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Commodities Briefing 03.Oct 2011

Posted on 03 October 2011 by VRS |  Email |Print

Paul SimonRecent years have demonstrated how Chinese demand can buoy commodity prices even in a stormy world. But recent days showed how raw-material markets can react if investors think China’s ship could be listing, too.
With just over two weeks left in the third quarter, the DJ-UBS commodity index was in positive territory for the period, despite concern about Europe’s sovereign-debt problems and mounting fears of another recession in the U.S……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

India’s commodity exchanges are poised for steady growth over the next few years after annual turnover more than quintupled to $2.5 trillion since futures trading started in 2003, but political hurdles hinder more dramatic development.
While a bill to strengthen market oversight and free up entry of financial institutions and the launch of new products has hung fire since 2005, government moves such as bans on some agricultural futures trading have fed regulatory uncertainty……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

New Zealand commodity prices fell for a fourth straight month in September as demand for locally produced raw materials comes off its record highs amid signs of a global economic slowdown.
The ANZ Commodity Price Index fell 1.3 per cent to 299.8, and has shed 4 per cent since a peak in May. Still, it’s gained 17 per cent in the past 12 months on burgeoning demand in Asia for raw materials. Of the 17 commodities measured, 10 fell, three gained and four were unchanged in September……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

When Dr. Copper (CU), the only commodity with a PhD in economics, suddenly collapses from a heart attack, risk takers everywhere have to sit up and take notice. Since the July top, the red metal has collapsed a shocking 31%.
So called because of its uncanny ability to predict the future of the global economy, copper is warning of dire things to come. The price drop suggests that the great Chinese economic miracle is coming to an end, or is at least facing a substantial slowdown……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

A sharp and unexpected appreciation in the price of an asset attracts an investor’s attention. At present, gold is at the centre of such attention.
As a rule, the higher the frenzy based on past performance, the greater the risk to the investor. If you are unable to hold your urge to jump in, the ironical implication is that you should be cautious rather than optimistic……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Gold might still reach the $2000 mark despite suffering its largest three-day price drop in 28 years this week.
After an incredible run since January, which culminated in a record level of $1900 an ounce at the start of September, the gold price momentarily dropped to below $1600 this week, raising fears that the gold bubble has burst……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Bank of America Merrill Lynch said on Thursday it maintained its 12-month gold price target of $2,000 per ounce set in August, even after the recent correction in prices.
“It is worth noting that falling quotations were not accompanied by substantial outflows from physically backed exchange traded funds particularly in recent days. Hence, the correction was not necessarily driven by a broad-based reassessment of fundamentals,” the investment bank said in a note to clients……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Gold prices will likely average $2,025 a troy ounce in 2012 as investors are expected to continue to rush to safe-haven assets amid continuing concerns over the health of the euro-zone economy, Paul Bloxham, HSBC’s chief economist (Australia and New Zealand), said.
However, prices will likely ease over the next five years to $1,500/oz levels as fundamentals take over from global financial concerns, he said on the sidelines of HSBC’s Global Natural Resources Conference……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Last week, gold saw a three-day drop and even slipped below $1,600 an ounce - a pretty long fall from its record $1,921.15 on Sept. 6. Does that mean the gold rush is over? Not necessarily, some analysts say.
“When the market gets very panicky, they sell everything off, and they go for cash and Treasuries because that’s really the largest market where you can park your money,” Gijsbert Groenewegen, a partner at Silver Arrow Capital Management, told Bloomberg News. “It’s a great opportunity to accumulate more gold and silver.”………………………………………Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

While the current global macro-economic picture still provides good reasons for higher gold prices, there are perhaps a few other factors at play that are worth considering.
Gold fell over $100 last Friday, Monday continued the carnage and, while the precious metal has regained some ground since, it is still on track for an 11% decline for the week. The question now on analysts’ minds is, where to from here?………………………………………Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

We have been around world financial markets, including gold, for more than 40 years watching the gold price move from $42 per ounce through what we are seeing today. More importantly we’ve seen why the gold price has moved over these decades and fully understand the monetary history and role of gold.
The events of the last three years have interrupted the currency experiment that used paper notes not redeemable either in gold or in anything else except more paper notes. Right now we’re watching the most recent experiment……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

With turbulence continuing, global commodity markets registered yet another week of volatile conditions and generally weakening prices in the wake of unsettled macroeconomic conditions, worsening sentiment and choppy external markets.
In particular, the unresolved euro area debt crisis continues to pressure markets and macroeconomic sentiment. The market is unsure whether the world will face a mere slowdown or something worse……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

First off, you say that there’s enough money, but I think that a lack of money is the primary concern. The European Financial Stability Fund has something like €440B in committed capital and the members haven’t agreed upon future funding requirements.
Also, the European Central Bank (ECB) itself only has €10B. If you compare that to the three largest banks in France, for example, they own roughly $600B in PIGS (Portugal, Ireland, Greece, and Spain)-related debt. You can see how imbalanced the system is and how undercapitalized some of these organizations are that are meant to be the solution……………………………………….Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Silver and copper have recently been going through their own private bear markets. Since the open on September 1st, silver futures have sold off by more than 25%. During the same time frame, copper futures sold off by around 24%. Both metals are extremely oversold, but lower prices are still possible.
Are the bear markets in copper and silver an attempt to warn market participants that slower economic condition are ahead? Are equities going to take a huge hit on slower future growth………………………………………Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Global oil demand is balanced with supply, said officials from OPEC’s two largest producers Saudi Arabia and Iran, as the group evaluates the outlook for economic growth and the return of Libyan output.
Markets are “stable and in balance,” Saudi Arabian Oil Minister Ali Al-Naimi was cited by Asharq Al-Awsat newspaper as saying yesterday in Riyadh. “The kingdom is ready to play a positive role to ensure the stability of the market.”………………………………………Full Article: Source

Posted on 03 October 2011 by VRS |  Email |Print

Few weeks ago this column said that nothing will affect oil market development as much as the evolution of the global economic situation.
This has become very clear in the last month when the perception of economic and financial development turned more to the negative and the IMF warned recently that “the global economy is in a dangerous new phase”……………………………………….Full Article: Source

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