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Commodities Briefing - Archive | July, 2009

Commodity hedge-fund assets rose 8.9 pct in 2nd quarter

Posted on 31 July 2009 by VRS  |  Email |Print

From Bloomberg: Commodity hedge funds’ assets under management increased 8.9 percent in the second quarter, according to Hedge Fund Research Inc.

Money managers investing in raw materials tracked by the Chicago-based company managed almost $11 billion by the end of June, compared with $10.1 billion three months earlier, data from the company show. Assets reached $11.1 billion in 2008………Full Article: Source

U.S. commodities path not for UK’s FSA

Posted on 31 July 2009 by VRS  |  Email |Print

From Reuters: Position limits on commodity futures are not on the agenda in Britain even if the United States puts pressure on the UK financial watchdog, which has other ways of deterring market abuse.

But different rules in different jurisdictions could potentially trigger a migration of business to London………Full Article: Source

U.K. regulator to discuss oil market with traders

Posted on 31 July 2009 by VRS  |  Email |Print

From MarketWatch: The financial-market regulator in the U.K. is holding a meeting with oil traders next week to examine trading in the market.

That move comes as the U.S. regulator is considering clamping down on excessive speculation in U.S. commodities trading………Full Article: Source

Buoyant markets lead to renewed fears of commodity speculation

Posted on 31 July 2009 by VRS  |  Email |Print

From Guardian: City traders are keen to see gains continue past the pre-Lehman Brothers bankruptcy mark of 4700, but regulators in Britain and the US look to crack down on underhand speculator tactics.
Equities and commodity markets on both sides of the Atlantic roared to seven-month highs today as good company results and lower than expected US jobless totals raised hopes that the FTSE 100 index could exceed 4700 within days………Full Article: Source

Commodity prices rebound over the first half of the year

Posted on 31 July 2009 by VRS  |  Email |Print

New research by Halifax shows that commodity prices rebounded over the first half of the year amid increasing optimism regarding the prospects for the global economy.

Commodity prices rose by an average of 10% during the first six months of 2009. In contrast, retail prices increased by 0.2% over the same period………Full Press Release: Source

In depth: OPEC report analysis

Posted on 31 July 2009 by VRS  |  Email |Print

From Arabianoilandgas.com: Last month’s OPEC market report revealed that several encouraging trends have begun to take root, and economic indicators are for world oil demand to return to positive growth in 2010.

The OPEC reference basket surged $11.38 per barrel, or almost 20% to average over $68 in June………Full Article: Source

Price of oil bounces back sharply

Posted on 31 July 2009 by VRS  |  Email |Print

From BBC: Sharply higher global stocks have pushed oil prices higher, clawing back almost all of Wednesday’s big falls.

US light crude was up $3.66, or almost 6%, to $67.01 a barrel, while London Brent was ahead by $3.68, at $70.21………Full Article: Source

UK says responds to French carbon trade tax fraud

Posted on 31 July 2009 by VRS  |  Email |Print

From Reuters: The British government on Wednesday said it will make carbon emissions credits exempt from value-added tax (VAT) from Thursday in response to fraudulent trading on a French emissions exchange.

“The new law, which takes effect from midnight tonight, follows evidence that commodity trading in emissions allowances is being used by fraudsters to steal VAT revenues from the UK, and that the UK may become a major target for this activity in the coming months,” the UK Treasury said in a statement………Full Article: Source

Is gold no longer an attractive commodity?

Posted on 31 July 2009 by VRS  |  Email |Print

From Shelteroffshore.com: The news that the price of gold futures fell yesterday and that gold has only achieved modest gains in the second quarter of 2009 anyway, suggests that the appeal of this commodity is perhaps waning – amongst smaller investors anyway.

So is gold no longer an attractive commodity? Or is it still worth an investment as a way to hedge your bets?………Full Article: Source

Gold will hit $1,000 again

Posted on 31 July 2009 by VRS  |  Email |Print

From Telegraph: Gold will revisit $1,000 as investment demand and jewellery purchases rebound and supply decreases annually, a senior World Gold Council official said.
On the supply side, gold mining production has been decreasing at a rate about 4 to 5pc per year after reaching a peak production in 2001, Jason Toussaint, managing director of exchange traded gold, said today. “Even if demand stays the same, prices must go up.”……..Full Article: Source

Gold ETFs lost some haven flavor

Posted on 31 July 2009 by VRS  |  Email |Print

From WSJ: Holdings declined in July in exchange-traded funds that focus on gold. At least part of the strong demand for gold ETFs from early in the year appears to be easing as credit-market concerns abate, inflation remains contained and investors look to capture profits.

Some observers see the trend as a temporary phenomenon, while others say it might be at least somewhat worrisome for gold bulls………Full Article (Subscription Required) : Source

Upswing in global markets dilutes demand for gold

Posted on 31 July 2009 by VRS  |  Email |Print

From Zawya.com: Gold tumbled $15 (Dh55) in 24 hours raking up apprehension that the yellow metal’s recent price rally was not supported by demand.

Market analysts who had just few days earlier been talking of the bullion’s price touching $980 an ounce in August have now termed bearish………Full Article: Source

US hedge fund managers ‘turning to Gold Investment’

Posted on 31 July 2009 by VRS  |  Email |Print

From Bullionvault.com: A prominent hedge fund manager has claimed today (July 30th) that Gold Investment is proving popular in the US over fears about inflation.

Moonraker, a London-based independent firm, has managed over $330 million worth of assets at BDO Stoy Hayward Investment Management since September 2003………Full Article: Source

Myth: “Gold bullion has no third-party risk”

Posted on 31 July 2009 by VRS  |  Email |Print

From Worldofwallstreet.us: Here’s a quote from a recent article that got my attention: “The great advantage of gold bullion is that it has no third party risk.” This kind of statement is made frequently in the gold investing world.

This is clearly not true. There is always third party risk with Gold Bullion. The risk is that third parties will steal it………Full Article: Source

Silver firms up on industrial demand and ETF infatuation

Posted on 31 July 2009 by VRS  |  Email |Print

From Zawya.com: Gold’s less respected cousin silver is firming up and its price is expected to increase on the back of declining mine output and a rise in its demand in the renewable energy sector.

Yesterday, the silver markets reacted positively to the launch of a new exchange-traded fund (ETF) - the ETFS Silver Trust………Full Article: Source

Copper near 10-month top on equities/commods rally

Posted on 31 July 2009 by VRS  |  Email |Print

From Reuters: Copper prices rose about 4 percent on Thursday, near 10-month highs, as the dollar
weakened and equity and commodity markets rallied on renewed economic optimism.

Better employment data out of the United States, a surge in euro zone economic sentiment and China’s pledge to retain a growth-friendly monetary policy combined to push global stock markets higher, and the euphoria flowed into commodities too………Full Article: Source

Copper may drop on speculation China buying less, survey shows

Posted on 31 July 2009 by VRS  |  Email |Print

From Bloomberg: Copper may decline on speculation that Chinese imports will shrink and metal booked to be taken out of London Metal Exchange-monitored warehouses will drop.

Canceled warrants, or metal earmarked for delivery, fell to 11,900 metric tons yesterday, compared with as much as 84,000 tons on April 30………Full Article: Source

China steel assn urges unified iron ore price

Posted on 31 July 2009 by VRS  |  Email |Print

From Ninemsn.com.au: The China Iron and Steel Association (CISA) is drawing up new rules that will force all Chinese mills to accept a single “unified” iron ore price, Xinhua news agency reported on Friday.

Citing the association’s secretary general, Shan Shanghua, the report said CISA was sticking to three basic principles — continuing contract price negotiations with foreign miners, establishing a unified price system and “changing the chaotic domestic iron ore market situation”………Full Article: Source

Nickel for a dime?

Posted on 31 July 2009 by VRS  |  Email |Print

From Mineweb.com: Brazilian supergroup Vale, best known for its dominant position in seaborne iron ore, today flagged a somewhat optimistic outlook for nickel prices, a market where it ranks as No 2 in the world, after Russia’s Norilsk; further big players in primary nickel production include BHP Billiton, PT Aneka Tambang, Jinchuan, and Xstrata.

In its second quarter results commentary published today, Vale gives an insider view, stating that: “there has been a recovery in global nickel demand from its depressed levels of 2H08 and 1Q09″………Full Article: Source

Brazil’s Vale sees metals markets rebound in 2009

Posted on 31 July 2009 by VRS  |  Email |Print

From Reuters: Brazilian miner Vale, the world’s largest iron ore producer, said on Thursday it expected metals markets to continue recovering as the world economy emerges from the financial crisis.

Vale on Wednesday posted an 84 percent year-on-year drop in second-quarter earnings caused by the tumble in iron ore prices from their peak at the height of the commodities boom and production cuts to adjust for collapsing demand………Full Article: Source

The true cost of hedging mining stocks

Posted on 31 July 2009 by VRS  |  Email |Print

From Hardassetsinvestor.com: While short-term blips are par for the course in any stock holding, gold miners are inherently more volatile than the broader equity market. This year, returns on the NYSE Arca Gold Miners Index stocks have gyrated nearly twice as much as those on the S&P 500 Index.

Financial advisers constantly tell clients that money’s more likely to be made by buying and holding issues rather than engaging in in-and-out trading………Full Article: Source

Precious metals holdings of exchange-traded funds

Posted on 31 July 2009 by VRS  |  Email |Print

From Reuters: Inflows into precious metals-backed exchange-traded funds slowed in the second quarter from record levels in the first three months of 2009, as signs the financial markets were stabilising knocked demand for the metals as a haven from risk.
Almost 15 million ounces or some 450 tonnes flowed into the six gold-backed ETFs monitored by Reuters in the first three months of the year, but in the second quarter those inflows dwindled to less than a million ounces………Full Article: Source

ETF assets golden in first half of ‘09

Posted on 31 July 2009 by VRS  |  Email |Print

From Investmentnews.com: Investors bought more exchange traded funds in the first half of this year than in the comparable time period in 2008, according to Strategic Insight Mutual Fund Research and Consulting LLC.
But whether ETF sales will outpace last year’s record total of $176 billion in net inflows remains to be seen………Full Article: Source

Bullion sales from gold ETFs rise

Posted on 31 July 2009 by VRS  |  Email |Print

From Commodityonline.com: Thursday’s recovery in Chinese equity markets gave new meaning to the term ‘hot & cold’ as investors piled money onto the same table from which they has swept it just the day before.
Chinese central bank comments stressing the efficacy of ‘market tools’ in order to guide lending and money supply were interpreted as ‘Hey, go play in the market some more’ and that’s exactly what profit-hunters did. Even if they can expect the authorities to tighten lending selectively, in small increments, as time goes by………Full Article: Source

ETF blowup continues

Posted on 31 July 2009 by VRS  |  Email |Print

From FT Alphaville: UBS’s decision to suspend purchases of its leveraged and inverse ETFs on Monday came, we understand, largely on the advice of industry regulator Finra who in June stated :
A good demonstration of the industry’s heightened diversification came in June with Pimco’s launch of an ETF offer set to give “retail” investors the chance to invest in a slice of the bond-giant’s mutual fund profits………Full Article: Source continues/

ETFs: Survival of the fittest

Posted on 31 July 2009 by VRS  |  Email |Print

From Thestreet.com: In 2008 nearly 50 ETFs were forced to fold as methodologies that looked good on paper failed to perform in the open market.
Viability can often be sensed from trading volume, and the black and white numbers that roll across the trading tape give weak funds nowhere to hide………Full Article: Source

ETFs slow In ‘09, growth projected

Posted on 31 July 2009 by VRS  |  Email |Print

From Emii.com: Exchange-traded funds have received investments at a slower pace in 2009, but their growth is likely to resume soon, Reuters reports.
Investors have invested $35 billion in new cash in ETFs so far this year, according to Simfund MF, a fund-tracking database produced by Strategic Insight………Full Article: Source

Dollar loses steam as U.S. stocks rally

Posted on 31 July 2009 by VRS  |  Email |Print

From CNN: A global stock rally depressed the U.S. dollar Thursday as investors took advantage of a fresh bout of optimism to snap up higher-yielding currencies such as the euro and Australian dollar.

The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, fell to 79.244, off about 0.3% from 79.473 in North American trade late Wednesday………Full Article: Source

Central Banks USD over-exposure - good for gold, bad for dollar?

Posted on 31 July 2009 by VRS  |  Email |Print

From Mineweb.com: US liabilities to foreign governments at end-May totalled a whopping $2.3 trillion dollars or 17% of GDP - but the maturity curve is shifting to the short end, partly but not wholly as a result of quantitative easing.
In principle this should be good for gold………Full Article: Source

Bulgaria will apply to join EU’s currency peg, Djankov says

Posted on 31 July 2009 by VRS  |  Email |Print

From Bloomberg: Bulgaria will apply in November to join the exchange-rate mechanism, the European Union’s two-year currency stability test before the country can drop the lev and adopt the euro, Finance Minister Simeon Djankov said.

“We have already started preparing the necessary documentation to apply to join ERM in November,” Djankov, said in an interview in Sofia yesterday………Full Article: Source

Putting a commodities-exchange stock on ice

Posted on 31 July 2009 by VRS  |  Email |Print

From Barrons.com: Owning shares of securities exchanges such as NYSE Euronext was supposed to be akin to investing in legal monopolies granted by the U.S. government.
All exchanges are essentially chartered by the federal government, and the very best exchanges tend to develop dominant market share………Full Article: Source

The dangerous hype behind Ethiopian Commodity Exchange

Posted on 31 July 2009 by VRS  |  Email |Print

From Ethiopianreview.com: It is our hope that many Ethiopians have watched the PBS/WNET documentary film under the title of The Market Maker/Wide Angle, which was broadcast beginning on July 23, 2009.
This documentary followed the Ethiopian economist, Dr. Eleni Gabre-Madhin, who is the CEO of the newly established Ethiopian Commodity Exchange………Full Article: Source

Zimbabwe govt finalising establishment of commodities exchange

Posted on 31 July 2009 by VRS  |  Email |Print

From Chronicle.co.zw: The Government is finalising modalities for the establishment of a commodities exchange that will create transparency and accountability in the trading of strategic agricultural products, a cabinet minister has said.
In an interview, Finance Minister Tendai Biti said creation of a commodities exchange had been necessitated by the “unbecoming behaviour” of business people and the need to ensure strict monitoring of agricultural produce in the country………Full Article: Source

UK launches inquiry into EU rules on alternative invest

Posted on 31 July 2009 by VRS  |  Email |Print

From Dow Jones: The U.K. government Thursday launched a new inquiry into the controversial plans by the European Commission to regulate hedge funds and private equity.

The E.U. proposal, which would impose leverage restrictions and disclosure requirements on all managers managing funds of more than EUR100 million, has been criticized as anti-competitive and disproportionate by business leaders and industry bosses alike………Full Article (Subscription Required) : Source

CFTC mulls investment limits on commodities-linked products

Posted on 31 July 2009 by VRS  |  Email |Print

From Investmentnews.com: The Commodity Futures Trading Commission is mulling setting position limits on physical commodities and is questioning whether swaps dealers should remain exempt from position limits.
Policy changes under debate at the CFTC may limit the amount of money investors put into commodities-linked products………Full Article: Source

Bullish on commodities, from natural gas in India to oil in South America

Posted on 31 July 2009 by VRS  |  Email |Print

From Marketoracle.co.uk: Primevest Capital Corp. President Ryaz Shariff reaffirms his long-held status as a commodity bull in this exclusive interview with The Energy Report, telling us to expect significant upticks in the markets once demand resumes.
Having shifted somewhat from the mining sector last year, he also talks about some of the energy plays he likes these days—from natural gas in India to oil in South America to uranium in East Africa………Full Article: Source

U.S. works to expand CFTC role, commodities oversight

Posted on 30 July 2009 by VRS  |  Email |Print

From Reuters: The U.S. government wants to boost oversight of commodity markets by increasing regulation of over-the-counter derivatives, clamping down on excessive speculation and expanding the power of the Commodity Futures Trading Commission.

Following are details of government initiatives to step up oversight of commodity trading:……..Full Article: Source

Goldman says curbing speculators may disrupt markets

Posted on 30 July 2009 by VRS  |  Email |Print

From Bloomberg: Goldman Sachs Group Inc., the bank that makes the most money from commodities, fixed-income and currency trading, said attempts to curb speculation may be “disruptive” to energy markets.

“The role that is played by non-traditional participants such as index investors and other financial participants often has been mischaracterized,” Don Casturo, a Goldman Sachs managing director, said today at a Commodity Futures Trading Commission hearing in Washington………Full Article: Source

Oil Prices: Why the bears are feasting

Posted on 30 July 2009 by VRS  |  Email |Print

From WSJ: Officially, fundamentals may not matter so much for oil prices. But there is a flurry of economic data—and comments from Big Oil chiefs—that explains why crude prices could take a beating in the short term.

U.S. government data on Wednesday showed another increase in U.S. crude and gasoline stocks, a sign of weak demand. Crude inventories swelled 5.1 million barrels, while analysts expected stocks to drop by 1 million barrels………Full Article (Subscription Required) : Source

Are we headed for another oil shock?

Posted on 30 July 2009 by VRS  |  Email |Print

From Businessweek.com: As the global economy recovers from the current downturn, there is a significant risk that resurgent energy demand will coincide with tight supply, vaulting oil prices higher again. Indeed, prices are already on the rise.
Research by the McKinsey Global Institute (MGI), combining macroeconomic modeling with an understanding of industry dynamics, finds that unless business leaders and policymakers act decisively on both oil supply and demand, there is a risk that a second oil shock could follow economic recovery—indeed, one that could be lengthier than the second price spike that hit the world economy in the 1970s………Full Article: Source

IEA says oil price have hit floor around $50-$60

Posted on 30 July 2009 by VRS  |  Email |Print

From Reuters: Volatile oil prices have reached a floor of between $50-$60 a barrel and OPEC is unlikely to announce major output cuts in September, a senior IEA oil analyst said on Wednesday.

Oil slid below $66 a barrel on Wednesday, extending losses from the retreat of more than $1 the day before, on renewed concerns over the U.S. economy after a drop in consumer confidence and due to industry figures showing a rise in commercial crude oil inventories………Full Article: Source

Venezuela energy minister: $70/bbl oil by year-end

Posted on 30 July 2009 by VRS  |  Email |Print

From Reuters: Venezuela Oil Minister Rafael Ramirez said on Wednesday he expected the price of oil to reach $70 a barrel by the end of the year.

“We are still influenced by market instability, but that (price) projection is happening, and there will be a gradual recovery of oil,” Ramirez said………Full Article: Source

Slough to rival world’s greenest cities with carbon pledge

Posted on 30 July 2009 by VRS  |  Email |Print

From Telegraph: Slough’s reputation for industrial sprawl may soon be a thing of the past as it joins environmental capitals including Copenhagen and Vancouver in pledging to strive to be part of the UN’s Climate Neutral Network.
Residents of Slough have long maintained that their town – damned by Sir John Betjeman and infamous as the home of The Office’s David Brent – has been unfairly maligned………Full Article: Source

Once-hot coal piles up as demand cools

Posted on 30 July 2009 by VRS  |  Email |Print

From WSJ: Mountains of coal are piling up along the winding roads of Central Appalachia, a boon to buyers and a bane to miners.

Coal companies centered in this region, which includes parts of Kentucky, Tennessee, Virginia and West Virginia, are seeing far fewer shipments to utility companies and steelmakers, resulting in contract renegotiations or cancellations for many of them………Full Article (Subscription Required) : Source

Dollar playing crucial role in base metals prices

Posted on 30 July 2009 by VRS  |  Email |Print

From Commodityonline.com: The base metals pack ended in the green on Monday but profit-booking emerged after a sharp bull run that we saw in the last week. However, prices still closed in the positive territory amid persistent optimism about the global economic situation.
Lead prices gained 2.7, the biggest advance in the base metals pack while other metals gained around 1%. Yesterday’s trade witnessed selling pressure after a good run in prices………Full Article: Source

Copper investment returns at 48 pct in four months

Posted on 30 July 2009 by VRS  |  Email |Print

From Commodityonline.com: The uptrend in base metals has continued as an aftermath of improved sentiment and economic data showed that not only is the worst behind us but growth in emerging markets especially China, is speeding up.

Last year’s downturn saw some of the biggest ever contractions in metals consumption, but there is mounting evidence that the pace of decline is now slowing………Full Article: Source

Upswing in global markets dilutes demand for gold

Posted on 30 July 2009 by VRS  |  Email |Print

From Business24-7.ae: Gold tumbled $15 (Dh55) in 24 hours raking up apprehension that the yellow metal’s recent price rally was not supported by demand.

Market analysts who had just few days earlier been talking of the bullion’s price touching $980 an ounce in August have now termed bearish………Full Article: Source

IMF to sell gold in central bank pact, official says

Posted on 30 July 2009 by VRS  |  Email |Print

From Forbes: The planned sale of 403 tonnes of IMF gold will take place within a new European central bank gold pact currently being negotiated, a senior International Monetary Fund official said Wednesday.

The IMF has provisionally agreed to sell the gold to raise resources for increased lending to poor countries………Full Article: Source

Storing bullion internationally

Posted on 30 July 2009 by VRS  |  Email |Print

From Ibtimes.com: GoldCore remain bullish on gold and particularly silver and believe that they remain essential diversifications in order to protect and grow wealth in the coming years.

One of the most widely read articles we have ever done was an article on ‘Storing Bullion Internationally’ published in February 2007 and picked up widely on the internet………Full Article: Source

ETF Securities sees silver ETP riding on ‘new money’

Posted on 30 July 2009 by VRS  |  Email |Print

From Forbes: London-based ETF Securities said on Wednesday it was not expecting to steal market share for its newly-launched U.S.exchange-traded product for silver from a rival fund run by Barclays Global Investors.

ETF Securities, which expects the ETFS Silver Trust to hold assets of more than $1 billion over the next six to 12 months, hopes rather to attract investors who are altogether new to commodities, Chairman and founder Graham Tuckwell said………Full Article: Source

July 2009
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