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Commodities Briefing 24.Nov 2014

Posted on 24 November 2014 by VRS |  Email |Print

We’re still in a super commodity cycle — except that Credit Suisse says it’s a “super down” cycle. And have we got further to fall? Perhaps, considering that oil ­prices are still 35 per cent above their 40-year inflation-adjusted norm, and minerals are 41 per cent above. Real commodity prices are not that low. Credit Suisse shows that, in real terms and over a trajectory of the past 50 years, present prices are still well above the norm.
In fact, on only four occasions since 1964 have commodities in real terms been higher than now: during the two oil shocks of the 1970s, then in the 2007 culmination of the recent commodity boom and finally during the temporary recovery surge after the GFC. We’re still well ahead of what miners and oil drillers received right from the early 1980s through to about 2005…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The US Federal Reserve is preparing to unveil new restrictions aimed at making it harder for Wall Street banks to make big bets in the commodities markets, according to testimony on Friday from Fed Governor Daniel Tarullo.
Tarullo struck an unexpectedly aggressive stance in his appearance in front of a Senate subcommittee that has been investigating the involvement of big banks in the markets for basic materials like coal, aluminum and gas. Tarullo said the Fed expected to issue a formal notice of potential new rules in the first quarter of next year. Those new regulations could force banks to amass more capital to protect against losses on holdings of commodities and restrict banks from some types of commodities operations that they are currently allowed to do…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Commodity markets mostly rallied this week as China cut interest rates for the first time in more than two years, boosting the demand outlook in the Asian powerhouse. Prices also won support after European Central Bank chief Mario Draghi signalled readiness to act quickly to deter deflation, sparking fresh stimulus hopes.
“Markets in Europe took a double dose of stimulus on Friday; Mario Draghi again implied the ECB is moving towards full quantitative easing and shortly afterwards China cut interest rates for the first time in two years sending commodities and risky assets flying,” said CMC Markets analyst Jasper Lawler…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

While Americans are chomping down on turkey and pie this week, everyone involved in the energy world will be closely watching the Thanksgiving Day meeting of the OPEC in Vienna, Austria. Oil prices have tumbled dramatically in recent weeks. Oil now trades below $80 a barrel and most Americans can buy gas for their cars for under $3 a gallon.
The question is how OPEC will respond. So far, energy producing nations and companies haven’t scaled back product even though it’s pretty clear there’s an over supply of oil on the world market…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

At the last meeting of Opec nations Ali al-Naimi, the Saudi oil minister, dashed in and out of Vienna in just a few hours. He even cast aside his customary 45-minute jog with reporters. With markets stable and the price of oil around $110 a barrel, there was little for the 12 members of the oil producing cartel to talk about.
“The customer is happy, the producer is happy, the consumer is happy, the market is in balance, everything is good,” said Mr Naimi, arguably the world’s most important man in the oil world, in June…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The defining image of the global energy industry in 2014 has been a tanker loading up with an ultralight form of crude oil known as condensate in Galveston, Texas, bound for South Korea.
The delivery was significant because US exports of crude oil have been tightly restricted under regulations dating back to the 1970s. For most of that period, the restrictions have been an irrelevance: the US was a large and growing importer of both oil and natural gas up until the 2000s…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The days when OPEC members could almost guarantee consensus when deciding production levels for oil are long gone, according to a veteran of almost two decades of the group’s meetings.
The global glut of crude, which has contributed to a 30 percent decline in prices since June 19, has left the organization dependent on non-members to shore up the market, said former Qatari Oil Minister Abdullah Bin Hamad Al Attiyah. The 12-member Organization of Petroleum Exporting Countries is scheduled to meet in Vienna on Nov. 27…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Iran will try to persuade Saudi Arabia to cut oil production when the oil ministers from the two OPEC members meet this week in Vienna, Iran’s semi-official Mehr news agency reported on Sunday citing a television interview with the country’s oil minister.
The Organization of the Petroleum Exporting Countries meets on Nov. 27 to set its output policy and some of its members have called for output cuts to shore up oil prices. Brent crude oil LCOc1 has lost about 30 percent of its value since June to around $80 a barrel because of abundant supplies and weakening demand………………………………..Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The head of the Swiss National Bank reiterated concerns that a popular vote on requiring the central bank to keep a fifth of its assets in gold would hinder its ability to conduct monetary policy.
In text of a speech to be delivered Sunday, SNB Chairman Thomas Jordan said the initiative, known as “Save Our Swiss Gold,” would limit the central bank’s “room for maneuver.” That would make it harder for the bank to intervene during crises and fulfill its mandate of price stability………………………………..Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Swiss voters will decide Nov. 30 on an initiative that would force the country’s central bank to more than double its gold holdings, a prospect that has rattled markets and drawn opposition from the government, lawmakers and business groups.
The “Save Our Swiss Gold” initiative would require the Swiss National Bank to hold a fifth of its assets in gold within five years. It would also prohibit the bank from selling any of its gold in the future and require that Swiss gold held overseas be repatriated…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Are Russia and Europe buying more Gold? Will the Swiss vote ‘yes’ in its gold referendum? Is there a chance for QE4? Peter Schiff is on Kitco News to comment on some of the most recent headlines surrounding the gold market and also to share his thoughts on the U.S. economy. The Euro Pacific CEO says the U.S. recovery isn’t real and adds that the dollar is only strong because all other currencies are weak.
The dollar isn’t really strong, it’s just that temporarily other currencies are weaker. I think people are worried about the yen, they’re worried about the euro, and so the dollar wins by default. They say, ‘Well it’s the cleanest shirt in the hamper.’ But it’s actually not. It’s actually the dirtiest shirt in there, people just don’t appreciate that yet. It’s only because the euphoric effects of our last round of QE haven’t worn off yet…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Don’t call it a comeback. Participants in a recent survey believe gold prices are positioned to make a comeback next week as prices are expected to rise. Out of 36 participants, 14 see gold prices going up, while six see the precious metal to decline and three believe prices will remain unchanged, according to the Kitco News Gold Survey.
Participants included bullion dealers, investment banks, future traders and technical chart analysts. On Friday, Comex December gold was up about $15 an ounce for the week as a stronger dollar and rising open interest in the futures market continue. Gold has finally reached the all-important $1,200 an ounce level…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

China’s surprise rate cut helped the yellow metal breach the $1,200 mark. Gold prices rallied last week and closed higher for the third consecutive week. The surprise rate cut announcement from China helped the yellow metal breach the psychological $1,200 per ounce mark last week.
All through the week, spot gold prices were range-bound between $1,175 and $1,205. China’s rate cut boosted sentiment and pushed gold prices as high as $1,207 before closing at $1,201.55, up 1.1 per cent for the week…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The price of iron ore has sunk below $US70 a tonne for the first time since the middle of 2009 as investors continue to fret about the imbalance of supply and demand.At the end of the offshore session on Friday, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US69.80 a tonne, down 0.3 per cent from its previous close of $US70 a tonne.
The latest dip rounded off a fortnight of heavy falls, which dragged the commodity down about 10 per cent. It is now trading at levels almost 50 per cent below the $US135 mark seen at the start of the year…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Over the past 90 days, the iShares Silver Trust and the ETFS Physical Silver Shares are off 15.6%, a decline that is more than twice as bad as the 6.3% drop for the SPDR Gold Shares over the same period.
November has been more kind to precious metals exchange traded funds, including silver ETFs, as SLV and SIVR are up an average of 1.8%. While silver ETFs are still highly damaged (SLV and SIVR each reside 15% below their 200-day moving averages, the November bullishness, albeit slight, could be the start of a situation worth monitoring………………………………..Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

November 5th likely marked a turning point for silver. My working assumption is that spot silver and the iShares Silver Trust made a significant bottom on November 5th. Since then, silver has rallied over 7%. I believe it was a significant bottom due to several reasons:
Silver mining stocks have significantly outperformed silver since then. SIL closed at $8.23 on November 5th and closed above $10 on Friday, which is a gain of over 21%. Usually, when silver is in rally mode, silver miners will outperform. Investors become more optimistic and take on more risk by buying the miners…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The U.S. dollar has been on a tear this year, rising against the currencies of virtually all major developed economies. What we’re seeing around the world is intense — and in some cases, deliberate — devaluations. What’s going on and what are the investment implications?
One reason for the devaluations is that, when economic growth is weak — as it has been globally for five years — governments feel tremendous pressure to increase exports and reduce imports to restore growth. Often that means lowering the value of the currency so that products sent abroad are relatively less expensive and those coming into the country more so…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

The specter of currency wars once again haunts the international chattering classes. Remember back in 2011, when Brazilian finance minister Guido Mantega blamed the U.S. for deliberately weakening the greenback to gain a competitive advantage? Well, now the shoe is on the other foot.
The Yen — an important regional currency — recently sank to a seven-year low against the now mighty U.S. dollar (USD). This is putting downward pressure on the Korean won and other Asian currencies…………………………………Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Some future impacts of climate change, such as more extremes of heat and sea level rise, are unavoidable even if governments act fast to cut greenhouse gas emissions, the World Bank said on Sunday. Past and predicted emissions from power plants, factories and cars have locked the globe on a path towards an average temperature rise of almost 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial times by 2050, it said.
“This means that climate change impacts such as extreme heat events may now be simply unavoidable,” World Bank President Jim Yong Kim told a telephone news conference on the report, titled “Turn down the Heat, Confronting the New Climate Normal.”………………………………..Full Article: Source

Posted on 24 November 2014 by VRS |  Email |Print

Brazil and China are on track to meet their emission-reduction goals by the end of the decade, according to new data from the United Nations Environment Programme (UNEP). The European Union, India and Russia join Brazil and China as the global players expected to meet projections ahead of 2020, while other leading countries need to implement more measures to curb their emissions projections, the report said.
“Linking development policies with climate mitigation will help countries build the energy-efficient, low-carbon infrastructures of the future and achieve transformational changes,” Achim Steiner, UNEP’s executive director, said in a statement on Nov 19…………………………………Full Article: Source

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