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Commodities Briefing 06.Oct 2010

Posted on 06 October 2010 by VRS |  Email |Print

From Morningstar.com: True, there are a lot of data pointing to the long-term benefits of commodities as a portion of a long-term portfolio. For one thing, commodities–and here I’m talking about the prices of actual, physical stuff like metals, agricultural goods, and energy products–have a relatively low correlation with the price performance of traditional asset classes like stocks and bonds.
That diversification ability, in turn, can improve a portfolio’s risk/reward profile, even though commodity prices are extraordinarily volatile in and of themselves……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Seekingalpha.com: In fact, it is well known that when commodities are rising and inflation is high, stocks tend to underperform. Once such instance is the 1970’s. From 1972 to the peak in 1980 during the Iran Oil Embargo, the CRB rose some 270%.
Meanwhile, the S&P 500 actually remained unchanged from the high of 1969 to the low of 1982. If that performance doesn’t make you cringe, nothing will. Below is a long term chart of the CRB which shows the tremendous change in value over the seventies and today’s fledgling rally……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Efinancialnews.com: The French Government has pledged to make reducing volatility in commodity and financial markets one of its top priorities when it takes the chair of the G20 next month.
French finance minister Christine Lagarde, who is already attempting to tighten EU investing rules for private equity and hedge funds, told a conference in Moscow that major discrepancies had emerged between the size of the market for physical commodities and the derivatives market……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Reuters: German Chancellor Angela Merkel threw her weight behind a French plan for tighter controls on commodity trading, deepening an alliance against financial speculators by the euro zone’s top two economic powers.
France takes over the presidency of the group of 20 of the globe’s most important economies in November and has put a regulatory clampdown on betting on everything from grain to gold at the top of the agenda for the organisation’s meetings……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From UPI: Oil market trends show a global economic recovery may be on the horizon, London’s Center for Global Energy Studies said Tuesday in its latest report on linkages between energy demand and world economy.
Citing last week’s oil price rises as an example, CGES noted that both dated Brent and WTI varieties of crude oil moved out of a $75-$80 a barrel range Friday and settled at more than the $80 a barrel mark……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Reuters: OPEC will agree next week to leave oil production targets unchanged, maintaining a policy that has helped keep prices within or close to its target range of $70 to $80 for more than a year, a Reuters poll showed on Tuesday.
“OPEC is happy with oil prices and they have no incentive to change anything,” said Leo Drollas, chief economist at the Centre for Global Energy Studies (CGES)……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Bloomberg: Abu Dhabi National Oil Co., the United Arab Emirates state-owned company, raised September oil prices for a second month ahead of next week’s meeting of the Organization of Petroleum Exporting Countries.
Murban, a high-sulfur grade, was set at a four-month high of $75.90 a barrel, up about 2 percent from August, Adnoc, as the company is known, said in an e-mailed document………………………………………Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Mineweb.co.za: A recent unofficial rare earth elements embargo by China on Japanese manufacturers over a diplomatic squabble may have been the wake-up call forcing western nations to form their own REE strategies.
The incident stemming from an altercation between a Chinese fishing boat being harassed by Japanese patrol boats resulting from a lengthy dispute of ownership of the Senkaky Islands ended up with a Chinese captain being arrested on Sept. 7 and the Chinese government demanding his freedom……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Commodityonline.com: World Steel Association has forecasted that the usage of apparent steel will increase by 13.1% in 2010 citing steady recovery in the global economies. According to WSA, steel usage will increase by 13.1% to 1272 million metric ton as compared to previous year. The forecast represents an improvement of 35 mmt over the April short range outlook for 2010 exceeding the pre-crisis peak of 1222 mmt in 2007.
Commenting, Daniel Novegil, Chairman of the world steel Economics Committee said, “Our first SRO forecast after the economic crisis in 2009 suggested 8.4% growth in steel demand in 2010. We have now revised this figure up to 13.1%”……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Reuters: Gold is all the rage as investors flee uncertain markets and worry about inflation, but some bankers to the very rich do not take a shine to the precious metal.
Gold prices have spiked 22 percent this year, with investors sending gold futures to record highs of more than $1,337 on Tuesday. The weak dollar, volatility in currency markets and deficit worries boosted demand for the metal as a safe store of value……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Resourceinvestor.com: The United States, the eurozone, the United Kingdom, Japan and other major economies may be heading into a period of competitive devaluations. Similarly, China and some of the other strong-currency countries are acting to slow revaluation of their own currencies to maintain a competitive edge in world markets.
Each country is responding to domestic political pressure to promote domestic employment and income growth – believing that exchange-rate undervaluation will boost exports, restrain imports, and support its local economy……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Mineweb.co.za: In Australian research organisation, Resource Capital Research’s (RCR) September quarter review of the gold sector, the group notes that the yellow metal has continued to set new records, recently breaking through the US$1,300/ounce level. Overall, the gold price is up around 10% since the start of the quarter, and in the last twelve months it is up by over 30%.
Since the start of 2008 RCR reckons that gold has stood head and shoulders above other major asset classes, appreciating by 55% while equity markets, the oil price, copper price (to name just a few) are still in negative territory or barely positive over that period……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Bullionvault.com: Psychologically, that $1300 level was important – it appears to have pumped more steam into the gold rally and transformed even the most dedicated gold bears into bulls. But the uptrend shows no signs of reversal anytime soon, says Jeffrey Nichols, senior economic adviser to Rosland Capital and the managing director of American Precious Metals Advisors.
A widely recognized expert in precious metals, Nichols has worked with everyone from mints to Gold Mining companies to develop financing and investor relations. He tells whether gold’s nearing bubble territory, why food prices affect gold, and why $1500 gold by year end is just the beginning……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Resourceinvestor.com: Recently, as gold has notched up new all time record after new all time record, there has been a flurry of articles claiming that gold is in a bubble. This is nothing short of ridiculous but not at all surprising. It is not surprising because humans have a habit of not recognizing what is the root cause of a change.
For example, the mother of little Johnny will tell you that the clothes she bought for Little Johnny last summer “have gotten too small for him”. In reality the clothes haven’t changed in size at all but Little Johnny got too big for them. ………………………………………Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Telegraph: The world’s wealthiest people have responded to economic worries by buying gold by the bar by the ton. The world’s wealthiest people have responded to economic worries by buying gold by the bar - and sometimes by the ton - and by moving assets out of the financial system, bankers catering to the very rich told Reuters, the news agency.
Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Mineweb.co.za: Silver is often viewed as a horse with two masters. On the one hand it is viewed as a monetary instrument and valued in the same way as gold, as an asset of last resort but, on the other hand it is viewed as an industrial metal.
In the recent past, with the advent of digital technology, one of the metal’s main industrial uses - photographic film - declined significantly while at the same time people were beginning to focus more attention on its monetary attributes, especially once silver ETFs were introduced to investors……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Bloomberg: Silver, trading near a 30-year high, may climb as much as 21 percent next year on demand for an investment that protects wealth and also may benefit from industrial usage, according to Deutsche Bank AG.
Silver has outperformed gold, global equities, Treasuries and most industrial metals this year and may peak toward the end of 2011 at $26.50 an ounce, said Daniel Brebner, an analyst at Deutsche Bank in London……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Seekingalpha.com: Exchange traded funds that deal in “poor man’s gold” have embarked on a seemingly unstoppable climb amid rising gold prices and quantitative easing in overseas economies.
The Bank of Japan’s moves early today were the most recent impetus driving silver prices higher, after the country’s central bank snapped up both gold and silver to cover bearish positions……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Reuters: Countries risk undermining the global economic recovery if they use their currencies to try to boost domestic growth, the head of the International Monetary Fund warned on Tuesday in a newspaper interview.
IMF Managing Director Dominique Strauss-Kahn made the comments ahead of the fund’s October8-10 annual meeting in which currency depreciations by governments to boost exports will be a key issue……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Businessweek.com: The concern: European leaders say the euro is too strong against China’s yuan, putting the 16 countries that share the currency at a trading disadvantage. The stronger euro makes European exports more expensive abroad.
The timimg: Three top eurozone economic officials met with China’s prime minister on Tuesday……………………………………….Full Article: Source

Posted on 06 October 2010 by VRS |  Email |Print

From Bloomberg: The Standard & Poor’s GSCI Index of 24 commodities jumped to the highest level in almost two years as corn, wheat and crude oil rose.
The index gained 1.6 percent to 556.422 at 2:23 p.m. in New York, heading for the biggest one-day rally since Sept. 1. Earlier, the measure advanced 1.7 percent to 557.066, the highest level since Oct. 7, 2008. Gold futures reached a record high, and silver touched a 30-year high……………………………………….Full Article: Source

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