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Commodities Briefing 02.May 2011

Posted on 02 May 2011 by VRS |  Email |Print

Ben S. BernankeCommodities beat stocks, bonds and the dollar for a fifth straight month, the longest stretch in at least 14 years, as demand for raw materials increases with expanding economies and Federal Reserve promises to boost growth.
The Standard & Poor’s GSCI Total Return Index of 24 commodities climbed 4.4 percent in April, after reaching the highest level since October 2008……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

The months-long rally in commodity prices has sparked fears it could ignite inflation or cripple consumer spending. But a surprising trend is now sweeping the markets for some key materials: Prices are falling.
Goods from cotton to zinc that were highfliers late last year have turned into laggards in recent weeks. Several have logged double-digit-percentage declines in futures markets……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

There’s a lot of chatter about the market’s current state. Consensus seems to be hewing toward an overvalued view. Geopolitics and inflation are fog makers that obscure visibility at best and, at worst, add volatility to May’s passage.
As if such fundamental concerns weren’t enough, the adherents of the adage of selling in May are cropping up on seasonal cue……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

They’ve already been bashed over high pay, tax avoidance and complex derivatives that helped cause the financial crisis. Now banks are under the spotlight over their agricultural trading.
The banks have been here before, but pressure is growing once again as observers become increasingly worried about rising food prices and food shortages……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

You know the feeling, you have $3 trillion in foreign currency burning a hole in your pocket and you are itching to spend. But on what? A mountain of gold, a sea of oil or a pile of paper?
So far China has chosen paper, especially in the form of U.S treasury bills. But comments this week by China’s central bank chief that the country’s foreign exchange reserves exceed reasonable requirements, and local media reports that Beijing was considering setting up investment funds in energy and precious metals, again raise the question about what the country can do with its money……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Soaring commodity prices are unsustainable and Rio Tinto will maintain a very strong balance sheet to insulate it from any future volatility in global markets, according to the mining giant’s chairman, Jan du Plessis.
In frank comments on the fevered speculation hitting base metal prices, Mr du Plessis told The Australian he expected current record iron ore and copper prices to fall, despite Rio’s confidence in continued strong demand from China and India……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Although there was a slight fall towards the middle of the month but it was short lived and the average for April is almost $118 a barrel. The year-to-date average is close to $101 a barrel compared to the average for 2010 of $77.45.
The Opec Secretariat finally accepted the fact that its oil demand estimate for 2010 and forecast for 2011 are in fact under-estimates……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Gold is up by 7.6% for the year till date and for the year of 2010, gold ended higher by 30% that saw a decade of gold rally (on an annual basis) culminating in another one. Let us see the eight factors driving up the gold prices:
Near-zero interest rates in US: On last Wednesday when Federal Reserve decided to keep the interest rates in a range of zero to 0.25%, gold prices rose higher. The said interest rate range has been maintained since December 2008………………………………………Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Gold might hold pride of place among precious metals but there is lots to like about its shiny sidekick. Bully for bullion but silver is where the real money is. Even if you feel the pinch after next week’s budget, whatever you do, hang on to the family silverware.
While gold is going gangbusters, breaking all records except its own personal best, it hasn’t done too well in Australian dollars……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Silver prices for July delivery surged $1.058, or 2.2 percent, to $48.599 an ounce. Silver prices have risen 5.5 percent this week and 57.1 percent in 2011.
China said its net imports of silver nearly quadrupled to more than 3,500 metric tons in 2010, boosted by sharp increases in demand by the industrial sector and the jewelry industry……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Readers of the investment press may have noticed in recent weeks a sharp increase in the number of articles that use the phrase ‘ silver lining’. However, most of these articles are not saying the obvious thing - that every cloud has a silver lining. Instead, they are saying that every silver lining has a cloud; or that silver has a cloudy lining.
Or something along those lines. It’s quite amazing the way interest in silver investing has increased. Or, maybe, it’s not so amazing after all……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Silver attempted to take out 50 on Monday of this week and instead had a big reversal day as it temporarily ran out of gas. Then after testing 45 the following day silver has moved higher after the Bernanke press conference and is once again approaching 50.
For the very short term silver appears to be trapped in the 45/50 box and is awaiting a break either above or below this box……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

The biggest surprise in the commodity market this year is the continuous rally in silver prices. A rally that defies all logic and rationale. Silver was trading at about Rs 29,000 per kg in July 2010. It crossed Rs 75,000 this month giving a return of 159 per cent.
Gold, on the other hand, gave a return of about 18 per cent in the same period. In 2010, silver went up by 84 per cent while last one month saw 25 per cent appreciation in its prices……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Undisciplined production behaviour in the market caused a significant surplus in zinc, but the surge in prices has hitherto successfully managed to dodge the oversupply. This clearly points out to the conspicuous gap between the underlying fundamentals and the current price level.
Current prices of zinc still render mining lucrative and have kept the production line not only active but also rising……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Question: When should a passive investment be anything but a passive investment? Answer: When it’s a synthetic exchange traded product (ETP) investing in commodities.
The market for commodities exchange traded funds (ETFs) and indeed all ETPs has mushroomed, as commodity prices have broken records. Gold makes up the vast majority of sales……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

In the world of fund management, it is a debate that refuses to go away – should passive investors stick with traditional mutual fund trackers or are they better served by opting for an exchange traded fund?
On the face of it, these products are pretty similar. Both offer investors a way of tracking specific indices, which has become an increasingly popular option for those that have lost faith and money with active managers……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

The Baltic Exchange’s main sea freight index, which tracks rates to ship dry commodities, rose for the second day on Thursday helped by modest iron ore sales to China.
The index rose 0.79 percent or 10 points to 1,269 points. Prior to the first gain on Wednesday, the index had fallen for 19 straight sessions. Brokers said iron ore and coal sales to China this week had boosted activity……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Americans’ cheap money spigot remains open and the flow is as fast as ever, meaning the world had better brace for even higher oil, metals and food prices and a weaker dollar.
The clear message from Federal Reserve Chairman Ben Bernanke on Wednesday was that the U.S. central bank intends to keep interest rates exceptionally low and monetary policy very easy as it continues to try to inflate the U.S. economy back to health……………………………………….Full Article: Source

Posted on 02 May 2011 by VRS |  Email |Print

Statements by Chairman Ben Bernanke on April 27 shouldn’t have surprised investors. Following the Federal Reserve’s press conference, the Fear Trade continued full speed ahead. Gold hit a new high while the dollar fell further.
As gold investors know, the metal has historically been negatively correlated with the dollar, meaning when the greenback is weak, gold tends to be strong. That correlation is reaching an extreme, widening substantially over the last year……………………………………….Full Article: Source

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