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Commodities Briefing 28.Oct 2011

Posted on 28 October 2011 by VRS |  Email |Print

As U.S. stocks extended gains Thursday with the Dow Jones industrial average surging some 300 points, commodities rallied, too, with gold rising 1.5 percent.
“We’re seeing a disconnect from the old relationship of equities down, gold up,” said Rich Ilczyscyn, senior strategist at MF Global, adding funds are allocating money to the gold trade because the precious metal didn’t break the trendline of $1,600 an ounce. “If the $1600 level holds, its relatively low-risk on the big scheme of things to start getting long.”……………………………………….Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Senior fund managers remain optimistic about the prospects for Chinese commodity demand and the outlook for crude oil, but investor fervour for commodities is now more tempered compared with the zeal of recent years.
Doubts about the strength of China’s growth prospects have led to weakened investor appetite for commodities over the last quarter amid heightened price volatility, but market watchers expect China to loosen its tight liquidity policy by year-end………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

BlackRock Inc, the world’s largest money manager, said its expects a swift recovery in demand for commodities in China once Beijing loosens its reins on borrowing.
“As China takes its foot off the brake in the near future, we should see a recovery in demand from the world’s largest consumer of commodities, as markets there are pretty tight,” BlackRock’s investment chief for natural resources Evy Hambro told Reuters………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Commodities advanced to a six-week high, led by metals and gasoline, after European leaders agreed to expand a rescue fund designed to stem the region’s sovereign debt crisis and as the U.S. economy grew in the third quarter at the fastest pace in a year.
The Standard & Poor’s GSCI Index rose 3 percent to 657.14, the highest level since Sept. 15, as 20 of the 24 commodities tracked by the gauge climbed. Copper, which was poised for a weekly record rally, led the gains. Lead, silver, zinc and crude oil rounded out the top five movers………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Commodities seem to tell a compelling diversification story, academically, anecdotally and intuitively, as investors witness what seems to be permanently elevated prices for such resources such as gold and oil.
Such is the interest that recently Commodity Futures and Exchange Commission commissioner Bart Chilton called the attention to: “a new species of traders, if you will, the ‘Massive Passives.’ They are the likes of pension funds, index funds, hedge funds and mutual funds …who could care less what a pork belly is used for or what a soybean field looks like………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

In the view of Citi, the oil market at present continues to be torn between current fundamental strength in the market and macroeconomic-pessimism, as well as between current supply and the potential for stronger production from Libya and elsewhere after the upcoming northern winter.
Given firm oil market fundamentals and some slight improvement in the macro environment in the US and China, West Texas Intermediate (WTI) has broken its downward trending channel. The market has moved into backwardation notes Citi, which means prompt prices are higher than deferred prices. There is potential for Brent crude prices to do the same………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Saudi Arabia’s biggest cut in oil output in three years is a sign OPEC’s largest producer is finding common cause with its long-time rival Iran.
The kingdom reduced supply by 400,000 barrels a day, or about 4 percent, last month, Oil Minister Ali al-Naimi said Oct. 8, reversing increases that it started in April, when declining Libyan exports sent North Sea Brent to a 2 1/2-year high. Crude prices have fallen 14 percent since then as the North African nation revived production and the International Energy Agency lowered its forecast for global demand………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will bolster crude exports by the most since June as refiners in the U.S. and Europe prepare to meet winter demand for heating fuels, tanker-tracker Oil Movements said.
OPEC will ship 22.8 million barrels a day in the four weeks to Nov. 12, a 2 percent increase from the 22.36 million exported in the month to Oct. 15, the Halifax, England-based company said today in a report. The figures exclude Ecuador and Angola………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

In the current economic environment, low real yields around the globe incentivise investors to look for additional sources of return, while increased uncertainty and market volatility have increased the importance of risk management, according to a latest update from the World Gold Council (WGC).
A distinct allocation to gold within a portfolio including alternative assets such as private equity, hedge funds, real estate and commodities, can preserve capital and reduce risk without diminishing long-term returns, concludes this latest research from the World Gold Council………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Capital can be preserved in the current uncertain environment when investors make a distinct allocation to Gold with a portfolio of alternative assets such as private equities, hedge funds, real estate and commodities. This strategy can preserve capital and reduce risk without diminishing long-term returns, according to World Gold Council.
Low real yields around the globe incentivise investors to look for additional sources of return, while increased uncertainty and market volatility have increased the importance of risk management, World Gold Council said in its latest research reprot…………………………………………Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Commerzbank sees upside potential in Gold and reiterates its forecast of $1,800 an ounce by the end of the year and a further increase to $1,900 next year.
The bank says the underlying factors have not changed in recent weeks. “Real interest rates are low or even negative. The euro-area government debt crisis has not been resolved,” Commerzbank says………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

In a recent series of articles we have looked at where in the world one invests in a precious metal share and the factors that must be considered. Also, should one invest in a gold fund, holding a spread of gold shares, or in gold shares direct? In this article we look at the two options.
We remind our readers of the prime objective of investing, to “Maximize Total Returns”. This gives us focus when answering this question. Before addressing the issue we are going to ask another question. ……………………………………….Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Gold is coming to life again - and looks poised to move higher in the weeks and months ahead. Having fallen precipitously from its all-time high just over $1,923 an ounce in early September to a recent low near $1,540 in early October, a peak-to-trough correction of some 20 percent, gold has been, of late, range-bound, trading between $1,640 and $1,680.
Having moved to the top of this range and even slightly higher, I sense gold is just now resuming its long march upward, a march that could, before long, carry the price to the $1,850 region and perhaps even to its historic peak of $1,923 by the end of the year………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Silver is outperforming іtѕ pricey counterpart this year and lаѕt year аs well. In 2009, silver prices rose 48 percent аnd have аlreаdy risen mоrе thаn 38 percent thіs year, whіlе gold prices аrе uр around 30 percent.
The gold-to-silver ratio, whісh tracks hоw manу ounces оf silver аrе needed tо buy onе ounce of gold, hаѕ gone frоm 66:1 іn January 2010 to about 56:1 in October 2010, аnd thе spread іѕ expected to kеер narrowing………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

After the sell-off in Gold and Platinum in 2008, both precious metals rebounded strongly from the October 2008 low by about 100% with platinum leading the way until early August 2011 when gold overtook platinum price.
Since then, platinum underperformed gold by about 17% to 26 October. Standard Bank found out platinum may be out of flavour as the net speculative position as a percentage of open interest in platinum has declined from about 38% in January to about 20% to October this year, mainly due to increase in short positions……………………………………….Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Copper traders and analysts are forecasting an end to the biggest weekly rally since at least 1986 on concern demand will slow in China while Europe’s lingering financial crisis limits growth.
Eleven of 23 people surveyed by Bloomberg say copper will drop next week, eight predicted a gain, and four said prices will be little changed. The last time respondents were mostly bearish, on Sept. 23, the metal slumped 4.6 percent in the following week………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Silver exchange traded funds rose 5% to outperform gold prices Thursday after the European Union cobbled together a deal designed to buy more time to sort out its debt logjam.
Silver ETFs have also received a boost lately from better economic data, as the metal has industrial applications………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

There isn’t enough food to feed the world, most of the world’s hungry live in Africa, and it’s mostly a question of droughts and other natural disasters. All of these statements are wrong. But they reflect a common set of misconceptions on hunger. Here are 11 of the most common myths - with the reality they mask.
Myth 1: There isn’t enough food to feed the world. Reality: There is enough food in the world today for everyone to have the nourishment necessary for a healthy and productive life………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Australia has been found to be a major contributor to the global environment’s rapid deterioration. In a 134-page report entitled “CO2 Emissions From Fuel Combustion,” the International Energy Agency (IEA) said Australia’s coal-related emissions rose to 220.9 million metric tons in 2009 from 73.2 million metric tons in 1970. From 1990 to 2009, the country’s burning coal emissions jumped 61 per cent.
Australia supplies coal to more than 20 countries. In 2009-10, according to data from the Australian Coal Association, Australia’s biggest markets were Japan, China, South Korea, India, Taiwan and Europe………………………………………..Full Article: Source

Posted on 28 October 2011 by VRS |  Email |Print

Given the broad scientific consensus that climate change is happening, based on data showing that climate change is happening, climate scepticism must be predicated on a belief that the data is flawed. The paper has a look at climate data to date and the methodological limitations that have given rise to what Richard Muller, an astrophysicist, characterise as “legitimate scepticism”.
As the article explains, Dr Muller, being somewhat sceptical himself in the wake of the 2009 “Climategate” scandal, convened the Berkeley Earth Surface Temperature group to examine the data and existing analyses using a methodology designed to incorporate some of the concerns of the legitimate sceptics……………………………………….Full Article: Source

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