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Commodities Briefing 25.May 2011

Posted on 25 May 2011 by VRS |  Email |Print

Jeffrey CurrieOil jumps to $111 a barrel after commodities specialist Jeffrey Currie says recent price falls have made oil, copper and zinc more attractive investments. The oil price jumped on Tuesday after Goldman Sachs called the bottom of the commodities market – just six weeks after calling the top.
Commodities prices have fallen by an average of 10% since Goldman commodities specialist Jeffrey Currie declared that in the near term, the rewards of holding raw materials such as oil, copper, platinum and cotton no longer outweighed the risks……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Having last month prompted a sell-off in mining shares after calling the top of the commodities boom, Goldman Sachs had the opposite effect on Tuesday after decreeing it was once again time to go long.
Analysts said in April - just as commodities trading giant, Glencore International, was preparing to float - that it was time to take profits in raw materials such as copper. But, this was a short-term view and given the recent slide in commodity prices, Goldman is now turning “more bullish”……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

A rising tide lifted all boats, but the recent fall in commodities prices has been far from uniform. The 10% drop in the S&P Goldman Sachs Commodity Index this month, as of late Tuesday in Europe, masks a wide divergence in underlying prices, with silver off 26% and corn down just 2.8%.
After years of seeing close correlation in commodity prices, investors need to become more discerning……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

The latest sell off in commodities did lead the investors to reconsider the commodity Bull Run owing to the intensity of the selling pressure and the dismal economic picture in the background.
In spite of the selling pressure, firms such as Goldman Sachs, Morgan Stanley and JP Morgan all foresee a recovery and maybe even a rally……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Britain’s top shares advanced on Tuesday, as a bounceback in commodity stocks helped the index claw back some of the previous session’s sharp falls.
“I think there’s an awful lot of nervousness out there, a lot of unknowns on the road ahead, and it’s going to be pretty rocky,” Martin Dobson, head of trading at Westhouse Securities, said……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

The European Union’s executive will propose powers to cap trading by big investors to control speculation on commodities, the bloc’s official in charge of financial reform said on Tuesday.
Speaking in the European Parliament, Michel Barnier said he wanted new rules to tackle speculation in derivatives, which has been blamed for the spiraling cost of grain and other commodities……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries is unlikely to increase crude production quotas at its June 8 meeting, said Richard Jones, deputy executive director of the International Energy Agency.
“I would be skeptical,” he said today at a press conference in Brussels. “Knowing OPEC politics, it would be difficult to make a decision in June.”………………………………………Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Merger and acquisition activity in metals mining kept on track in the first quarter of 2011, boosted by stronger balance sheets and better credit availability, PwC said in a quarterly report.
There were 26 deals with value greater than $50 million in the metals mining industry in the first quarter of 2011, the same number as last quarter and two more than in the same period of 2010. The 26 deals accounted for $12.9 billion in total deal value, up from $6.3 billion in the same period last year……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

We’re all well aware by now that the world is facing a copper supply deficit. The price of the metal rose 30 percent in 2010. Meanwhile, London Metal Exchange (LME) copper inventories fell 25 percent – below what the world consumes in a single month.
Of course, the usual suspects are to blame: booming growth in the emerging and developing worlds. But the tight supply situation means there are plenty of opportunities for investors……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Analysts at Goldman Sachs raised their views on oil and industrial metals on Tuesday, suggesting it’s time to revive long positions in copper.
Supporting fundamental views are “signs that Chinese metal demand has already returned with the SHFE-LME copper arb opening again, exchange inventories declining and the Shanghai copper forward curve moving into backwardation,” the Goldman note added……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

The Office of Fair Trading is considering an investigation into whether the market for metals trading is anti-competitive after MPs raised concerns that many of the warehouses used in the industry were owned by big commodities traders.
As part of an investigation into strategically important metals, the Commons science and technology committee learned that four large metals traders also ran warehouses, raising fears they could gain an unfair advantage through access to sensitive information about the activities of rival traders……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

When gold prices were pushing through $1,000 an ounce back in 2009, some folks were looking at other precious metals to see if they could get a better bang for their buck.
Lots of eyes turned to platinum. I wrote a report on platinum back after my trip to South Africa. “White gold” is extremely rare, and yet it’s used in a lot of key industries. In fact, the Department of Defense lists platinum as a strategic precious metal……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

During the last few weeks the price of gold has been consolidating between $1475 an ounce and $1525 an ounce. Yet, with all the current turmoil in the financial markets, it seems totally undervalued.
On Monday May 16, the United States hit its $14.3 trillion borrowing limit. Treasury Secretary Timothy Geithner told Congress that issuing $72 billion in bonds and notes would push the deficit to its legal cap and he would have to suspend deposits into federal pension funds to free up room for more borrowing……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Numerous commentaries in the media, both on television and in print, would have us believe that gold is a bad investment. Headlines warning investors to avoid the yellow metal are commonplace.
Examples such as “Five reasons not to own gold,” “Gold is in a bubble,” “Gold as an investment - think again,” “Gold is a bad hedge,” “Gold is a pointless rock,” and “Why gold is a bad investment” can be found with a simple Google search on gold and investment……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

During the last few weeks the price of gold has been consolidating between $1475 an ounce and $1525 an ounce. Yet, with all the current turmoil in the financial markets, it seems totally undervalued.
On Monday May 16, the United States hit its $14.3 trillion borrowing limit. Treasury Secretary Timothy Geithner told Congress that issuing $72 billion in bonds and notes would push the deficit to its legal cap and he would have to suspend deposits into federal pension funds to free up room for more borrowing……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

If you were holding portfolio investments in silver in the first few weeks of May, it didn’t feel like a silver lining. The white metal plunged in price nearly 30 percent in just two weeks of trading - after a spectacular run-up earlier this year.
So, could silver be set for a rebound? First of all, why should there be excitement over silver, the cheaper cousin to gold? Michael Purves, chief market strategist and head of derivatives research at BGC Financial, explains that silver’s price correlates closely with gold, although not with base metals or other commodities……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

The price of gold is dominated by investment/monetary demand to such an extent that nothing else matters as far as gold’s intermediate- and long-term price performance is concerned. Investment/monetary demand is probably also the most important driver of silver’s price trend, although in silver’s case industrial demand is also important.
In addition, changes in mine supply have some effect on the silver market, because unlike the situation in the gold market the annual supply of newly-mined silver is not trivial relative to the existing aboveground supply of the metal……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

While neither side can claim victory yet, the battle between bulls and bears raging in the precious metals market has shifted notably in favor of the former. Key support levels continued to hold last week, while renewed sovereign debt worries acted as a fear-based catalyst to support the sector.
Importantly, gold and silver were able to rally, despite a surge in the U.S. dollar and declines in other commodity markets. But their performance hasn’t been even. Gold continues to outperform silver, as investors liquidated proportionally more of their positions in the white metal last week……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Commodity exchange traded funds have experienced outflows so far in the second quarter, while precious metals such as silver and gold have contributed to the sector’s volatility. Although volatility levels are higher than usual, some experts say the long-term trends for precious metals remain set in place.
Is a commodities bubble about to burst? Analysts say no, but Michael Kahn for Barron’s reports that the easy money in selling silver and gold has already been made……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

ETFs can be simple, flexible replacements for mutual funds, thanks to their ease of trading. However, they may not always be appropriate for mining particular sectors.
For one thing, says Pat Chiefalo, director of derivatives and structured products at National Bank Financial Markets, “I think the market is split. There are certainly advisors that have over the years built their books on mutual funds or whatever types of products that they use………………………………………Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Price hikes resulting from the increased cost of food are challenging restaurateurs and consumers alike. Manhattan restaurant Mario Batali’s Del Posto is charging 21 percent more per meal since October, and similarly Gordon Ramsay at The London is charging sixty-nine percent more since last month, as reported by Bloomberg food critic Ryan Sutton.
Worse still, some believe that inflation has gone under-reported. Under a calculation used prior to the Boskin Commission’s 1996 reworking of the CPI formula, inflation would be much higher……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Recent depreciation in regional currencies was sparked by renewed concerns about sovereign debt in Europe, says Prasarn Trairatvorakul, the governor of the Bank of Thailand.
The decision by Standard & Poor’s to downgrade its outlook on Italy’s sovereign credit rating from stable to negative has caused anxiety that it could follow Greece, Portugal and Ireland into a debt crisis……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Latin American currencies strengthened on Tuesday, led by Brazil’s real and Mexico’s peso, after stronger-than-expected economic confidence data in Germany, the world’s fourth-largest economy.
The data lifted oil, copper, coffee and other commodities, the backbone of many Latin American economies, following yesterday’s declines. That gave further support to the region’s currencies……………………………………….Full Article: Source

Posted on 25 May 2011 by VRS |  Email |Print

Global demand for coffee is set to keep climbing, and even a doubling in the cost of the commodity over the last 12 months has failed to quench consumers’ thirst. Faster paced lifestyles in China and other Asian economies where economic growth has been strong have helped to keep consumption firmly on an upward path.
The International Coffee Organisation estimates that global coffee consumption rose 2.4% to a record 134.0 million 60kg bags in 2010 and it sees the upward trend continuing despite the rise in prices……………………………………….Full Article: Source

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