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Commodities Briefing 05.May 2011

Posted on 05 May 2011 by VRS |  Email |Print

Richard FisherA Federal Reserve official who has been a vocal critic of the current course of monetary policy warned Wednesday central bankers must ensure surging commodity prices don’t fuel a broad-based inflation surge.

Citing a “worrisome” rise in some price classes, Federal Reserve Bank of Dallas President Richard Fisher said “as of now, the higher gas and commodities prices have not translated into more general price inflation numbers.” But he added “my gut … tells me that we must not become complacent on this front.”………………………………………Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Donald Coxe Global uncertainty about the sustainability of the runup in commodities is rippling through the markets and pounding down prices as investors worry the party might be over. Commodity prices fell Wednesday across a range of sectors from gold and silver to copper and cotton, on concerns about the sputtering U.S. economic recovery and a slowdown in demand from emerging markets as central banks move to contain inflation.

But observers aren’t quite ready to say this is the bursting of the commodity bubble……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Goldman Sachs is now saying that it’s time for commodity investors to take some money off the table, as the price cycle for oil, gold, corn and copper is getting tired. I agree with this view if you’re a short-term investor. Everything is looking tired in this market and stocks and commodities are most certainly due for a correction.

As odd as this seems, the feeling I get from the current equity market action is that investors are basically satisfied……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

The past year has seen an amazing increase in the price of commodities, and the previous week was no exception. However, recent action suggests that this latest leg up may be increasingly driven by speculation rather than macroeconomic trends. Shown below are charts of the CRB Raw Industrials Index as well as the Goldman Sachs Commodity Index.
The difference between the CRB and GSCI is that the CRB contains prices of many non-tradable commodities such as tallow and other industrial commodities whereas the GSCI is comprised of exchange-traded futures contracts……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Below we highlight our trading range charts of ten major commodities. For each chart, the green shading represents between two standard deviations above and below the commodity’s 50-day moving average. Moves above or below the green zone are considered significanly overbought or oversold.

The big commodity move so far this week has been in the silver market, where the metal has fallen from $50 to $40 over the past three days. As shown in its trading range chart, silver is still closer to the top end of its range than the bottom, which highlights just how overbought silver had gotten……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

If raising the margin requirement-or downpayment-on silver contracts helped cool speculation in the metal this week, could it do the same thing for runaway oil prices?

Silver has plunged 20 percent in recent days, in part due to the sharp increase in the amount of money investors are required to put down to buy the metal……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

The oil-market volatility unleashed by Middle East turmoil and Japan’s earthquake has been good news for commodity desks at Wall Street banks.

Banks’ first-quarter results, just released, showed commodities revenues improving even as some other trading results softened. Revenues could rise 50% from a bleak 2010 if current trends continue this year, bankers and analysts say……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

The world’s biggest oil cartel needs to start producing more crude oil to drive prices down on the energy market, the International Energy Agency said.

Oil and gasoline prices are at post-recession records because of a declining value of the U.S. dollar, a modest economic recovery and unrest in Libya, one of Africa’s top oil producers……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

As oil prices hover near two-and-a-half-year record highs, there are renewed calls for OPEC countries to boost supply to help bring down prices. But a Washington think tank argues OPEC is unlikely to budge because Saudi Arabia needs high oil prices to offset its burgeoning spending program, AFP reported.

Crude has soared past $110 a barrel, average gasoline prices are nearing $4 a gallon and heating oil is still at near record levels despite warmer weather……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

With OPEC tapped out, where will China find the oil to power future economic growth?

The obvious answer is it will take a big chunk out of the 19 million barrels the U.S. economy burns every day. And China doesn’t have to build a blue water navy or engage in an arms race to take a big slice of the U.S.’s energy pie . All it has to do is stop showing up at the U.S. Treasury auction, and Washington’s massive budget deficit will do the rest……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Silver and gold futures fell Wednesday on a newspaper report that high-profile investors, including George Soros’ hedge fund, have sold precious metals, with silver still reeling from an exchange decision to increase trading requirements.

Silver for July delivery closed lower by $3.20 an ounce, or 7.5%, at $39.39 an ounce on the Comex division of the New York Mercantile Exchange. That was the lowest close for a most-active contract since April 6……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Silver prices plunged for a third straight day, leading a broad sell-off in commodities in the wake of some weaker-than-expected economic data and indications that some big-name investors are turning away from precious metals.

Until this week, silver was one of this year’s hottest investments worldwide. On Wednesday, the near-term silver futures contract tumbled $3.19, or 7.5%, to $39.38 an ounce, the lowest price since April 4……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

This week’s rout in the silver market has commodity bulls running for cover, and everyone else wondering if those old devil speculators are manipulating the market. We’d say this is the kind of volatility you get in a financial market defined by too easy money and dollar uncertainty.

The silver price decline of nearly 20% in three days to $39.58 a troy once is certainly an attention-grabber, though perhaps less so …………………………………………Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Is investing in silver a smart thing to do now? Hi ho, Silver! Away! With the price of silver galloping along in recent months, the Lone Ranger with his silver bullets would be one rich dude today.

And that’s despite a big slide in the price of silver in the past few days. Since August of last year when sterling really began to take off, the value of the iShares Silver Trust ETF has soared some 125%, with much of that increase coming in the past three months……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Base metal prices may slide by 10%-15 % in the next two months on account of monetary tightening in Brazil , Russia , India and China, collectively known as BRIC nations. Japan, which has still not recovered from the aftermath of tsunami , has not placed orders for base metals yet which would have otherwise spurred the base metal offtake.
The emerging nations have recovered early from the 2008 recession but their central banks are trying to temper growth to rein in runaway inflation……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

China’s top-performing fund manager is favoring resource and agriculture stocks as the country’s government intensifies its fight against the worst inflation in three years amid rising commodity prices.

Oil prices may extend this year’s surge amid concerns over supply disruptions in the Middle East, while demand for fuels will increase after Japan’s worst earthquake on record spurred countries to shelve plans to develop nuclear energy, Wang Cheng, co-manager of the China Southern Long Yuan Equity Investment Fund, said in a May 3 interview from Shenzhen……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

It is important to keep the difference from security derivatives in mind when transacting in commodity derivatives, so that you are not caught unawares when you realise that you have to pay tax on income higher than your actual income, on account of the inability to set off certain losses from commodities derivatives against your other derivatives trading income.
With the boom in commodity prices worldwide, trading in commodity derivatives has attracted more and more interest, with many seeking to benefit from rising commodity prices. Is the tax treatment of commodity derivatives the same as the tax treatment of security derivatives?………………………………………Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Continued US Dollar weakness has not necessarily been met with continued bets on and hedges against further declines, warning that participation is waning as the Euro approaches the key 1.50 mark.

FX futures data shows that Non-commercial traders—typically large speculators—remain very heavily net-short the US Dollar across almost all major counterparts……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Commodities giant Glencore said on Wednesday that it has already attracted big investment, as it took the long awaited step of setting a price for the world’s biggest initial public offering so far this year.

Glencore, which valued itself at about $61 billion dollars, is aiming for a flotation on the London Stock Exchange and in Hong Kong later in May, for the first time in its 37 year history……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Glencore mania is gripping London. The company’s initial public offering is imminent and is set to be the world’s biggest this year. If it works, many more IPOs could follow, restoring London’s reputation as the international financial services centre of choice.
If it flops, it will deliver a body blow to London’s revival efforts, not to mention Glencore’s reputation as the smartest guys in the industry……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

UP to 500 millionaires will be created when the world’s largest commodity trading firm launches on the Stock Market later this month.

Biggest winner will be chief exec Ivan Glasenberg whose 16% stake in Glencore will make him the ten-billion-dollar man……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

Months after thieves hacked into traders’ accounts and stole European carbon-trading allowances worth millions of euros, uncertainty prevails.

Since the market re-opened in April after a three-month closure, traders have worried that they might end up buying stolen permits, some of which are still believed to be sloshing around the market……………………………………….Full Article: Source

Posted on 05 May 2011 by VRS |  Email |Print

If the Earth’s climate continues to see more weather and temperature volatility, new types of risk will rise to the forefront of corporate and individual concern. Investors should begin making themselves aware of some of the major threats to future economic growth and some of the industries that could be most affected.
This article will look at how the nature of insurance and risk prevention may change as various climate-based risks continue to be assessed globally by governments, corporations and individuals……………………………………….Full Article: Source

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