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Commodities Briefing 20.Dec 2011

Posted on 20 December 2011 by VRS |  Email |Print

T GnanasekarWhile the recent downward spiral in assets such as equities and commodities started around the end of July, globally the fall has been much sharper in the latter. In the five months since the US rating downgrade, commodities have lost 11.27 per cent (on the all commodity index of S&P GSCI).
The metals index was the worst performer, losing 23.4 per cent, while agri commodities lost 16.8 per cent globally. In comparison, major equity indices such as the Dow and FTSE lost only 5.6 and eight per cent, respectively. The Brazil equity market was down just over five per cent and Mexico two per cent up………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Jan LoeysJPMorgan Chase & Co. said commodities are poised to gain in the second half of 2012 after a “weak” first quarter, with energy providing the biggest returns.
Demand for industrial commodities will decline in the coming months because of a “subdued” global growth as Europe goes into recession and China’s economy decelerates, the bank said in a report dated Dec. 16. Easing measures in China and the U.S. will help boost global growth and raw materials demand from the second quarter of 2012, according to the report………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

In a tough landscape for commodities, most hedge funds and other money managers have decided to stick with long positions in crude oil, boosting their investments even as prices slide.
For commodity funds, who must basically be long of something to justify their continued existence, crude is the least-dangerous among a series of tricky alternatives………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Saudi Arabia won over fellow OPEC members to forge agreement on a new oil production ceiling for the first time in three years, to accommodate increasing output from Libya and Iraq.
Qatar International Petroleum Marketing Co., known as Tasweeq, offered 3 million barrels of Al-Shaheen crude for February loading. Libya’s National Oil Corp. agreed to buy 3 million tons of gasoline next year from four international companies, according to the manager of its supply department………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Gold has fallen marginally in most currencies, extending last week’s loss, which was the biggest in nearly three months. Gold’s weakness continues despite negative economic news such as Fitch’s warning regarding downgrading France and other countries and geopolitical risk after the death of North Korea’s Kim Jong-il.
Fitch warned it may downgrade France and six other euro zone nations as it believes a comprehensive solution to the region’s debt crisis is “technically and politically beyond reach.”……………………………………….Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Gold prices will fall below USD 1,500 an ounce over the next three months and are unlikely to retest September’s all-time highs until later 2012 at the earliest, according to a Reuters poll of 20 hedge fund managers, economists and traders.
The bleak forecast, coming after gold has lost 11% of its value so far this month, is likely to fuel fears that bullion is close to ending its more than decade long bull run and entering a bear market………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

The price of gold bullion has dropped more than 17 percent from an all-time high reached in September as strapped hedge funds and sovereign funds sell the precious metal to raise money and the strong U.S. dollar strips it of its safe haven status.
In fact, some experts say it could go as low as $1,000 an ounce in the foreseeable future. “Gold was a safe haven, a hedge and a speculative trade all at the same time,” Michael Murphy, CEO of Rosecliff Capital, a hedge fund, told CNBC. “Long gold has been a winning trade for years.”……………………………………….Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Such was the scale of last week’s sell-off, it sparked worries we are seeing a re-run of the events of 2008, when the global financial meltdown began. Gold was the main headline-grabber, as the “safe haven” metal saw a dramatic plunge in its price.
On Thursday, the spot gold price dropped below its 200-day moving average, a threshold that previous slides had failed to breach for three years. Market-watchers said gold was falling through both psychological and technical barriers, as the drop triggered sell-offs by computer trading programmes………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Are the gold bubble prognosticators right? Is the run in gold and silver over as they fall to a three month low? Nothing could be further from the truth. The reason gold and silver prices have fallen of late is because, as I have been saying, the Dollar Index is rising.
This is a 40 year pattern that was last repeated in 2008 when the Dollar Index broke above the 80 mark. Yesterday, the Dollar Index broke above the 80 mark again………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Bank of America Merrill Lynch (BofAML) estimated that there is a good upside potential in 2012 Silver prices. As per the bank, prices should average $34/oz, followed by $37/oz in 2013, because of continued interest in the metal. Also, the bank believes that $30/oz silver is justifiable at present.
According to BofAML, silver fundamentals have been improving in recent years for a host of reasons, including increased demand from emerging markets, somewhat reduced drag from the photography sector and higher usage from new applications………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Despite finally reaching an agreement with management, workers at Freeport McMoRan’s giant Grasberg mine further delayed their return to work after a three month strike that the company says is costing it roughly 2m pounds of copper production daily.
While an extreme case, the situation at Grasberg, the world’s second largest copper mine, is not the only setback facing the supply side of the global copper market………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

With real estate markets in the gutter, treasury yields at all-time lows, and equity markets plagued with instability, it’s no wonder that commodity investing has been surging in recent years.
Many investors have hopped on board with the various benefits that these investments offer, including inflation protection, equity hedges, and diversification benefits to overall portfolios. Commodity are very powerful, yet often misunderstood tools. While the statistics vary, “as many as 90-95% of investors trading commodities lose money” says Matthew Bradbard of MB Wealth………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Traders in energy, metals and agriculture are opening or joining hedge funds after leaving financial firms that cut more than 233,000 jobs this year, data compiled by Bloomberg show.
Departures of commodity traders from banks probably rose 10 percent this year, according to Commodity Search Partners Ltd., a Brighton, England-based recruiter. Pay for that group will drop 24 percent on average, estimates Options Group, a New York- based recruitment firm………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

The Ethiopian Commodity Exchange sold 92 seats, with full membership privileges, last week. The seats were sold at competitive bid held at the Wabi Shebelle Hotel. The exchange will earn 123,370,708.81 birr from the sale.
50 of the 92 full membership seats on offer were allocated to limited members and suppliers previously engaged in limited trading on the exchange. 66 bids were received for the 50 seats with the highest bid received from Ato Teklay Gebre-Mariam Gebre-Medhin for 2,000,150 birr………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

In 2012 China will maintain a ‘generally stable’ exchange rate of its national yuan currency, a statement released during the annual economic work conference in Beijing says. Experts agree that a tendency to make the yuan a more global currency will continue next year.
Chinese economists believe that the greater use of the yuan is a natural process which meets the interests of China and also promises positive changes to the international currency system………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

When the European sovereign debt crisis began in late 2009, few experts believed it would bring about the demise of the euro, a currency used by 17 of the 27 European Union countries.
But today, with a steady stream of bad news coming from Europe, speculation has grown — at least in some circles — that the euro’s days might be numbered or at least that a handful of the most troubled countries like Greece might exit the euro and use their own currency going forward………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

The euro, after falling to its weakest level against the dollar since January, is poised to depreciate further as traders lose confidence in the ability of European leaders to contain the region’s debt crisis.
Measures in the derivatives market ranging from future volatility implied by option prices to the cost of insuring against a drop in the euro to the record number of bearish bets by hedge funds and other speculators, show traders expect the blueprint unveiled by European leaders this month for a closer fiscal accord will fail to stem the declines………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

Abundant external risks and defensive posture among investors could prevent the 2012 turnaround for emerging-market currencies that some investors are hoping for.
Currencies from developing economies got hammered in 2011, as the euro-zone crisis intensified and economic data verified concerns about slowing global growth. The Indian rupee has fallen 18% against the dollar, while the South African rand dove 27% against the U.S. currency, according to CQG. Even investor favorites like the Brazilian real and the offshore Chinese yuan were not immune to severe bouts of risk aversion………………………………………..Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

South Korea said conflicts between opposition and ruling party lawmakers are disrupting efforts to make polluters pay for their emissions starting in 2015.
Opposition parties have boycotted all agenda schedules of the National Assembly, including those concerning carbon trading, Park Chun Kyoo, director general of the Presidential Committee on Green Growth, said……………………………………….Full Article: Source

Posted on 20 December 2011 by VRS |  Email |Print

The price of commodities like oil and gold has fallen in the last few months of 2011, as the global economy has slowed amid worries over the eurozone crisis.
David Lennox of Fat Prophets in Sydney told the BBC he believes commodity markets will remain volatile into 2012 but prices will rise once again towards the end of next year………………………………………..Full Article: Source

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