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Commodities Briefing 02.Dec 2011

Posted on 02 December 2011 by VRS |  Email |Print

James DaileyThe long-term outlook appears strong for agricultural commodities, fossil fuels, and metals. As the world’s population balloons rapidly over the next few decades, so will demand for oil, gas, food, and all sorts of infrastructure.
The urbanization and rise of the middle class in emerging markets like China, India, and Brazil will dramatically boost the need for food and facilities. By 2050, almost three quarters of the world’s population will live in urban areas (compared to about half today) and food production will need to increase by 70 percent to keep pace with overall population growth, according to projections from the Organisation for Economic Co-operation and Development and the United Nations Food and Agriculture Organization………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Goldman Sachs forecast that commodities may rally 15% in the next 12 months, sticking with an “overweight” recommendation on raw materials and predicting Brent crude may surge to highest level since 2008.
Commodities may gain as the global economy avoids recession next year and in 2013, analysts led by London-based Jeffrey Currie said in a report on Thursday. Brent, the benchmark used to price two-thirds of global oil supplies, may jump to $127.50 a barrel at the end of next year and $135 in 2013, it said………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Commodities may rally as central banks boost money supply further and cut interest rates to combat slowing economic growth, according to Renaissance Asset Managers, a unit of Moscow-based Renaissance Group.
“Money will continue to be plentiful and free, and that will continue to underwrite a commodity cycle,” said Chief Investment Officer Plamen Monovski, who oversees about $2.2 billion and formerly co-managed as much as $9 billion at BlackRock Inc. (BLK), the world’s biggest asset manager………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Investors should be warned not to overreact to movements in commodities markets, as the fundamentals paint a picture of constraints on supplies and surprisingly strong demand, writes Investec fund manager George Cheveley.
With eurozone crisis concerns dominating and economic indicators showing world growth will slow over the coming months, commentators have become increasingly bearish on the outlook for commodity demand………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Commodities have often featured in periodic booms and busts, but they have also offered attractive returns over sustained periods and provided a good way for investors to diversify risk.
That is the conclusion of a research paper by US investment firm Vanguard, which has looked at the returns on 30 commodities since 1959, including popular areas such as gold and crude oil as well as more esoteric products such as feeder cattle and rough rice. Vanguard has no axe to grind: it does not offer a commodity product among its range of low-cost tracker funds………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

With a few exceptions, many key commodities are at do or die moments. Stingy bond yields and volatile stock prices are sending people scrambling for alternative places to put their money. While news reports tell us that selected food prices are rising, investors looking at the commodities markets as places to ride this trend may be in for a surprise.
Many commodities are now at long-term crossroads where any further selling pressures can push them over the edge………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Gold is Morgan Stanley’s (MS) top pick in the commodity markets for next year, as the euro zone remains without a definitive solution to its deepening debt crisis, U.S. fiscal issues continue to weigh on broader investor sentiment and emerging market economies slow.
With global economic growth prospects having dimmed, the bank said it doesn’t “feel it is prudent” to take long positions in commodity markets indiscriminately, and noted that commodities most leveraged to economic growth have historically been the worst performers in a slowdown………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

The massive risk-asset rally generated by a global central bank liquidity-bailout on Wednesday pushed gold back onto center stage. The yellow metal just hit a two-week high after having suffered a massive correction from its early-September peak and will average $2,025 an ounce in 2012, according to HSBC’s head of precious metals research, Jim Steel.
Gold was all the rage in the investing world for a few months this year, hitting consecutive nominal all-time highs until it peaked on September 6 above $1,920. After a nearly 20% correction, gold balanced out and slipped off investors’ radar screens, slowly crawling back up above $1,700………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Gold futures settled lower after touching fresh two-week highs Thursday, as investor enthusiasm over central banks’ plans to cut the cost of borrowing dollars faded.
Gold prices rallied 2% on Wednesday after the Federal Reserve, the European Central Bank and several other central banks announced plans intended to boost dollar liquidity. However, gold prices gave up some of their gains as market participants reconsidered the move as a sign of deep-rooted problems in the global financial system………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Investors appear to have that golden glint back in their eyes, as they prepare for another big year in the bullion market.
Last year–as analysts were eyeing a global recovery–there was widespread talk of when the perceived safe haven status of gold may reach its summit. But the worsening economic outlook has the yellow metal back at the top of many investors’ “favorites” list………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Silver, as an alternative precious-metal investment to gold, is less well known. Silver attracts investors’ attention because it has low correlation with other asset classes such as stocks and bonds.
It is suitable for hedging against inflation and the US dollar while offering good returns during economic crisis. So, silver is a strong candidate for any portfolio. Demand and supply regarding silver in 2010 came from the following sources: ……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Today’s investing horizon can seem like a sea of roiling turmoil. Not too long ago, many of us were considering how we’d spend our early retirement. The boom times of the middle of the decade seemed prosperous for all. Recently however we’re more concerned with just staying above the dangerous waters that seem to be rising around us. In this kind of environment, many of us are considering the merits of investments like Silver bullion.
As a commodity, silver bullion has some very appealing qualities for a period of uncertainty like this. For those of us concerned about inflation, commodities can provide a level of protection that cash cannot………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

According to a report on the sector released by RBC Capital Markets today, with total costs continuing to increase to just under the US$1400/oz level compared to the current basket price of approximately US$1230/oz a further margin squeeze is on the cards.
One of the major contributing factors to this is the wage increases seen at operations in South Africa - for example both Amplats and Impala have agreed increases of 8-10%……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Copper traders are bullish for the first time in six weeks on signs that demand is still expanding as global inventories decline to an 11-month low and central banks cut funding costs to shore up growth.
Twelve of 24 surveyed by Bloomberg expect the metal to advance next week and two were neutral. The last time they were bullish overall, in the week ended Oct. 21, prices surged more than 14 percent in the following five days……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Goldman Sachs introduced its 2013 Brent oil price forecast at $130 a barrel, saying crude oil prices will continue to rise in order to slow demand growth, even in a relatively poor economic growth environment.
The firm introduced a 2013 WTI price forecast of $126 a barrel, saying the WTI-Brent spread will likely compress further as the Seaway pipeline increases capacity to 400,000 barrels per day……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Solar technologies such as photovoltaic panels, water heaters and power stations built with mirrors could provide a third of the world’s energy by 2060 if politicians commit to limiting climate change, the International Energy Agency said.
Energy from the sun could play a key role in de-carbonizing the global economy alongside improvements in efficiency and imposing costs on greenhouse-gas emitters, the agency said……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

In early 2011 a devastating earthquake and subsequent tsunami wreaked havoc on much of Japan, putting the country in something of a bind. One area that was particularly affected by the quake was the Fukushima nuclear power plant.
Fukushima had taken hefty damages during the incident and began leaking radiation into the surrounding environment shortly thereafter. The result yielded not only devastating effects for Japan, but for nuclear power as a whole, as the global community lashed out at the seemingly unsafe energy source. The incident was enough to prompt Germany to abandon nuclear power within the next decade and has a number of other countries considering the same action………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Hedge funds slashed bets on falling natural gas prices from record levels last week, triggering the longest rally since July on speculation that cold weather will bolster heating demand and reduce brimming stockpiles.
The funds and other large speculators cut short positions, or wagers that prices will decline, by 25 percent in futures and options in the week ended Nov. 22, according to the Washington- based Commodity Futures Trading Commission’s Commitments of Traders report. ……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

So many commodities exchange-traded products, so little time. In fact, there are now enough commodities ETFs and ETNs on the market today where it can legitimately be said investors have a dizzying array of choices.
In other words, the more single commodity funds that come to market, the likelihood increases that a few are bound to fly under the radar. Admittedly, some of these unheralded plays aren’t worth investors’ time, but others are worth eschewing popularity for and taking a look at in search of potential noteworthy returns………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

Past currency-area breakups may provide some guideposts to how Europe’s deepening financial crisis could end if its leaders can’t find a solution. But its case is sui generis.
History suggests two types of monetary unions survive the longest, says Gabriel Stein, a director of Lombard Street Research, a London-based economic-analysis firm………………………………………..Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

The cheapest way for the U.K. to meet its goal of cutting emissions by 80 percent from 1990 levels over the next four decades would triple nuclear power generation, according to the government’s carbon plan.
It would cost the least to have 33 gigawatts of nuclear power, 45 gigawatts of renewables and 28 gigawatts of fossil fuels with carbon capture and storage technology fitted, according to a government statement. The country has about 10 gigawatts of installed nuclear capacity. ……………………………………….Full Article: Source

Posted on 02 December 2011 by VRS |  Email |Print

A day after rising to the month’s high, prices fall sharply as poor Chinese manufacturing data spur hope on monetary easing there. Global commodities softened on Thursday after rising the most in a month in the previous session, as poor Chinese manufacturing data pulled down the optimism spurred by major European central banks’ move to aid the region’s distressed lenders.
Global financial markets witnessed a revival of upbeat sentiments yesterday on the steps the world’s six major central banks took to tackle the euro zone debt crisis by providing cheaper dollar funding……………………………………….Full Article: Source

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