselves didn’t have much of an eye-opening fall last week, but when you peer in at the gold and silver mining ETFs, you can see there was considerable damage done, especially with the leveraged commodity ETFs.
Let’s look at how far prices fell from last Friday’s close to this past Friday’s close: Direxion Daily Junior Gold Miners Bull 3X ETF – down $56.36, Direxion Daily Gold Miners Bull 3X ETF – down $18.65 and VanEck Vectors Gold Miners ETF – down $1.09……………………………………….Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

The first half of 2016 was definitely good for those who invested in precious metals. However, great results of gold and silver are nothing to compare to the equity of miners. Since the bottom of 18 January index of small miners (with a capitalisation of 5 bn USD or below) nearly tripled.
I have a lot of reasons to be glad because of this. My ‘Intelligent Investor’ students were given GDXJ buy recommendation when its price was 19 USD. Today it is 49 USD. After such a great race to the top should we start looking for cheaper assets?……………………………………….Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

So far, lithium has been the hottest metal of 2016, beating out gold, with exponential demand expected over the coming years. Although the price trajectory of the metal has been subdued in recent months, the fundamentals behind the long-term trajectory suggest strong potential for long-term growth.
Price doubling from 2014/2015 was first seen in China and is now being felt worldwide, with lithium hydroxide prices from $16-20 and carbonate prices from $12-14 thousand USD per ton. There is no doubt as to the push that Tesla has given the current automotive transition to electric vehicles (EVs)………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

A stronger US dollar has knocked industrial metals prices while nickel has also been hit as some investors lock in profits from a recent rally. Aluminium bucked the weaker trend and ticked higher as industrial consumers took advantage of recent declines to make purchases.
The US dollar index hit its highest levels since early March after data showing activity in the US manufacturing sector registered a larger-than-expected expansion, boosting expectations of a rate increase by the Federal Reserve………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Move is win for Bats Global Markets and New York Stock Exchange, which compete for listing of such funds. The Securities and Exchange Commission moved to expedite the approval of exchange-traded funds run by human stock and bond pickers, a boost for the fast-expanding ETF industry.
The SEC on Friday approved “generic” listing standards for actively managed ETFs, guidelines that aim to cut months off the process of bringing these funds to market………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Strategists forecasting the yen will post its first annual gain since 2011 are standing their ground in the face of a rout driven by speculation the Bank of Japan (BoJ) will expand record stimulus.
The yen remains this year’s strongest major developed currency even after a 2.3% tumble this month following Ben S Bernanke’s visit to Tokyo last week, which spurred speculation the BoJ would directly finance government debt - a policy known as helicopter money. The yen climbed the most in almost a month last week after BBC Radio 4 broadcast an interview with Governor Haruhiko Kuroda, that was recorded on June 17, in which he said there is no need and no possibility of introducing such a policy………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

The dollar was buoyant against the euro and yen early on Monday as a prevailing risk-on mood continued to support the U.S. currency and assets. Upbeat U.S. business activity data out on Friday also added to prospects of a near-term Federal Reserve interest rate hike and supported the greenback.
The euro was down 0.1 percent at $1.0969 after slipping to a one-month low of $1.0955 on Friday in the wake of shootings that took place on Friday in Munich. Against the safe-haven yen the dollar was up 0.1 percent at 106.30, having recovered from a dip below the 106 threshold after Wall Street shares resumed their advance………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

The climate change minister has not acted on the first policy recommendation of the new Climate Change Advisory Council to support a raise in fees paid by industry for carbon emissions.
The council, established under the 2015 Climate Action Act, wrote to Denis Naughten last month to urge him to back a French proposal to establish a minimum carbon price within the EU emissions trading system (ETS). The ETS requires industrial facilities such as power stations and oil refineries to pay for each tonne of carbon dioxide………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

The government, in partnership with the Wildlife Conservation Society (WCS), sold its first carbon credits to billion-dollar media giant Disney for an undisclosed amount from Keo Seima Wildlife Sanctuary in the country’s northeastern province last week. The credits are part of a global carbon emissions trading scheme aimed at offsetting the expulsion of greenhouse gases (GHG) through reciprocal investment in sustainable programs and renewable energy initiatives.
A carbon credit is a financial token that represents one ton of CO2 or other GHG removed from the atmosphere through an emission reduction project – like the 292,690 hectare Keo Seima Wildlife Sanctuary – which can be used by a company, government or private entity to offset harmful carbon emissions they have generated………………………………………..Full Article: Source

Posted on 25 July 2016 by VRS |  Email |Print

Benedicte Gravrand, Opalesque London: Precious metals such gold, silver, platinum and palladium, have not exactly shined in the past few years, but have started to experience recoveries so far this year. And the few funds out there investing in precious metals related equities are reaping the profits.
Windermere Capital’s mining fund returned 93% in the second quarter of this year, and is up 122% YTD. Blackrock’s World Mining Fund A2 is recovering with a YTD return of 55%. Sprott Asset Management’s Gold & Precious Minerals Fund is up 97% YTD and its Hedge Fund L.P. II up 84%.Full Article: Source

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