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Commodities Briefing 27.Oct 2011

Posted on 27 October 2011 by VRS |  Email |Print

Gold, unlike other commodity markets, has bubble-like tendencies, the head of commodities research at Goldman Sachs told a conference in London Wednesday. Jeff Currie said the definition of a bubble is excessive price inflation driven by excess demand, a description that often defines gold.
“Gold is the one commodity that does have bubble tendencies,” Currie said. “Gold is physically held–there’s 73 million troy ounces stored against the physical gold exchange-traded funds, a success because it’s easy storage.”……………………………………….Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Unlike stocks, bonds, or soybeans, gold is an asset you can at least wear. But that’s its big problem according to Jeff Currie, Goldman Sachs’ commodities guru who is otherwise bullish on things like oil and copper.
Physical exchange traded funds hold 73 million troy ounces of gold, Currie said, making them collectively the third largest hoarders behind the euro zone and U.S. central banks………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Gold prices will be supported at higher levels until real interest rates start to rise, which is 2013 at the earliest, the head of commodities research at Goldman Sachs Group Inc. said Wednesday.
“No-one in this room can accurately predict when real interest rates will start to rise…we see the earliest time as being 2013,” Jeff Currie told a conference in London. “There’s still modest upside for gold, but we’re not jumping up and down pounding the table bulls as we have been in the past.”……………………………………….Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Central banks stopped selling Gold in the past few years and began buying the precious metal, and that trend is likely to continue for some time, according to an official at the World Gold Council.
Natalie Dempster, director of government affairs for the WGC in London, said many central banks, those in Asia and other emerging markets in particular, have been rebalancing their reserve portfolios and will continue to do so. Dempster spoke at the Argyle Executive Forum’s 2011 Investment Leadership Forum here, sponsored by the WGC………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

With Europe teetering on a knife edge gold has once again resumed its role as the custodian of safe - and perhaps sane wealth. Gold prices firmed throughout late New York trading yesterday where it breached the $1700 level. The firm tone prevailed during Asian trading hours this morning, when gold traded to a high of around $1720 before easing slightly.
Behind the move higher has been a surge in purchases of gold ETFs as well as ongoing strong demand for physical bars. The ETFs have seen 16.5 tonnes of new gold buying over the last 2 days which is driving the price upwards………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Over the past month, gold and silver have remained in a trading range. Gold had difficulties breaking through $1,700, while silver lost momentum as it rose near $33. However, recent developments such as Greece deadlocks and US debt worries have once again returned gold and silver to their rightful safe-haven status.
Gold and silver never really lost their safe-haven status per se, but traders were not treating the metals as such. Gold and silver were caught in the tide with equities………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Nickel, the second-worst performing metal on the London Metals Exchange in the past six months, is set to rebound as Chinese steelmakers lead a recovery in demand.
Nickel’s 20 percent slump this year has made it cheaper than pig iron, a substitute made from low-grade ore from Indonesia and the Philippines. Nickel, used to strengthen stainless steel in everything from kitchen sinks to aircraft- fuel tanks, may rise 16 percent next year as mills boost purchases, Societe Generale SA said………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Options traders are snapping up protection against declines in agricultural stocks at the fastest rate in four years, locking in gains after a security that tracks the industry rallied the most since 2009.
Puts to sell the Market Vectors Agribusiness exchange- traded fund outnumber calls 2.1-to-1, the widest gap in almost a year, according to data compiled by Bloomberg. The ratio has jumped from 0.74 on Oct. 14 for the biggest increase since January 2008, the data show………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Although gold and silver attract most of the headlines, investors can also choose from among exchange traded funds tracking other precious metals, including platinum.
Platinum can perform differently from gold because it is also an industrial metal used for catalytic converters and automobiles, as well as in jewelry and other luxury items. This opens up its ability to prosper once consumers begin to spend again………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Sweeping macroeconomic turmoil and looming market doubts have created a treacherous environment for commodity investors over the past few months. While the risk of an upheaval remains present, as we have seen in recent days, the fog may be lifting on hard assets.
At the start of the week, industrial giant Caterpillar injected a welcomed dose of confidence into commodities. The firm noted that its mining branch had been a major contributor to its analyst-beating quarterly earnings numbers……………………………………….Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Commodity investments as a whole lost assets during the last two quarters but commodity ETPs held up with $2.8bn of inflows, according to Barclays Capital.
This is the first consecutive fall in commodity investments since 2008; during the third quarter assets fell from $408bn to $393bn, with index swaps bearing the brunt, losing $5bn. Flows across the sector were flat………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

When it comes to commodities, there are two factors that dictate prices. The first factor is the underlying demand for the commodity, which can exceed or lag relative supply.
The second factor is the technical picture, which is in focus for global investment-bank desks, which simply respond to the direction of a price of a commodity while paying little attention to the fundamental forces in place………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Chances are, you’ve never heard of a company named Vitol. It rarely makes a headline, yet it plays a larger role in the oil market than Exxon, and its annual sales last year were twice as strong as Apple’s.
… and it just got a lock on the Libyan oil market. How do you invest in this company? You can’t… it’s owned by just 330 share-holding employees. They are very rich………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

While the global commodity markets turned considerably lower during the third quarter of 2011, we do not believe that a sustained drop in commodity prices is likely.
Worldwide demographic trends will continue to place supply pressures on several commodity types, notably food and energy, while increased market volatility will likely result in continued investor appetites for precious metals………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Frankfurt-based Deutsche Bank (DB) – Germany’s largest bank – has turned into one of the biggest players in commodities markets in recent years. Their latest financial results show record-beating performance, with DB reporting its best ever third quarter in commodities trading in the company’s history.
Other major market players, however, suffered heavy losses from the sharpest downturn in commodity prices since the outbreak of the global financial crisis in 2008. DB expects commodity prices to remain strong for the rest of this year………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Currency-trading strategies are losing the most in two decades as the volatility that’s boosted volume and profits for investment banks erodes the ability of investors to make money.
Three out of four Royal Bank of Scotland Group Plc indexes of foreign-exchange trading strategies are down this year, including a 2.7 percent drop through September for its carry trade index. Deutsche Bank AG’s dollar-denominated Currency Returns Index has fallen 3.4 percent, the biggest drop since a 4 percent slide in 1991………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

China said that rapid yuan appreciation in the near term is out of the question as it would harm China’s economic growth, in one of the strongest responses yet to U.S. pressure for a faster rise in the currency.
The comments by a spokeswoman for the Ministry of Foreign Affairs on Wednesday reflect China’s growing anxiety as its domestic economy slows and demand for its exports is threatened by economic stagnation in Europe and the U.S. ……………………………………….Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

The economies of oil exporting countries in the Middle East and North Africa, excluding Libya, are expected to expand by 4.9% in 2011 due to higher oil prices and production but the risk of a sharp slowdown in the US and Europe could lead to slower global oil demand in 2012 and a sustained drop in oil prices, the IMF said in a regional report Wednesday.
“Economic activity in the MENAP oil-exporting countries, along with their fiscal and external situations, has clearly improved, underpinned by high energy prices,” the IMF said. “Real GDP growth is expected to pick up in 2011 — to almost 5% — then moderate to about 4% in 2012.”……………………………………….Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

Iraq will ask to rejoin OPEC’s quota system for crude output in 2014 as the holder of the world’s fifth-largest oil reserves boosts production from an average of 2.9 million barrels a day.
The country aims to increase output to 3.4 million barrels a day next year and 4.5 million barrels a day in 2013, Falah al- Amri, director of the State Oil Marketing Organization, said today. Iraq is exporting an average of 2.2 million barrels a day this month and earning an average price of $104 a barrel, he said in an interview in the southern city of Basra………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

The coal industry has certainly contributed to Australia’s wealth, but like heroin destroys addicts and those around them, our coal buzz is helping to destroy the environment that supports us and rehab will be a costly affair.
According to a 134 page report from the International Energy Agency (IEA) entitled “CO2 Emissions From Fuel Combustion” (PDF), Australia’s coal and peat related emissions grew from 73.2 million tonnes in 1970 to 220.9 million tonnes in 2009. For the period 1990 to 2009, the emissions belched by the burning of coal and peat (the latter a minor component in Australia) jumped 61%………………………………………..Full Article: Source

Posted on 27 October 2011 by VRS |  Email |Print

The decrease in the amount of global carbon dioxide emissions declined because of the economic meltdown, but don’t expect a trend, the International Energy Agency, IEA, said from Paris.
The IEA announced Monday that in 2009 the global economic recession led to the first decline in carbon dioxide emissions since 1990. The IEA added, however, that it expected a large rebound in CO2 emissions when it reviews records from 2010, when the global economy showed signs of recovery………………………………………..Full Article: Source

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