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Commodities Briefing 18.Nov 2011

Posted on 18 November 2011 by VRS |  Email |Print

Commodities dropped the most since September on concern that Europe’s debt crisis is spreading, hurting the global economy and eroding demand for raw materials.

The Standard & Poor’s GSCI Index of 24 commodities fell 2 percent to 659.43 at 12:16 p.m. in New York, heading for the biggest loss since Sept. 30. Twenty prices tracked by the index declined, led by silver, energy and cotton. European and U.S. equity markets fell, and the cost of insuring against default on Spanish and French sovereign debt rose to records………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Demand for industrial commodities is headed for a softening because China won’t be able to offset dwindling consumption in the euro-zone economies, Capital Economics analysts said in a note distributed to reporters Thursday.
Views that China’s rising demand will support the global commodities is misguided, the analysts said. China’s annual growth rate is set to slow to about 6% on average during the next decade as the supply of cheap labor dries up, cooling from current annual growth of about 10%. Crude oil in particular may see a potential drop as falling demand in Europe outpaces rising consumption in China……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

While some oil bulls continued to push WTI contracts higher using the good news from Enbridge, the broad market sentiment was so vulnerable that prices retreated after rising to as high as 103.37 earlier in the day. Weakness in Brent crude was more severe with prices approaching 110 again. The WTI-Brent spread has narrowed to -8.4 in European session.
Gold price fell along with others in the commodity sector although uncertain economic outlook should traditionally be positive for the yellow metal……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Gold prices will soar to $2,100 US an ounce in 2012, leading a general rebound in commodity prices that will emerge once Europe gets its act together, TD Economics said in a report Thursday.
“Assuming the Europe story falls off the front pages of the paper next year, prospects for commodity prices are generally quite positive,” economist Dina Cover said in TD’s Commodity Price report………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Global gold demand in the third quarter of 2011 has reached 1,053.9 tonnes, an increase of six per cent compared to the same period last year, according to the World Gold Council.

This equates to $57.7 billion, an all-time high in value terms, it said in a statement. The World Gold Council report said the increase was driven by investment demand which rose by 33 per cent year-on-year to 468.1 tonnes, generating record quarterly demand of $25.6bn……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Gold futures have been swimming in choppy waters lately, with a number of cross-currents leaving the metal range-bound between $1,700 and $1,800 an ounce so far this month.

The precious metal started November by rallying from the lower end of this range and eventually touched several daily highs slightly on either side of $1,800. But now, gold is back toward the lower end of the band, pressured by recent gains in the U.S. dollar, some shifting from a range of assets into cash, worries about potential central-bank gold sales to deal with the European debt crisis and technical-chart considerations………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Have you ever held a basketball underwater in a swimming pool and let go? It flies to the upside and pops you in the nose. That is exactly what gold is doing now. After the barbarous relic peaked at $1,922 on Aug. 24, it traded like an absolute pig, giving up 20% in a matter of weeks. I managed to coin it with a couple of quick in and out trades in (GLD) puts, some doubling over a weekend. So much for the “safe asset” theory.

You can thank hedge fund titan, John Paulsen, for the action. John gained international notoriety when he earned a $4 billion bonus after making huge bets against subprime loans going into the housing crash……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

What an incredible whirlwind of crisis from seven foul winds around the globe. Most emanate from Europe, which is far from its climax in crisis. Three steps will lead to full blown eruption, the first Italy with rising bond yields and a bank run, the second Spain with rising bond yields and admission that banks are far more insolvent than recognized, and third the failure of all three largest French banks as the principal swine creditor.
In fact, a great split has occurred, as France has been cut off from the future world by Germany, which looks East to Russia and China. The Berlin leaders will not be needing French squires to carry their bags, but instead will watch as Paris becomes the appointed leader of the PIIGS……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Thomson Reuters GFMS’s Philip Klapwijk Wednesday forecast an average silver price of $35.66 per ounce this year, a short-term forecast of $35-$40 through year-end, as well as a price above $50/oz by the end of 2012.

In a speech before the Silver Institute in New York City Wednesday night, Klapwijk said conditions next year are likely to remain supportive of additional growth in silver investment, underpinning silver price gains. However, as mine production of silver continues to grow, it could be a negative development for the silver price outlook……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Silver prices will continue to rise on economic uncertainty and production declines, says Mitchell Krebs-CEO of Couer d’Alene Mines Corp, the largest silver miner in the United States.

“As long as we see things like the EU (Euro zone currency turmoil) and as long as we run the kind of deficits here, neither of which we see being cleaned up in the short term, those two things will continue to be positive backdrops for Gold and silver”, Reuters quoted Mitchell Krebs……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Silver prices will aveage $35.66 an ounce in 2011 and will extend the rally to $45 in 2012, according to a Silver Interim Report Media Advisory, released by GFMS Thomson Reuters.

Prices for silver from January to November has averaged $35.70 representing a growth of 88% year-on-year basis. Silver prices continue to be driven by strong investment demand. Siver’s core fabrication demand (excluding coins) should rise next year, chiefly due to gains in industrial uses, it will nonetheless be exceeded by gains in mine production and recycling. The resultant silver market supply is expected to be once again be absorbed by investors, as the investment case for Silver remains in play……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

The price of an ounce of Silver Bullion will exceed $50 by the end of next year, a leading precious metals consultancy has forecast. “We expect to see silver’s bull run continue,” says the Interim Silver Market Review from Thomson Reuters GFMS – whose base case is for Silver Prices to average over $45 per ounce during 2012.

Silver investment is predicted to be a key driver of higher prices. GFMS forecasts that silver investment – which includes Silver Bullion coins and medals – will reach 8600 tonnes (278 million ounces) for 2011………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Japan’s top trading house are likely to come head-to-head again while competing for copper mines across the globe, armed with an unprecedented ability to spend on what they see as a long-term bull market.

The competition is likely to drive up asset prices for potentially lucrative properties holding the base metal, with the trading houses jostling for the prize of becoming the top supplier for the world’s fifth biggest copper market and to tap surging demand in China and other emerging markets……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Copper will lose out to Aluminium as buyers will prefer the white metal because of its low volatility and most importantly – the availability of supply. Aluminium will be the metal of the decade opined CRU consultancy Group.

“We are predicting at least a decade now of aluminium being the preferred and most attractive metal from a consumer stance. Aluminium looks like a metal which will have a relatively stable price path compared to alternatives. The level is important, but just as important for consumers is the lack…………………………………….Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Despite a severe pullback in the prices of many rare earth metals mining stocks, constricting supplies and rising demand eventually will bring big profits to the select few companies sitting on rich deposits.

Prices for rare earths skyrocketed over the summer, but have since fallen – though nowhere close to where they were in 2010. That volatility was reflected in the prices of many mining stocks………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

The gap between the marginal cost of supply and the price at which demand gets destroyed offers commodities investors a useful signpost in this very uncertain economic climate.

Take copper and aluminum. Copper is priced at about $7,600 per metric ton; aluminum around $2,100. Based on UniCredit estimates, that means copper trades 90% above its marginal cost of production, while aluminum is 16% below its own. Yet demand for aluminum is growing about twice as fast………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will boost shipments to their highest since before the Libyan uprising to meet rising demand in Asia, according to tanker-tracker Oil Movements.

OPEC will export 23.48 million barrels a day in the four weeks to Dec. 3, an increase of 3.8 percent from the 22.63 million barrels shipped daily in the month to Nov. 5, the Halifax, England-based researcher said today in an e-mailed report. It’s the most since mid-February. The figures exclude Ecuador and Angola………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

OPEC officials are considering estimates that demand for the group’s crude oil in 2012 could average 1 million barrels per day (bpd) less than their current output, suggesting it may start to look at trimming supply.

The board of governors of the Organization of the Petroleum Exporting Countries is meeting in Vienna this week, in preparation for the gathering of its oil ministers on Dec. 14 that will decide output policy………………………………………Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Oil prices hit $100 a barrel on Wednesday after a six-week surge that may drive gasoline prices higher in coming months and slow the fragile economic recovery. For now, there a few reasons to explain why oil jumped 30 percent higher since early October.

One is promising. The U.S. economy continued to show signs of strength, meaning that the thirst for fuel may grow……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

The International Atomic Energy Agency, or IAEA, released its findings on Iran last week. Their 25-page report accuses Iran of developing miniaturized nuclear warheads, built for delivery by medium-range missiles. Iran could have enough fissile material, if enriched to weapons grade, for four nuclear bombs.

Fallout from the report is spreading (no pun intended). The United States could push for new sanctions on Iran… Israel is on high alert… and harsh threats are flying……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

A sharp increase in oil prices will ally with higher crude output to boost the collective income of Gulf hydrocarbon producers to a record high of nearly $608 billion in 2011, according to a semi official study.

The income this year will be nearly 30.7 per cent above the oil export revenue of nearly $465 billion earned by the six-nation Gulf Cooperation Council (GCC) in 2010, showed the study by the government-run Emirates Industrial Bank (EIB)……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

The Indian rupee — already the worst-performing currency against the dollar this year in Asia — is fast-sinking toward its weakest level in more than a decade, weighed down by growing pessimism about the state of the Indian economy.

On Thursday, the rupee was trading at 50.83 rupees to the dollar. Its lowest level in more than a decade was 52.18 rupees, hit in March 2009. At the time, stock markets had collapsed globally and risk appetite was at a nadir……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

An increasingly difficult search for dollar funding by euro zone financial institutions will gradually push the euro lower but only a major event such as a sovereign default or a break-up of the currency bloc would trigger a precipitous fall.

The euro has so far held up well against the dollar, trading around $1.35 and still 1 percent higher on the year, despite the spreading euro zone debt crisis. But selling of euro zone assets by spooked investors is likely to see increased demand for the safe-haven dollar……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

Japan’s proposal for a new emissions trading scheme is expected to be included in a chairman’s statement to be issued Saturday at the East Asia Summit meeting in Indonesia, government sources said.

The proposed scheme is being promoted as more flexible than the emissions trading system currently being operated by the United Nations, under the terms of the Kyoto Protocol. It would make it easier for developing countries to take advantage of Japan’s Environmentally friendly technologies, and thus promote trade of carbon permits between Japan and those countries……………………………………..Full Article: Source

Posted on 18 November 2011 by VRS |  Email |Print

I’ll never forget my first visit as a teenager to the commodity-trading pit of the Chicago Mercantile Exchange (CME). The swirling bright colored jackets, the shouting and rapid hand signals (looked like arm wrestling to me) were captivating and reminded me of past family gatherings.

It was also the polar opposite of my later visit to the currency trading floor of JP Morgan at 1 Wall Street – row after row of white shirts hunched over computer screens and dry IMF statistics………………………………………Full Article: Source

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