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Commodities Briefing 03.Oct 2012

Posted on 03 October 2012 by VRS |  Email |Print

For years, commodities investors had it easy—just buy anything that China was buying. Now, with China’s growth slowing and demand for raw materials easing, investors are being forced to work a bit harder.
Some investors have turned away from commodities that are heavily dependent on Chinese demand, such as base metals, cotton and soybeans. Others are searching for areas that will continue to expand no matter what happens in China, such as the U.S. natural-gas market. And some are simply getting out of commodities completely………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Mitch PetrickCarlyle Group LP said on Tuesday it had bought a majority stake in a commodities-trading hedge fund manager, its biggest leap yet in an expansion that has seen it diversify from private equity into other alternative asset classes.
Carlyle, which has $156 billion of assets under management, said it bought a 55 percent stake in Vermillion Asset Management LLC, a New York-based commodities investment manager with approximately $2.2 billion of assets under management………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Commodities are the necessary building blocks of the world. Glance around you – commodities are what the world needs to live and prosper and are everywhere you look. The world’s seven billion people need resources, and that’s why we recommend investors consistently allocate a portion of their portfolio to a natural resources investment.
Not every investment is the same, though. Even within the commodities space, when looking at measures such as correlation, performance and risk, two indexes can have very different effects on a portfolio’s results………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

The commodity complex is expected to be steady to higher in the fourth quarter, with precious metals and grains seen as the likely top performers, several veteran futures-market participants said.
The outlook for crude oil is mixed, perhaps hinging on whether prices are driven solely by current supply/demand fundamentals or whether an unknown geopolitical crisis spurs buying. The third quarter ended up being strong for many commodities, with metals lifted by expansionary monetary policies in the U.S. and elsewhere. U.S. grains were underpinned by supply issues due to a drought………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

The Reserve Bank of Australia’s (RBA) index of commodity prices fell 1.3 percent in September, from August, when measured in special drawing rights (SDR) terms.
The drop followed a revised 2.8 percent fall in August. The largest contributors to the fall in August were declines in the prices of iron ore, coal and oil. The prices of rural commodities also declined, while prices for aluminium and gold rose in the month………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Iraq plans to export 2.9 million barrels of oil per day in 2013 and hopes to increase production to 3.4 million bpd by the end of this year, a high-ranking official said on Tuesday. “Next year the plan is 2.9 million bpd of exports,” said Thamir Ghadhban, Prime Minister Nuri al-Maliki’s main advisor.
Production is “already over three million bpd… We hope to reach 3.4 million bpd by the end of the year,” Ghadhban told reporters on the sidelines of the third Iraq Mega Projects conference held in Dubai………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Its his way of showing how tough he is, following in the insidious tradition of former Secretary of State Madeline Albright who told a TV interviewer that the sanctions her administration imposed on Iraq were “worth it,” even as they claimed the lives of a million children.
Ironically, some experts who look at their impact closely find that they are not that effective. OPEC says Iran continues to export its oil. Andrew Davenport writes in the Washington Post, “The reality is that current sanctions policy is simultaneously extensive and flimsy. It amounts, in large part, to labeling a broad array of business activity as “sanctionable.” But with the exception of a handful of cases, the actual sanctioning of violators has been markedly absent………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

A couple of weeks ago, when crude oil prices were skyrocketing, many analysts came up with different explanations as to why crude oil would reach $140 and some said it would go to $180. With the recent steep drop in prices, however, that doesn’t seem possible to me anymore.
Crude oil prices fell sharply and suddenly, with oil at $90 a barrel for the first time in almost eight weeks. The Energy Department said total US Fuel use decreased 1.1 percent in the four weeks endedSeptember 21st. It is very likely that the price of crude oil will continue to decline because for the first time in a decade, supply is exceeding demand………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

The prior major rally — and peak — in natural gas during the June 14 to July 31 timeframe (2.168 to 3.277 in the nearby futures) represented a secondary advance off of the April 19 low at 1.902. As such, when natural gas peaked on July 31, it was not confirmed by the majority of my momentum gauges.
That huge momentum non-confirmation of price strength set up the potential for an outsized downward corrective sequence. The vulnerable technical setup, the uncooperative weekly inventory readings, and the fact that the “generational base” formation was in its infancy — and likely needed more TLC — all combined to create conditions for an outsized downward correction in natural gas from 3.277 to 2.575 (-21.5%) into the August 29 low………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Professional investors who want exposure to gold are starting to put their money in gold-related shares rather than the metal itself. Gold shares are being snapped up by fund managers in place of bullion, as the derating that has occurred over the past three years looks to right itself.
Alastair Mundy who runs the Investec Cautious Managed fund and Jon Rebak who runs HSBC Open Global Distribution have increased their exposure to gold shares and reduced exposure to gold bullion. Troy Trojan multi-asset manager Sebastian Lyon has gold shares and gold bullion dominating his top holdings………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Wholesale gold prices hovered in a tight range just below $1,780 an ounce for most of Tuesday morning in London, just below a new 2012 spot market high touched yesterday following comments from US Federal Reserve policymakers.
Silver prices traded just below $35 per ounce, close to seven-month highs, while stocks and the euro ticked higher despite warnings that Spain is underestimating the amount of recapitalization its banks need. Commodities were broadly flat, with copper showing some strength, while major government bond prices fell………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Gold is back on the march. Once again, City analysts are dusting off their forecasts that the precious metal will hit a record $2,000 (£1,240) per ounce by the end of the year.
It’s a simple equation. Gold tends to surge in value when people fear investing their money elsewhere, such as in the stock market or government bonds. Or as analysts at Deutsche Bank put it: ‘Gold’s value depends in large part on the degree of badness of bad money………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Last year the Chairman of the Federal Reserve told me that gold is not money, a position which central banks, governments, and mainstream economists have claimed is the consensus for decades. But lately there have been some high-profile defections from that consensus.
As Forbes recently reported, the president of the Bundesbank (Germany’s central bank) and two highly-respected analysts at Deutsche Bank have praised gold as good money………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Chinese copper demand is likely to remain subdued in the near term but pick up in early 2013, said British bank Barclays Capital in a commodity research note.
According to Barclays, Chinese stimulus measures announced during the summer have yet to translate into demand. Power-sector demand, which accounts for 45% of China’s copper consumption, has fared better than other sectors this year, but September orders have not picked up substantially from low levels in August………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Iron ore, the commodity most leveraged to China’s growth and Australia’s biggest export earner, is heading for the longest bear market in 20 years.
Vale SA, Rio Tinto Group and BHP Billiton Ltd. (BHP), which control about two-thirds of seaborne iron ore supply, are spending about $47 billion on new and bigger iron ore mines from Brazil to Australia. The new cargoes are set to reach the global market just as China changes gear to lower growth expectations, following what may become its weakest performance since 1990………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Through the end of September, 2012 has by and large been another solid year for commodities. Measuring commodity performance can be a little tricky though, as many commodity ETFs and ETNs hold various contracts throughout the year and roll those contracts according to their investment mandate. What that means is that ETF/ETN performance can vary from the underlying commodities.
While many regular investors do find that commodity futures offer certain advantages as investment options, a large number look to get their exposure through ETFs and ETNs, and it is the performance of these vehicles that we will use as proxies for this article………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Low volume exchange-traded products get a bum wrap and the further down the volume totem one goes, the worse the reputation becomes. This scenario exists despite the fact that there is ample empirical evidence suggesting many low volume funds deliver excellent returns.
Importantly, the phenomenon of high returns from low volume ETFs and ETNs is not limited to just one asset class. Five of the 10 best-performing equity-based ETFs year-to-date will not be winning any volume contests any time soon……………………………………….Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Physically backed palladium exchange-traded funds recorded net outflows during the just-completed third quarter, while platinum ETFs had inflows, said the Union Bank of Switzerland (UBS) in a commodity snippet.
According to UBS, Palladium ETFs had their worst quarterly showing since the fourth quarter of last year, with outflows of some 25,000 ounces………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Just as the internet has enabled the rise of e-commerce, it has also led to the emergence of e-money - currencies that only exists in digital form. Advocates say these promise to revolutionise the global money supply, but critics insist they are a magnet for crooks.
Virtual currencies such as bitcoin, e-gold and liberty reserve, allows businesses and individuals to transfer funds across the globe without banks or governments charging fees………………………………………..Full Article: Source

Posted on 03 October 2012 by VRS |  Email |Print

Analysts cut their price forecasts for United Nations’ carbon permits to 2020 further on Tuesday as over-supply continued to put pressure on prices, a Reuters poll of 14 analysts showed.
UN carbon permits, called certified emissions reductions (CERs), have lost more than 70 per cent of their value over the past year on the continued over-supply of permits, low demand due to the global economic downturn and concerns about restrictions on CER use in other countries’ carbon markets………………………………………..Full Article: Source

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