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Commodities Briefing 12.Dec 2011

Posted on 12 December 2011 by VRS |  Email |Print

David HumphreysCommodity markets are more familiar territory for individual investors than they once were. But are they the sort of territory into which investors should venture right now? The answer depends partly on whether the commodities boom is over or merely having another brief interruption.
The sector depends heavily on China’s appetite for metals—it consumes half of the world’s annual iron ore production, and more than a third of most base metals………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The price of economic essentials are a pointer to global growth or the lack of it - but they move for complex reasons. Know where commodity prices are going and they will tell you all about next year.
The dollar, interest rates, inflation, your super … you name it, commodity prices change it. They also explain why the share prices of BHP Billiton and Rio Tinto, the world’s biggest and most profitable miners, are struggling………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Hedge funds cut bullish bets on agricultural prices to the lowest in more than two years on signs of expanding global supplies.
A measure of speculative positions across 11 products from wheat to coffee to cattle fell 3.6 percent to 258,071 futures and options in the week ended Dec. 6, Commodity Futures Trading Commission data show. That’s the lowest since September 2009. Bullish wagers on corn fell 11 percent to a 17-month low, and bearish ones on cocoa increased for a fourth week………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

China’s imports of crude oil, copper, soybeans and iron ore all surged in November, prompted by lower global prices and domestic shortages ahead of winter, official customs data showed on Saturday.
The double-digit monthly increases in major commodity imports came as overall growth in foreign trade continued to slow………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Commodities failed to hold on to previous gains as EU leaders struggled to come to a consensus on a fiscal plan. Moreover, data showed that factory output in China grew at the slowest pace since August 2009 while the growth of Japan’s economy missed expectations.
This increased concerns that demand for commodities will fall further. Gold appears to be the safest investment. Besides, the ECB’s interest rate cut last week signaled that bond purchases are now less likely, thereby strengthening the case for gold………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

A bullish outlook for gold next year, but nevertheless anticipates further strength in the U.S. dollar going into the New Year may be the next test for the yellow metal. Unlike previous periods of risk aversion that occurred in 2009 and 2010, this time U.S. dollar strength is not being accompanied by strong inflows into physically backed gold ETFs, said Deutsche Bank in its final weekly commodities report of 2011.
According to bank, liquidation in Comex Gold over the past couple of months appears to be drawing to a close, although currency trends could trigger yet another round of speculative liquidation. Overall, gold has outperformed other precious metals in recent months………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The big feature of last week’s decline in the gold price has been the lending of gold into the market. Commercial banks could have been doing it, but there is evidence in the past that central banks have leased gold to cap the gold price and bring it down.
The gold price declines were so rapid and extensive that some investors theorized that central banks, including the Federal Reserve, were actively selling gold. The talk is that Commercial banks were unable to get the dollar liquidity they needed, leasing gold under their wings to facilitate these loans at lower interest rates………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks?
An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Despite a pullback from its all-time high of about $1,920 an ounce set in September, gold is still trading in the $1,750 range. In fact, the glittering metal has gained 22% in the past 12 months.
What’s more is that I believe gold prices will eclipse $2,200 an ounce next year, and shoot beyond even $5,000 an ounce after that. So there’s obviously still time to get in on this once-in-a-lifetime bull-run, if you haven’t already………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Gold, historically considered a “safe haven” investment, has had a year of ups and downs correlating with investor confidence. However, Michael O’Kane from NZ Mint told TVNZ’s Business programme that the market is seeing a shift in how gold is traded - but inflation and investor nervousness still play a part in dictating the price.
Nervy investors worried about Europe have in part shaped this shift in trading, he said………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Aluminum and Copper to fare best in the industrial base-metals complex that could be held back by Chinese economic growth in the next few months, said Deutsche Bank said in its final weekly commodities report of 2011.
“We believe the sector will continue to face headwinds as Chinese growth slows into the first quarter of next year. Of the LME metals, we continue to favor aluminum and copper, which we expect will perform well in the event of monetary easing and fiscal stimulus in China,” bank added………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The China-driven commodities boom transformed economies and environments across the globe in 2011, a year that saw cashed-up mining giants invest record amounts into extracting Earth’s riches.
From Australia’s barren interior where plans were approved to create one of the world’s biggest open pit mines, to the Amazon rainforest where vast copper deposits were targeted, the mining phenomenon went into overdrive………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The paradox of the oil majors is that their reserves are pretty minor. Back in 1970, Western oil firms had full access to 85% of the world’s oil reserves, according to consultancy PFC Energy. By 2010, this figure was just 7%.
Yet it would be a mistake to simply conclude that the likes of Exxon Mobil will be progressively squeezed out by monolithic national oil companies. Events of the past few weeks show why………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The European Union “definitely” will not impose sanctions on OPEC member Iran’s oil exports because such a measure would harm the global crude market, Iranian Oil Minister Rostam Qasemi said on Sunday.
EU leaders called on Friday for more sanctions against Iran by the end of January, in an effort to increase pressure on Tehran over its disputed nuclear programme………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Oil swung between gains and losses as concern that Europe will be unable to tame it debt crisis countered Iran’s calls for production cuts before an OPEC meeting this week.
Futures were little changed after slumping 1.5 percent last week. German Finance Minister Wolfgang Schaeuble said euro-area policy makers will focus on implementing last week’s pact to strengthen budget rules as quickly as possible………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

When ministers from the Organization of Petroleum Exporting Countries meet Wednesday, the suspense will be less over what they agree on than on whether they agree on anything at all.
At their last meeting, in June, members of the producers’ group failed to reach a deal—a rare outcome for an organization that prides itself on consensus. The meeting ended abruptly, after a debate that people who attended described as acrimonious………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The International Energy Agency (IEA) on Monday said a boost in Saudi oil production would provide “welcome” relief to rising oil prices, warning continuing price hilkes threatened to thwart global economic recovery efforts.
“OECD stock levels are at historically low levels, plus we are in a very fragile economic recovery situation,” IEA chief economist Fatih Birol told a seminar………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

It was a slow week for ETP flows, but investors remained interested in precious metals. It was an uneventful week for commodity-related exchange-traded product flows, as every sector saw only fractional movements.
Precious metals and broad market (multicommodity) ETPs had inflows of $70 million and $31 million, respectively. Agriculture, energy and industrial metals ETPs had outflows of $66 million, $62 million and $4 million, respectively………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

If disaster strikes, how exactly does a eurozone nation hit the emergency escape button on the euro? Once considered an outlandish scenario, it is no longer taboo among economists.
Whether it is the entire euro project collapsing or just one country jettisoning the single currency, analysts agree on rule number one: Prevent panic………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

The crisis in the European Union has been inevitable since the Maastricht treaty legislated for the creation of a single currency. The question that I put to Ken Clarke was: “Can you name a currency that has more than one chancellor of the exchequer?”
There are differing opinions as to whether the Eurocrats – led by Jacques Delors, the president of the European commission – were so gung ho about ever closer union that they closed their eyes and hoped something might turn up to change the reality that a currency can have only one chief finance minister………………………………………..Full Article: Source

Posted on 12 December 2011 by VRS |  Email |Print

Traders in the beleaguered European carbon credit trading market, which saw carbon prices plummet to a record low last month, are pinning their hopes on a new European directive to give business a boost.
The Energy Efficiency Directive, due to be voted on by the European Parliament on December 20 ahead of a final sign-off next April, could help jump-start the market by reducing the amount of overall emissions allowed, thereby increasing the need for businesses to purchase carbon credits or “abatement”………………………………………..Full Article: Source

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