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Commodities Briefing - Archive | April, 2013

Commodity price forecasts after mid-April declines

Posted on 30 April 2013 by VRS  |  Email |Print

Global investment banks have adjusted near-term price forecasts for energy, metals and agricultural commodities after the mid-April market tumble.Brent crude oil fell below $100 a barrel the first time in nine months; gold suffered its biggest loss in dollar terms; and copper sunk to an 18-month low after the selloff, triggered by worries of stagnating China growth, fresh concerns about the euro zone and U.S. economic uncertainty.
Goldman Sachs, Wall Street’s most influential name in commodities, has lowered its forecast for Brent crude in the second quarter, while turning bullish on copper due to inventory drawdowns in China. It also withdrew its previous call to short gold, as bullion prices moved back above $1,400 an ounce………………………………………..Full Article: Source

Commodity price slump ‘will end up boosting growth’

Posted on 30 April 2013 by VRS  |  Email |Print

The recent fall in commodity prices should “ultimately be viewed as a positive”, according to Rowan Dartington Signature’s managing director, Andrew Morris.The prices for Brent crude oil, copper and gold have all fallen by more than 10 per cent this year, partly due to concerns about global growth, but Mr Morris said the price fall will end up boosting growth.
He said: “A general fall in commodities… will in time be good news for growth prospects. By reducing imported or commodity-related inflationary pressures, this will not only help boost consumer purchasing power but it will take some of the heat off central bankers tasked with reigning in inflation.”……………………………………….Full Article: Source

Don’t write off the commodities super-cycle just yet

Posted on 30 April 2013 by VRS  |  Email |Print

Here’s something unexpected: commodity prices have actually been rising, at least according to Bank of Nova Scotia’s monthly commodity price index.The index rose in March by 1.6 per cent over February and inched up slightly in the first quarter as a whole.“Firmer overall prices in March – likely a surprise to financial markets – were led by the oil and gas index (+6.8 per cent month over month),” Scotiabank said.
In the plus column were Western Canadian heavy oil, natural gas export prices to the U.S., and propane prices, and for non-energy commodities, forest and agricultural products………………………………………..Full Article: Source

Slower world growth gives commodity investors cold feet

Posted on 30 April 2013 by VRS  |  Email |Print

Investors are staying away from commodities, fearing that the worst is yet to come after prices plunged in April on signs of slower world economic growth.Wealth managers have been pulling money from commodities since the start of the year, culminating in a major sell off in April when investors dumped gold, copper and oil.Poor economic data from China, Europe and the United States has hit global growth forecasts, making investors reassess the demand for raw materials.
The 19-commodity Thomson Reuters-Jefferies CRB index was down almost 6 percent following April’s rout and is still off some 4 percent since the start of the year………………………………………..Full Article: Source

‘Dr. Doom’ says commodity weakness signals global economic weakness

Posted on 30 April 2013 by VRS  |  Email |Print

Nouriel Roubini is a household name in the financial world as his nickname, “Dr. Doom,” has been rightfully earned, given his propensity for bearish sentiment. Roubini is also not afraid to speak his mind as he has been issuing warnings about the global economy for the past few years. Now, the Dr. has commented on the commodity industry, as he believes its struggles reveal a bigger trend that could see the global economy slip.
“What has happened for the last few weeks is that most of the macro economic news has been actually quite negative and surprising on the downside,” said Dr. Doom in a recent interview. He went on to name a number of factors such as a weakening eurozone, slowing growth in China, and a weak outlook for the US given the sequester and tax hikes that went into place this year………………………………………..Full Article: Source

Scotiabank’s Commodity Price Index rallies in March

Posted on 30 April 2013 by VRS  |  Email |Print

Scotiabank’s Commodity Price Index rose by 1.6% month over month (m/m) in March, after edging down in February, and inched up slightly in the first quarter of 2013 from the fourth-quarter average. However commodity markets remain skittish, with a sharp selloff in gold in mid-April and softer base metal prices, after the release of China’s slower-than-expected first-quarter GDP advance, 7.7% year over year (yr/yr), down from 7.9% in 2012:Q4.
“Firmer overall prices in March were likely a surprise to financial markets,” said Patricia Mohr, Scotiabank’s Vice President of Economics and Commodity Market Specialist. “The advance was led by the Oil and Gas Index (+6.8% m/m), with gains in Western Canadian Select (WCS) heavy oil, natural gas export prices from Canada to the U.S. and liquefied petroleum gas (LPG) prices in Edmonton and Sarnia.” (Press Release)

7 reasons why oil prices won’t plunge

Posted on 30 April 2013 by VRS  |  Email |Print

The United States is in the midst of a miraculous supply boom that has seen domestic oil output soar by more than 1 million barrels per day in the past year to the highest levels in decades. U.S. oil output is now at 6.5 million bbl per day, in third place after Saudi Arabia and Russia (both at roughly 9.8 million bpd). And the growth shows no sign of slowing down.
Add to that the slow and steady recovery of the Iraqi oil industry, plus the likelihood that the shale-cracking techniques perfected in the U.S. will be exported to the likes of China and Russia, and it looks like the world’s oil demand will be easily met for years to come………………………………………..Full Article: Source

What to do about OPEC?

Posted on 30 April 2013 by VRS  |  Email |Print

Cato hosted a policy forum last week (which you can watch in its entirety if you missed it the first time around) to discuss a new paper released by Security America’s Energy Future (SAFE). The paper – written by long-time friends Andy Morriss and Roger Meiners – argues that there is a consensus among academics who have studied OPEC. The consensus?
The cartel is responsible for less crude oil on the market than would otherwise be the case (which means higher prices than would otherwise be the case) and for the bulk of the price volatility we find in crude oil and, thus, gasoline markets. “The international market for oil is not a free market” they conclude. “The global oil market deviates in important ways from the competitive model and that these market anomalies have significant economic impacts and so are relevant for policy makers.”……………………………………….Full Article: Source

Libya pushing for bigger role in OPEC

Posted on 30 April 2013 by VRS  |  Email |Print

Libya will seek to increase its oil output quota within the Organization of the Petroleum Exporting Countries (Opec) once it is sure it can produce 1.7 million barrels per day (mbpd), up from about 1.5 million currently, Oil Minister Abdelbari Al Arusi said.
Opec dropped individual allocations in 2011 when it adopted a 30-mbpd output target. But with production rising in Libya and Iraq, the issue of quotas may need to be addressed at some stage. Though individual country quotas are for the moment off the radar, this month’s oil price falls have prompted statements from Venezuela and Iran about a potential extraordinary Opec meeting and the idea of cutting output has been raised, said Simon Wardell, oil analyst at IHS………………………………………..Full Article: Source

WTI crude rises to near two-week high; OPEC basket above $100

Posted on 30 April 2013 by VRS  |  Email |Print

West Texas Intermediate crude advanced to near its highest closing level in more than two weeks. OPEC’s reference price rebounded above $100 a barrel.
WTI reversed losses of 0.6 percent as European stocks and the euro rose amid speculation central banks will maintain monetary stimulus. Brent crude traded near its highest closing price in two weeks as Italian Prime Minister Enrico Letta prepared to finish installing a new government. Hedge funds curbed bullish bets on the North Sea benchmark to their lowest in four months, data from ICE Futures Europe showed………………………………………..Full Article: Source

Is the price of gold signaling an economic slowdown?

Posted on 30 April 2013 by VRS  |  Email |Print

Friday’s GDP number was a disappointment. The consensus among economists was that growth for the first quarter would be at least 3% (at an annual rate adjusted for inflation). The actual number was only 2.5%. And even that wasn’t as good as it looked. Growth late last year was very weak, so part of the first-quarter gain was simply a short-term bounce back from the previous quarter.
Nonetheless, those results appear to fit with conventional wisdom: A lethargic economy has managed to crank out minimal but steady growth for almost four years. And the outlook is slowly getting better rather than getting worse………………………………………..Full Article: Source

Dip in gold prices may not help narrow CAD: HSBC

Posted on 30 April 2013 by VRS  |  Email |Print

The dip in gold prices may not help narrow current account deficit, a report by HSBC said.”The recent drop in gold prices is likely to have no impact on the CA deficit as the drop in prices should be outweighed by a rise in volumes” said Leif Eskeseen, chief India economist, HSBC.
” Our quantitative analysis supports this”. The volume of gold imports rises with higher real incomes, lower real deposit rates, and falling gold prices. In fact, the volume demand for gold is price sensitive, the HSBC report notes. Indian households collectively holding no less than 20,000 tonnes of gold, according to the World Gold Council………………………………………..Full Article: Source

Banking giant predicts gold price collapse

Posted on 30 April 2013 by VRS  |  Email |Print

ABN Amro, the Dutch state-owned banking giant, recently revised its global macro and gold outlook, forecasting a $1,300 gold price by the end of this year.
Moreover, the bank forecasts $1,000 gold by December 2014, and $800 gold in 2015. Why? “The authorities — especially in Europe — have acted to reduce systemic risks and inflation is going down rather than up. . . Other assets will become increasingly more attractive as the growth outlook improves.”……………………………………….Full Article: Source

Gold market needs time to heal – UBS

Posted on 30 April 2013 by VRS  |  Email |Print

The recent collapse in gold prices has forced UBS to downgrade its price expectations, not just for gold, but also for the whole precious metals complex.
According to the bank, the forcefulness of the recent correction was, in many ways “baffling”, even when the negative factors like concerns around Cyprus are taken into consideration.In a note out this morning UBS says sentiment toward the metal has been dealt a severe blow. With some concerned about gold’s credibility as a safe haven after the violence of the recent sell-off………………………………………..Full Article: Source

Gold prices may touch $1350/oz in Q2 and $1483 2013: Barclays

Posted on 30 April 2013 by VRS  |  Email |Print

ETP outflows may remain as a key downside risk for gold in the near term and prices are expected to touch $1350/oz in the second quarter of 2013 and $1483/oz this year, stated London based Barclays in its recent market analysis.
“In our view, the vulnerability of further ETP outflows subsides should prices recover to above the $1500/oz level or equity markets under perform given the stronger correlation between the two,” it added.Gold prices recovered last week, ending the week above the $1450/oz level, after hitting their lowest level since February 2011 the week prior………………………………………..Full Article: Source

BlackRock’s Hambro: Too early to tell if gold price falls are over

Posted on 30 April 2013 by VRS  |  Email |Print

The recent gold price volatility could plague investors for some time, and further selling is also a risk, according to BlackRock’s natural resources head Evy Hambro.
The gold spot price suffered its worst one-day fall for 30 years on 16 April, dropping 9% and falling as low as $1,321 as investors rushed to sell the precious metal. Gold has rebounded in the last week to around $1,450 as buyers returned to take advantage of lower prices, but the manager cautioned there could be another move down for the asset class………………………………………..Full Article: Source

The beginning of the silver age

Posted on 30 April 2013 by VRS  |  Email |Print

A lot of people were knocked out of the gold and silver market because of panic during the last two weeks; they capitulated or sold short near the bottom. Many others exclaimed that the gold age was over. However, I see the rising sun in the morning. Both gold and silver will start a new age. In this paper, I’ll try to tell you why we are in the beginning of a more splendid era for gold and silver. I’ll also share with you why silver will be a supernova in the following decades.
If you ask me which words I’d like to use to describe the gold and silver market in the last two weeks, “Capitulation, rivers of blood” is my answer. According to the Weekly Commitments of Traders Reports released by the CFTC, the net long of small speculators decreased by 24,310 contracts for gold and 7,846 contracts for silver from April 9 to 23………………………………………..Full Article: Source

Commodity prices move higher in March, weakness ahead for industrial metals: Scotiabank

Posted on 30 April 2013 by VRS  |  Email |Print

Commodity prices nudged up slightly in March just ahead of the steep sell-off in gold mid-April. Scotiabank’s Commodity Price Index rose 1.6 per cent month over month. Traders are bracing for more uncertainty following a reality check in China’s economic growth, which rose less than expected at 7.7 per cent in the first quarter of 2013.
Oil and gas was the strongest sub-category as prices rose 6.8 per cent from February. Natural gas reached its highest level since July 2011 as the winter dragged on in North America………………………………………..Full Article: Source

Betting on ETFs without actually buying an ETF

Posted on 30 April 2013 by VRS  |  Email |Print

Last week, WisdomTree (WETF) announced earnings, and the results were strong, sending the stock 5% higher in early trading. Net income rose 600% year-over-year on the back of an almost $6 billion increase in assets during the first quarter and expanding margins. In all, it was a powerful report by a firm that has quickly become one of the success stories in the ETF industry.
Although no one in their right mind would rank WisdomTree alongside BlackRock , Vanguard or State Street Global Advisors in terms of influence or power, the New York-based ETF firm has leveraged its unique strategies in a way that even the biggest money management firms in the world have had trouble replicating………………………………………..Full Article: Source

Commodities super-cycle far from over, asserts ETF Securities

Posted on 30 April 2013 by VRS  |  Email |Print

ETF Securities believes that the commodity super-cycle that started in the late 1990s is far from over, despite recent falls in commodity prices which have wiped billions off the firm’s assets under management.
The London-headquartered exchange-traded product (ETP) provider, which is best known for its leadership position in commodities, asserts that the main fundamental drivers of the super-cycle are still in force and that recent commodity price weaknesses are more related to business-cycle fluctuations and short-term commodity-specific supply increases than a change in structural fundamentals………………………………………..Full Article: Source

Time to sell the copper ETF?

Posted on 30 April 2013 by VRS  |  Email |Print

Thanks to the strong dollar, commodity prices have been pretty depressed over the past few months. It also doesn’t help that many are looking for a slowdown in China, a key market for commodity demand.
This is especially true in the base metal market, as China is easily the biggest consumer of copper (and other industrial metals) in the world. So, when this important country is experiencing sluggish growth—and when the dollar is strong—it can be a rough period for copper investors………………………………………..Full Article: Source

Speculators return to cutting precious metals bullish positions — CFTC

Posted on 30 April 2013 by VRS  |  Email |Print

Large speculators returned as sellers of precious metals futures and options on the Comex division of the New York Mercantile Exchange and the Nymex, trimming back exposure in all precious metals and slashing gold positions, according to U.S. government data.
For the week ended April 23, large speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report saw their net-long positions in precious metals fall across the board, with the gold net-long position in disaggregated reports fall to its lowest level since mid-March. For the legacy report, the gold net-long is the smallest since early November 2008. Reductions in silver and the platinum group metals were less severe, but still saw a reduction. In copper, speculators reduced their net-short position………………………………………..Full Article: Source

China’s Zhejiang Commodity Exchange mulls e-trading of iron ore

Posted on 30 April 2013 by VRS  |  Email |Print

Zhejiang Zhoushan Bulk Commodity Exchange, a government-controlled exchange in Zhoushan city in east China’s Zhejiang province, is eyeing joining the growing number of Chinese commodities exchanges hosting an e-trading platform for iron ore, an exchange official confirmed Friday.
ZZBCE aims to begin offering an e-trading capability for spot imported iron ore by the end of this year, he said, assuming that designing the contract runs smoothly and that the bourse secures the necessary approvals from government regulators and industry associations………………………………………..Full Article: Source

The single Gulf currency: Getting it right

Posted on 30 April 2013 by VRS  |  Email |Print

A single currency for the Gulf countries has long been recognized as a logical development to boost economic development and interstate trade. Since it was agreed upon in 2008, dates for its introduction have come and gone. However, as the problems of the European Monetary Union have demonstrated so clearly, it is absolutely essential that a single currency be built upon solid and entirely workable terms. The euro’s troubles stem in large part from the fact that it was driven by political considerations, by enthusiasts for greater and faster political integration.
The legal framework of the euro lacked some key economic and financial realities. Two of the most crucial were the incredible failure to appreciate the dangers inherent in the cost of money being the same across 23 countries with starkly different levels of economic performance………………………………………..Full Article: Source

US recovering; commodities may continue to weaken: Citi

Posted on 29 April 2013 by VRS  |  Email |Print

The US data has improved from last year, Guillaume Menuet of Citi believes that that underlying fundamentals in the US are recovering steadily. However, concerns relating to lack of fiscal deal remain.
“When you look at availability of credit, market matrix, unemployment, everything is pointing towards a recovery gaining momentum in the second half of the year,” he said………………………………………..Full Article: Source

Commodity shakeout emboldens risk-seeking investors

Posted on 29 April 2013 by VRS  |  Email |Print

Although the speed and scale of the fall has raised eyebrows, it may be that the world is simply entering a seasonal soft patch, as it did last year. And there are hardly any signs of a major investment shift away from risky assets.
If anything, the sell-off may work in favour of investors who like riskier assets, as cheaper raw materials could allow major central banks such as the Federal Reserve and the Bank of Japan to carry on pumping cash without stoking inflation………………………………………..Full Article: Source

Commodities tipped to drop further on demand fears

Posted on 29 April 2013 by VRS  |  Email |Print

Macquarie Research, a unit of Macquarie Group, said that despite China’s economic growth, apparent demand for metals remained weak, particularly in the US, Europe and South Korea.
“Certainly, industrial production is stuttering rather than accelerating and metal consumers are maintaining minimum working capital — this situation should improve as lead indicators rise. However this process does not seem aggressive enough to drive commodity prices,” it said.The bank cut its 2013 copper price forecast by 5.2 per cent compared with its January forecast, to $US7459 a tonne, and cut its 2014 copper price forecast by 14.7 per cent to $US6550 a tonne………………………………………..Full Article: Source

Short term oil market predictions from OPEC and the EIA

Posted on 29 April 2013 by VRS  |  Email |Print

Just this month Saudi Aramco announced that production had begun at their Manifa oilfield, and by July would be supplying up to 500 kbd to the new refinery that is being built at Jamail with the collaboration of Total. The first oil from the refinery is expected to ship in August, and both projects are currently ahead of schedule.
Manifa will further increase in production next year, to 900 kbd, with the additional flow going to the Yanbu refinery being built with the collaboration of Sinopec. Both these refineries are designed to take heavy crude, and can also accept oil from the ongoing projects to expand production at Safaniya. Collectively this is said to ensure that the company will be able to achieve a maximum sustainable production of 12 mbd………………………………………..Full Article: Source

Weakening demand keeps oil below USD100

Posted on 29 April 2013 by VRS  |  Email |Print

Indeed, Saudi Arabia and the UAE are among the countries most vulnerable to an oil price shock, the bank says.Brent crude prices have declined 12.5% this month alone, as traders worry about declining demand and rising output notably from the United States, the North Sea, Canada, Iraq and Libya.
Overall, Brent has lost 6.9% in 2013, ending the third week of April at USD 102.41 a barrel on the London-based ICE Futures Europe exchange………………………………………..Full Article: Source

All the big banks forecast a higher gold price this year

Posted on 29 April 2013 by VRS  |  Email |Print

The spot gold price was holding onto its strong gains last week to hover around the $1,465 an ounce level in European trading on Monday.Gold suffered a $200-plus decline that began on Friday 13 April and accellerated into Monday when the metal dropped to multi-year lows of $1,326 an ounce.
Gold’s recent push higher breached important technical levels and the 50% recovery of recent losses is also a bullish signal for the gold market………………………………………..Full Article: Source

HSBC cuts gold, silver price forecasts for 2013 & 2014

Posted on 29 April 2013 by VRS  |  Email |Print

HSBC lowered its gold forecast for this year and next on Friday, saying the recent tumble in prices for the yellow metal has dealt a severe blow to investor confidence, which may take many months to restore.The bank cut its 2013 gold price forecast to $1,542 per troy ounce from $1,700 and the 2014 price outlook to $1,600 per troy ounce from $1,720.
The bank, however, expects gold prices to stabilise after the recent rout as retail demand for gold lends support with rising jewellery and gold coin purchases from Asia………………………………………..Full Article: Source

Gold rally may lose steam

Posted on 29 April 2013 by VRS  |  Email |Print

Gold prices are up 6.8% from recent 26-month lows, but there is evidence that these gains are temporary, traders and analysts say.A rush to buy physical gold and jewelry in India and China helped prices bounce higher last week. But at the same time, financial investors were leaving the market.
Gold held at exchange-traded funds, which trade and store the metal on the investors’ behalf, continued to decline as investors sold their shares. In addition, Comex open interest, the number of futures contracts left open overnight without offsetting transactions, were dropping, a sign investors are moving to the sidelines………………………………………..Full Article: Source

The current gold run is not a repeat of the 1970s – WGC

Posted on 29 April 2013 by VRS  |  Email |Print

Many parallels have been drawn between current moves in gold and the events of 1971 to 1980.But, the World Gold Council argues, this recurring comparison is, “a simplistic and flawed parallel”.In the latest edition of its Gold Investor publication, the WGC says the two periods are characterized by different price performance and remarkably dissimilar fundamental drivers.
During the 1970s, the advent of fiat currencies made gold a free-floating market while private gold ownership was once again permitted in the US. During that decade, oil prices spiked and tensions in the Middle East rose, leading to hyperinflation and instability………………………………………..Full Article: Source

Is gold in a bear market?

Posted on 29 April 2013 by VRS  |  Email |Print

“The fundamentals for gold are unassailable, the long technical picture is excellent and gold remains very inexpensive when compared to almost every other alternative (most particularly, bonds, treasury bills and bank deposits). With currency debasement assured and some form of hyperinflation probable, gold should trade at several multiples of the current price before this bull market reaches its end.” John Embry, Chief Investment Strategist for Sprott Gold and Precious Minerals Fund.
Not according to my most recent interview with John Embry, (Sprott Asset Management, Chief Investment Strategist), “I am absolutely sure the gold and silver bull market has not ended. If you don’t like gold prices here, then you must like the value of paper money and you’re getting next to zero interest on it.”……………………………………….Full Article: Source

Silver price breakdown on heavy volume does not look good

Posted on 29 April 2013 by VRS  |  Email |Print

After being stuck in a tight range following its plunge about 9 trading days ago, silver finally responded to gold’s creeping advance and ‘popped’ on Thursday, but it was not that impressive and was followed by a rather negative ’spinning top’ candlestick on Friday, meaning that it could have been a 1-day wonder especially given that gold’s relief rally looks to be about done.
We can see recent action in detail on the 8-month chart below. On this chart we see that once silver crashed key support at and above $26 it plunged on very heavy turnover, which was bearish. The current minor relief rally is serving to unwind the oversold condition and thus creating the conditions for renewed decline………………………………………..Full Article: Source

Silver’s underperformance against gold

Posted on 29 April 2013 by VRS  |  Email |Print

What happened on Friday, April 12 and Monday, April 15 on gold and silver markets looked like a gigantic earthquake – a drop of about $200 (13%) for the yellow and almost $5 (18%) for the silver metal. There has been a lot of hyperbole going on. We even heard it said that a move of that scale would statistically only be expected “once every 4,776 years.”
Going even further, John Kemp of Reuters calculates that, based on a normal distribution (by the way, market returns are not normally distributed), movements like this can be expected once in every 500 million trading days, or two million years. Sounds far-fetched?……………………………………….Full Article: Source

Palladium prices may average $748/oz in 2013 & $795 2014: Barclays

Posted on 29 April 2013 by VRS  |  Email |Print

Palladium prices may average $748/oz in 2013, and rise to an annual average of $795/oz in 2014, stated London based Barclays in its recent market analysis.
“We forecast the palladium market to remain in deficit for a second year, and we do not see this as a short term phenomena. We believe this will be the start of serial annual deficits for the market,” it added.From a deficit of over 1Moz in 2012, Barclays expects the palladium market to deliver a deficit of 700koz in 2013, followed by 639koz in 2014………………………………………..Full Article: Source

Copper loses its sheen as over-supply puts market bears in driving seat

Posted on 29 April 2013 by VRS  |  Email |Print

Futures contracts in most metals traded on the London Metals Exchange spiked on Friday, rebounding from falls earlier in the week following worries over Chinese growth. Copper futures smashed through an 18-month low on Tuesday, trading below $7,000 a tonne.
Manufacturing activity in China had dipped, prompting concerns that the major driver of global growth was about to stall. Indeed, China is responsible for 40pc of global refined copper demand, so any slowdown will hit demand for the metal particularly hard………………………………………..Full Article: Source

Base Metal complex may witness short-covering in coming weeks: Deutsche Bank

Posted on 29 April 2013 by VRS  |  Email |Print

Over the next couple of weeks it appears likely that the base metals complex may see some short-covering as Chinese merchants/speculators square positions heading into holidays early next week (May Day), stated Frankfurt based Deutsche Bank (DB) in its recent market analysis.
Furthermore an exhaustion in selling by Western funds concerned about disappointing economic growth appears to have been reached.The magnitude of buying may depend partially on how CTAs respond and, of course, if there is an improvement in economic data after the recent disappointment – certainly the recent jobless claims data from the US is easing concerns………………………………………..Full Article: Source

The European ETF party has just begun

Posted on 29 April 2013 by VRS  |  Email |Print

European ETP assets are set to exceed $900bn by 2017 as regulation, wider adoption of wraps and the increasing illiquidity of fixed income products makes them more attractive investment propositions, according to analysis by BlackRock iShares.Sector assets stood at around $387bn at the start of the year, and are set to more than double over the next five years as the market plays catch up with its US counterpart.
Mark Wiedman, global head of iShares, said: “The growth of the ETP industry has much further to go. Compared to the market size of other investment vehicles in segments such as securities, mutual funds and derivatives, ETPs have huge headroom for growth, even in the more mature markets of Europe and the US. It’s a very exciting time for investors and providers alike.”……………………………………….Full Article: Source

‘ETP outflows add downside risk to gold prices; average $1,500/oz in Q4 13′

Posted on 29 April 2013 by VRS  |  Email |Print

Barclays expect gold prices to recover to an average $1,500/oz in Q4 13 but given the weight of cash negative ETP holdings, they believe downside risk still exists in the near term, and expects prices to average $1350/oz.
The key question here will be whether physical demand can continue to offset ETP outflows, which have shown no sign of slowing down. Gold ETP outflows have continued, hitting 150 tonsso far in April, bringing year-to-date outflows to 310 tonnes. This compares to net inflows of 279 tons in 2012, and outflows represent 11% of the peak holdings at the start of the year of 2767 tons………………………………………..Full Article: Source

Exchange-traded funds growing in popularity

Posted on 29 April 2013 by VRS  |  Email |Print

Sweeping changes to financial advice rules, including the banning of commissions, will fuel Australia’s ETF sector, which grew 30 per cent last year to $6.5 billion and is forecast to grow to $17 billion over the next three years.
ETFs - which are traded on the stock exchange and are designed to track a particular share index, commodity or other type of asset - have only been available in Australia for 12 years. From just one ETF in 2001 that tracked the ASX 200 index, there are now more than 90 of them investing across shares, property, cash, bonds and commodities such as gold………………………………………..Full Article: Source

Commodity futures market helped farmers: Study

Posted on 29 April 2013 by VRS  |  Email |Print

The growth of commodity futures markets in India has helped farmers in dismantling powerful trading cartels in commodities like potato and mentha oil apart from helping them in taking more broad-based decision on production, storage and marketing of farm produce, a study conducted by Tata Institute of Social Sciences in association with MCX showed.
The study which analyzed the contribution of commodity exchange ecosystem on economic development showed that commodity futures exchanges have facilitated a number of brokers, traders and producers, who are first generation economic beneficiaries of commodity markets and they have expanded their business with growing opportunities………………………………………..Full Article: Source

China’s big dilemma — Currency reform

Posted on 29 April 2013 by VRS  |  Email |Print

China’s central bank has been talking tough on currency reform while it has also intensified market intervention, highlighting the fine line it must walk in trying to liberalize the yuan.
Critics, including the United States, see the intervention as another sign that Beijing is dragging its feet in letting market forces determine the yuan’s exchange rate.But the wall of money being printed by China’s trading partners under their super-loose monetary policies is flooding emerging markets with speculative cash, which has put the yuan under strong upward pressure this year………………………………………..Full Article: Source

The world wisely edges away from talk of a currency war

Posted on 29 April 2013 by VRS  |  Email |Print

The diplomatic communiqués that follow international summits are rarely noteworthy. They have to be acceptable to everyone, so tend toward the lowest common denominator. But the Group of 20’s most recent communiqué, following its meeting on the sidelines of the spring meetings of the International Monetary Fund and World Bank, contains one sentence of consequence. “Monetary policy,” it reads, “should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks”.
The significance of this addition should not be overlooked. It means that the Bank of Japan is to be applauded, not criticised, for the aggressive asset-purchase programme it has adopted in the effort to hit its 2 per cent inflation target………………………………………..Full Article: Source

ADB president-elect Nakao: No currency union likely for Asia

Posted on 29 April 2013 by VRS  |  Email |Print

The president-elect of the Asian Development Bank, Takehiko Nakao, said a common currency isn’t desirable for Asia, drawing a clear distinction with the euro zone, to which some Asian countries have looked as a model for regional economic integration.In a press conference Friday after being elected head of the Manila-based regional development bank, former Japanese vice finance minister Nakao said Asia “is not yet at a stage to think about a currency union.”
He said he was “very skeptical” a common currency would emerge even in the future, as economic integration progresses, noting the region’s much greater internal economic, cultural and political differences than those of Europe………………………………………..Full Article: Source

Carbon tax and tight consumers help lower emissions, new report says

Posted on 29 April 2013 by VRS  |  Email |Print

The Climate Commission’s report examining escalating global action on climate change reveals emissions from electricity generation in 2012 dropped by 4.7 per cent on the previous year.
And emissions from electricity hit the lowest levels seen since 2001-02 in the last six months of last year.Coal-use is being scaled back as gas and green energy grows, with Australia nearly doubling its renewable energy capacity since 2001………………………………………..Full Article: Source

Commodity super cycle isn’t dead, emerging nations keep it alive: ETFS

Posted on 26 April 2013 by VRS  |  Email |Print

Commodity super-cycle that began in 1990’s is far from over and it will continue to be driven by resource intensive urbanisation, industrialisation in emerging countries, according to an analysis by ETF Securities Ltd. It said that analysts have shown a tendency to confuse short term correction in prices denoting end of super cycle while such cycles have to be defined over a larger time frame extending to three to four decades.
ETFS said that the world has seen four major super cycles in the past 160 years with bull cycles ranging from 30-40 years and the immediate two previous super cycles were driven by growth in USA (1870-1913) and post war Japan from 1946-1973………………………………………..Full Article: Source

ABN AMRO sees commodity prices falling further in 2013, base metals to rise

Posted on 26 April 2013 by VRS  |  Email |Print

ABN AMRO sees most commodity prices declining further for the remainder of 2013 before strengthening next year on economic recovery-led demand, according to the bank’s Quarterly Commodity Outlook published today.
The improving outlook and sentiment for the US and China will support cyclical commodities, especially base metals, in the near term. Price increases of 5-10% are predicted for aluminium, copper and zinc are predicted in the coming quarter, with nickel expected to strengthen even further………………………………………..Full Article: Source

OPEC to bolster exports on Asian demand, Oil Movements reports

Posted on 26 April 2013 by VRS  |  Email |Print

The Organization of Petroleum Exporting Countries will increase shipments by 60,000 barrels a day through to the middle of May because of rising demand in Asia, according to tanker tracker Oil Movements.
The group that supplies about 40 percent of the world’s oil will boost exports by 0.3 percent to 23.61 million barrels a day in the four weeks to May 11, the researcher said today in an e- mailed report. The figures exclude Angola and Ecuador………………………………………..Full Article: Source

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