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Commodities Briefing 11.Oct 2012

Posted on 11 October 2012 by VRS |  Email |Print

Stocks aren’t the only asset class that could feel the pinch of the slow-growth environment. Commodities could also be at risk, says Jurrien Timmer, co-manager of the $402-million Fidelity Global Strategies Fund.
Like stocks, commodities got hit hard during the financial crisis: The Reuters CRB Continuous Commodity Index fell nearly 50% from its peak on July 2, 2008, through its low on Dec. 5, 2008. And like stocks, it’s since rallied: The index has jumped 80% since hitting that low………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

The threat of S&P downgrade and a rising dollar will continue to sway commodities across the board in the domestic market on Thursday. With Spain worries leading to further fall in the euro against the dollar, the rupee is likely to decline further. A rising dollar will make gold imports costly and hence, gold could continue to gain.
Gold has been gaining in the domestic market with the fall in the rupee this week. In New York, spot gold closed lower at $1,762.90 an ounce………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Commodity prices appear vulnerable to risk aversion driven by rising Eurozone sovereign stress. The Fed’s Beige Book is in focus on the economic calendar. Commodities came under pressure overnight as broad-based risk aversion plays out across financial markets.
The MSCI Asia Pacific regional benchmark equity index fell 0.8 percent. Newswires cited guidance in the third-quarter earnings report from Alcoa Inc as the catalyst for the dour mood. While the leading aluminum producer’s results beat analysts’ estimates after adjusting for a handful of special items, its forward guidance warned of the dangers posed by a slowdown in China and carried a downgrade in the outlook for demand………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Commodity prices mostly made a comeback in Q3, led by sharp rises in many agriculture products driven by the drought in the US, but all told prices are mostly down for the full year, as the steady, multi-year rise in input prices has reverse itself since early 2011. Overall, commodity prices had been on the march higher for nearly a decade.
After rising rapidly during the mid-2000s, commodities naturally enough hit the skids in late 2008 and 2009 during the financial crisis, finding a bottom in about November of 2009, according to the often cited Reuters CRB Commodity Index……………………………………….Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Two Chinese fund houses have launched funds focused on the domestic commodities futures market as they look to tap into the burgeoning market that regulators have cautiously opened to local financial institutions this year.
More than a dozen Chinese futures brokerages, which until recently were barred from investing directly into the futures market, have also applied to set up funds that trade commodity futures through a managed account product………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Canada’s resource-fueled economy faces the threat of a swooning commodities market at a crucial point in the economic recovery. From Europe to the United States and especially in China, the outlook for commodities is diminishing heading into 2013, with the impact already being felt abroad.
Evidence is mounting that Canada, where commodities drive about 20 per cent of the gross domestic product, will not be spared some hardship. Canada is a major producer of potash, coal, iron ore, nickel, copper, gold, zinc and uranium, among other base and precious metals that have been hit especially hard as a decade-old commodities market starts to lose steam………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

OPEC trimmed its forecast for world oil demand growth in 2013 due to a slowing global economy and said it expected a trend for ample supply to persist, reinforcing its message that producers are doing enough to tackle high prices.
The Organization of the Petroleum Exporting Countries, in a monthly report, trimmed its forecast for growth in world oil demand in 2013 by 30,000 barrels per day (bpd) to 780,000 bpd and said the risk remained skewed to the downside………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

A report published by OPEC Wednesday painted a gloomy picture of the world’s economy, as the group of oil producers lowered its forecast for global oil demand growth this year and warned of a continued slowdown in 2013.
In its monthly oil market report, the Organization of Petroleum Exporting Countries said it saw oil demand growth falling to 800,000 barrels a day this year, 100,000 barrels a day lower than its previous projections. Overall world oil demand is pegged at 88.81 million barrels a day this year………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Global oil demand is looking weaker than previously forecast as the slowing economy continues to weigh on consumption, according to monthly reports released on Wednesday by the U.S. government and OPEC.
The Organization of the Petroleum Exporting Countries trimmed its forecast for growth in world oil demand in 2013 by 30,000 barrels per day (bpd) to 780,000 bpd and said the risk remains skewed to the downside………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Iraq insisted on Wednesday its oil output could reach up to 10 million barrels per day by 2020, far higher than a prediction from the International Energy Agency which outlined several risks.
The latest forecast from Iraq’s deputy prime minister responsible for energy affairs, Hussein al-Shahristani, came as the IEA released its Iraq Energy Outlook report, forecasting Iraq’s oil production to increase to 6.1 mbpd by the end of the decade but warning of factors impeding output growth………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Gold prices are surging again and could set a new record of $2,400 by next summer. The reason? A third round of quantitative easing in the US and more economic stimulus from other central banks around the globe.
The first round of QE in February 2009 drove gold higher from $900 an ounce and it has been rising ever since. Gold was trading at six-month highs and rallied to a near 11-month high above $1,791 last Thursday after the Federal Reserve unleashed more stimulus for the American economy. Gold stocks have also had an impressive run………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Gold price per ounce is expected to touch US$1,800 within the next one year and above US$2,000 over the next two years, driven by higher demand, low interest rate and central bank gold-buying, AmInvestment Bank Group said.
Funds Management Division, Retail Funds Director Ng Chze How said people were now branching into other investment opportunities, with gold and properties as the current top choices………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Investors should double the amount of gold they hold as the value of paper currency diminishes along with the prospects for global economic growth, said a senior executive at Coutts, the private banking arm of Britain’s Royal Bank of Scotland.
Ideally, investors should aim to have 7 to 8 percent of their assets in gold, above the wealth management industry’s average of 3 percent, Gary Dugan, Coutts’ chief investment officer for Asia and Middle East, told Reuters………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Gold is going to benefit from a further move of real (inflation-adjusted) interest rates into negative territory. There is a long-standing inverse correlation between real interest rates and the price of gold. The Fed has clearly signaled that it will take its eye off its 2% inflation target and instead target jobs numbers – effectively declaring an open-ended money-printing program.
It is not alone. The Bank of Japan has dramatically upped its own QE program. And although it says it will sterilize any new issuance of paper money, the ECB has announced its own “no ex-ante” bond-buying promise………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

One only has to compare the charts for the two main precious metals, gold and silver, to see how close the price movement correlation is for the most part. Yes, there are occasional anomalies, but broadly speaking the silver price moves up and down in line with the gold price, although the peaks and troughs tend to be more exaggerated.
Indeed over the third quarter this year silver was certainly the best performing major metal commodity of all (if one ranks gold as a commodity which perhaps runs counter to my last article - see Gold is not a commodity but the strongest currency of all. In this article I am using the word commodity in a more general manner!)………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Silver was the best-performing commodity for the third quarter, ended September 30, 2012 says Michael Lombardi, financial expert and lead contributor to Profit Confidential. The third round of quantitative easing (QE3), silver prices are set to go higher still and the returns could be phenomenal.
“Silver rose about 53% after the first round of QE from 2008 to 2010—twice as much as gold bullion,” Lombardi points out. “In the second round of QE, silver rose 24%—three times the performance of gold bullion.”……………………………………….Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

The introduction of commodity ETFs brought trading to a whole new level, as your average retail investor now has the opportunity to trade something like natural gas futures through a single ticker. As the years have gone on, a number of these products have grown to be some of the most widely-used financial instruments for their respective commodity.
One advantage to ETFs, however, is that liquidity is not hindered by average volume due the the creation process. Instead, there will just be some funds that are more liquid and tradable than others………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

There may be someone in the world who needs the iPath Long Enhanced MSCI EAFE Index ETN, an investment that offers rocket-powered gains and weapons-grade losses from a popular international stock index.
If so, that person hasn’t shown up recently. The iPath exchange traded note last changed hands in January. It’s just one of 394 funds on the ETF Deathwatch, a list of funds that should be on the road to extinction………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

It has been an interesting year for investors and traders focused on the metals. While ongoing economic uncertainty and recent additional monetary stimulus from the Fed has kept gold in the news, silver has quietly had a strong run as well. Amidst that uncertainty, industrial metals like copper have not done nearly so well.
What has that background meant for the leading metal miner ETFs?……………………………………….Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

The world’s insatiable thirst for coffee has made the commodity one of the most active futures contracts on the market. The average retail investor, though, does not need a commodities brokerage account to gain exposure to coffee as there are exchange traded notes that provide access to coffee’s price movements.
Currently, there are two ETNs that track coffee price movements: the iPath Dow Jones-UBS Coffee Subindex Total Return ETN and the iPath Pure Beta Coffee ETN. Both ETNs have a 0.75% expense ratio………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Water has yet to live up to its hype as the commodity bet of the future, but the world’s most basic resource is drawing ever more money as asset managers seek steady inflation-protected returns.
Investment opportunities are increasing as cities in faster growing markets expand and as governments in more developed countries, short of cash, are forced to turn to the private sector to fund upgrades to meet tougher environmental standards………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

Risk-sensitive currencies have been on a roll, but these strategists say the fun is about to end. If you’ve been riding risk-sensitive currencies, you’re probably feeling pretty smart. The Norwegian krone, Canadian dollar, and Mexican peso have seen significant gains as events like the Fed’s QE3 announcement and the European Central Bank’s plan to launch new bond buying have kept investors in a buoyant mood.
Sadly, the party is just about over, say Nick Bennenbroek and Vassili Serebriakov, currency strategists at Wells Fargo. Investor positioning, a lack of good news on the horizon, and the prospect of a sudden end to big U.S. tax breaks are beginning to weigh on risk appetite, they say………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

China’s seven trial emissions trading schemes will represent the second largest carbon market in the world by 2014 and be double the size of Australia’s regime, new analysis suggests. The Climate Institute says a Climate Bridge report, which it commissioned, proves the world is taking action to tackle dangerous climate change and Australia risks being left behind.
“Measured by emissions covered China’s pilot emissions trading schemes will represent the second largest carbon trading effort on earth by 2014,” the report, released on Thursday, states………………………………………..Full Article: Source

Posted on 11 October 2012 by VRS |  Email |Print

UN carbon credits could be worth just 50 euro cents by the end of the decade due to a huge oversupply of allowances, hitting investment in its Clean Development Mechanism (CDM), analysts Thomson Reuters Point Carbon warned yesterday.
The current surplus of Certified Emission Reduction (CER) credits generated in the UN’s CDM and Joint Implementation (JI) schemes, and used by companies to offset their emissions, could be as large as 1.43 billion for the period up to 2020, the company said………………………………………..Full Article: Source

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