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Commodities Briefing 31.Mar 2011

Posted on 31 March 2011 by VRS |  Email |Print

The global macro environment in the first quarter of this year has been a “tug of war” between attractive economic momentum and reasonable evaluations versus a growing list of risks such as oil prices, European sovereign credits and natural disasters. On a global basis, risk assets such as equities and commodities have continued to perform well as the economic momentum trumped the growing concerns.

Geographically, we saw Asian stocks and developed markets (DM) start the year with healthy performance. As the double-dip fears eased and the recovery strengthen in the developed markets investors became more willing to accept equity risks………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Frank HolmesGiven the specter of inflation and the need to rebuild Japan in the wake of the quake and tsunami, investors are going wild over commodities these days. And that interest is leading many average retail investors to ask the question: What’s the best way to hop on this train?

For some, the best way to take advantage of these trends is to buy single-commodity exchange-traded funds or exchange-traded notes, from which there are plenty to choose……………………………………..Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Following the crash of 2008, the broad commodities space went on an upward tear. Since the end of February 2009, the Dow Jones UBS Commodity Index gained 59.3%. During the same period, investor interest in the space has increased dramatically as assets to (non-equity-based) commodity-focused exchange-traded products increased by nearly 278%.
In a historical context, a broadly based commodities position has been found, within a well-diversified portfolio, to provide the benefits of inflationary hedging and diversification away from the correlation of traditional asset classes………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Why would anyone pay more for precious metals than they’re worth? That’s the mystery confronting investors looking at several closed-end bullion funds that now change hands well above the market value of the assets they hold.
Unlike mutual funds or exchange-traded funds, closed-end funds issue only a limited number of shares (hence the “closed-end” label). Because their share price is determined by investors’ enthusiasm, rather than being tied to the value of the underlying assets, it’s not unusual for closed-end funds that invest in stocks or bonds to stray from their NAV………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Commodity prices are currently surging. We have heard about oil prices and precious metals, but commodities are up broadly as the following charts show (click on each to enlarge). The question I have in looking at them is this: Are prices peaking?

First, a word on commodity indexes. There are different indexes we can use to look at commodities. Many use the Commodity Research Board (CRB) Index, but that can be misleading because the CRB is heavily-weighted to energy………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Investors remain bullish on commodities with more than half increasing their commodity allocation over the next 12 months, according to Barclays Capital’s annual survey of institutional investors.

The survey, which was conducted as the Japanese nuclear crisis and Middle East unrest unfolded, revealed that 85 percent of investors expect flows to be at or above last year’s levels and almost half are seeking returns of over 10 percent………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Crude oil prices are volatile right now, amid crosscurrents, conflicting fundamentals, and dealing with “the unknown.” For crude futures, this is currently the normal environment in which we traders attempt to determine the future price of oil. One could easily make a bullish case or a bearish case for crude oil prices , each certainly with profound investment ramifications. But which is the more compelling argument now?

The bull case is centered around crude oil supply. There is only so much supply available to the world on a daily basis in the “perfect” scenario; currently about 86 to 87 million barrels per day………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

The International Energy Agency has said it expects OPEC’s oil export revenues to hit one trillion dollars this year, that is 710 billion euros. IEA Chief Economist Fatih Birol said in an interview with the Financial Times the one trillion dollar figure is based on crude prices staying above $100 a barrel.

The IEA, which monitors energy for the world’s richest countries, said the total amount of oil exported by OPEC this year will be slightly lower than in 2008 when it received 990 billion dollars. Lower crude prices pulled its revenue down to 571 billion dollars in 2009. In 2010 it was 750 billion dollars………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

The volatility switch has flipped in the energy sector, creating opportunities for investors ready to buy at increasingly attractive entry points. With gasoline approaching $4 a gallon at the pump, and crude oil $100-plus a barrel, most U.S. investors would be wise to hedge that rise with an overweight position in energy.

Jeff Saut, chief investment strategist at Raymond James, has been overweight energy for most of the last decade and says higher prices are here to stay………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Russia’s Federal Atomic Energy Agency (Rosatom) and Kazakhstan’s uranium producer Kazatomprom signed a memorandum of intent to cooperate in the production and sales of rare earth metals, the market for which is squeezed by Chinese export restrictions, Sergei Kiriyenko, head of Russia’s Federal Atomic Energy Agency (Rosatom), said on Wednesday.

“Our estimates show there are good opportunities to take rather an influential share on the rare earth metals market,” Kiriyenko said………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

It was on a dark and stormy night in 1752 when Ben Franklin took his kite out to snag lightning from the sky and prove that it’s a stream of electrified air. It led to his invention of the lightning rod as a means to protect people, buildings and ships against this dangerous force of nature. Ben’s experiment took courage. It also took appreciation of what he was dealing with and wisdom enough to do it safely. In short, he was prepared-and his preparation paid off.

Fast-forward 259 years. Rick Rule, the widely known and well-respected founder of Global Resource Investments (GRI), tells investors that such qualities will serve them well over the next year or two, as markets become ever more turbulent………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Here is a simple question for you: which would you rather buy right now, gold or silver? Gold has incredible amounts of emotional baggage attached to it, while silver is in a different league - at least for the moment. This video will show you two indicators that can help you capture either market when and if the upward trend decides to resume.
With all of the world’s troubles, there are plenty of reasons why one would think that both of these markets should be much higher. The question is, why aren’t they? I think that the video you’re about to watch will help answer some of those questions………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Portugal’s prime minister has resigned, a new political regime looks imminent in Libya and Japan’s coastline seems to have shifted as much as four metres to the east.

But, while the world has changed dramatically in the last few months, it seems for many commentators, the foundations underlying the continued growth in gold prices over the last decade have not………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

After seemingly losing interest in 2010, investors have resumed pouring money into commodity ETFs in 2011. Both broad-based basket funds and resource specific products have grown as these products have come back into style.

Precious metals have without a doubt been the hottest corner of the commodity ETF market, as investors have embraced the exchange-traded structure as an efficient means of accessing an asset class that has the potential to act as both an inflation hedge and a safe haven………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Commodity mutual funds have performed better than their equity peers in the past few months thanks to rising commodity prices. However, most of the funds are global in nature and has provided up to 18% returns in the past six months even as equity funds lagged behind.

Most of the mutual funds in this sector invest in commodity stocks that have benefitted in recent times due to surge in commodity prices. This includes the likes of Monsanto, Posco, Tata Steel, Exxon Mobil, Arcelor Mittal or Rio Tinto………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

Multi Commodity Exchange (MCX) is set to file the draft red herring prospectus (DRHP) with Securities and Exchange Board of India (SEBI) by Friday, an official of India’s largest commodity exchange has said.

The Jignesh Shah-promoted MCX is reportedly planning to get the exchange listed. This is its second attempt after the initial plan was postponed in 2008 following adverse market conditions. “In all likelihood, we will file the DRHP by March 31,” the official said………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

India’s commodity futures trading volumes have surged fast enough to increase the profitability of the commodity exchanges, but is that enough to attract instituitional interest in the bourses? Not necessarily.

Both Multi-Commodity Exchange of India (MCX), India’s largest bourse and National Commodity Exchange of India (NMCE), India’s first national level electronic bourse to commence trading in 2003, have been given more time to comply with a legal directive to bring down anchor investor stakes to 26% of the paid up capital………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

The Canadian dollar is firmer Wednesday morning and is approaching the multi-year highs touched earlier this month as commodity currencies in general strengthen. The U.S. dollar is at C$0.9704 from C$0.9747 late Tuesday, according to data provider CQG. It dipped to a low at C$0.9685, its lowest level since March 10, in earlier trading.

Traders said the move was supported by buying of the Canadian dollar against Japanese yen. The Canadian unit reached a session high of Y85.80, its highest level since July 2010………………………………………Full Article: Source

Posted on 31 March 2011 by VRS |  Email |Print

In Beijing China made a major step towards greater emissions reduction by conducting the first transaction under its own domestic “Panda Standard” for carbon trading.

Franshion Properties, a leading Chinese real estate developer, bought 17,000 tons of carbon credit on the Beijing Environmental Exchange. Sources said the deal was worth about $150,000; funds which will go into a project for planting thousands of hectares of carbon-absorbing bamboo in the province of Yunnan………………………………………Full Article: Source

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