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Commodities Briefing 05.Nov 2012

Posted on 05 November 2012 by VRS |  Email |Print

It used to be that most individual investors seeking to bet on commodities faced a stark choice: buy shares in companies that produce raw materials, or drill for oil near the bullion buried in the backyard.
Now individuals have a much wider range of options, thanks to a growing menu of mutual funds and exchange-traded funds. In addition to funds that hold commodity-related stocks, which have been around for decades, there are ETFs that invest in physical metals and commodity futures, as well as some more narrowly drawn commodity-stock portfolios………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Hedge funds cut bullish wagers on commodities by the most since June as prices retreated to a three-month low on mounting concern that Europe’s debt crisis will worsen and U.S. growth slow. Money managers reduced combined net-long positions across 18 U.S. futures and options in the week ended Oct. 30 by 11 percent to 1.05 million contracts, the lowest since July 10, Commodity Futures Trading Commission data show.
Copper holdings fell to an eight-week low, and gold wagers are now the smallest since September. Gasoline bets declined for a fourth week, and those in oil reached the lowest level in four months as Hurricane Sandy forced U.S. East Coast refineries to shut………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Russia has emerged as the world’s largest producer of Crude Oil ahead of Saudi Arabia in 2012. According to US Geological Survey (USGS) data, Saudi Arabia topped the charts until 2011 producing 10.5 mn barrels per day in 2011 while Russia produced 10.1 mn barrels per day.
However, Reuters reported that Russia has emerged as the world’s largest crude oil producer this year having increased production to 10.46 mn barrels per day thanks to increased production by Rosneft, soon to be world’s biggest crude supplier………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Both BP and Royal Dutch Shell posted better than expected results last week, boosted by their refining operations. However, this positive trading backdrop is unlikely to last. The oil refining industry has been weak for many years – due to the stuttering global economy and because of its significant overcapacity across the world.
“Industry refining margins increased sharply from year-ago levels across all of the regions in which we operate,” Simon Henry, Shell’s finance director, said last week. “It’s been quite a while since we’ve been able to make such positive comments on the downstream macro.”……………………………………….Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Oil industry economist and consultant Philip K. Verleger, Jr. recently predicted that the United States will export more energy than it imports within a decade. Five, certainly ten years ago, to make such a claim would require someone smoking some pretty strong stuff. Today, they would likely be viewed as overly optimistic.
That optimism may not be altogether unfounded. First, American consumers and businesses are more fuel efficient. As Ezra Klein showed in the Washington Post, the US is squeezing more GDP from a barrel of oil than ever………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

On Friday, the Energy Information Administration released U.S. natural gas production statistics for the month of August. The report shows remarkably little change from the previous several months and re-confirms the earlier established trends.
The Lower 48 gross natural gas withdrawals remained essentially unchanged from the previous month. However, if the production shut-ins due to Hurricane Isaac are taken into account, the production would have shown a modest month-on-month increase………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

As rumors fly that leading Western economies have exhausted their gold hoards, China has become the world’s biggest gold producer while also discretely accumulating bullion reserves.
In sharp contrast to the powerhouse manufacturing industries which have brought about its rapid economic ascent, China is not exporting any of the bullion it produces, and that despite being the world’s biggest gold producer no on ever sees bars with Chinese stamps on them………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

One of the most common questions that I’m asked goes something like this: “If the deflationary long-term cycle is in its ‘hard down’ phase until 2014, why should we expect gold’s value to rise? Shouldn’t we instead expect to see a rising dollar along with a falling gold price?”
That’s a good question and on the surface it makes sense. The dollar after all has historically been inversely correlated with gold, and since the currency tends to benefit from deflation it stands to reason that a rising dollar during “runaway” deflation would lead to lower gold prices. The answer is more complex than this, however………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

According to a note from HSBC out earlier this week there is a loose correlation between Democratic control of the White House and Congress and higher bullion prices.
While at pains to point out that this line of inquiry shouldn’t be taken too far or relied on at all heavily because gold prices are influenced by far more than the red or white nature of the White House, a look at gold’s performance in light of who is in charge does show some interesting trends………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Gold has always attracted potential investors, not just because of its beauty but also due to the fact that the price of the precious metal has risen for 11 consecutive years. There are many different ways of investing in gold other than buying physical bullion - like gold equities, gold ETFs and options.
One of the examples of gold ETFs is SPDR Gold Shares (GLD), an investment fund which reflects the performance of the price of gold bullion. Market Vectors Gold Miners ETF (GDX) is another example………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Increased output of home appliances in China bodes well for copper, helped by demand around holidays in the country, said Barclays Capital in a commodity research note. According to the British bank, Chinese official data show that refrigerator, air conditioner and washing-machine production rose 8%, 14% and 25% year-on-year, respectively, in September.
“Although demand was amplified by the holiday effect, September data suggest that more positive signals are emerging from one of the worst-hit sectors this year,” they continued………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Silver is no doubt tiny on the grand commodities scale. But its attractiveness, spearheaded by a 1000%+ bull-to-date gain to its latest high, has spawned a wide range of products for investors to partake in. And one of the most unique and powerful is the iShares Silver Trust ETF (SLV).
This ETF’s objective is quite simple, to mirror the price of silver (minus a small management fee of course). But while simple in its objective, two unique traits have allowed SLV to take the silver market by storm………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

According to the CIA World Fact Book, the United Statesoperates the largest single-country economy in the world. Its gross domestic product for 2011 was estimated at $15.3 trillion, trailing the European Union, which is comprised of 27 different countries, by only $360 billion.
China remains in third place, as the developing economy continues to see rapid growth in recent years due to its build out of industrial capacity and its growing class of individual consumers. Growth in the U.S., however, remains subdued below 2%. The global economic slowdown has certainly hampered the nation’s growth, but there still remains a few economic bright spots, namely the advancement of domestic energy production……………………………………….Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Commodity traders think about the United States for natural gas, Saudi Arabia and other Middle Eastern nations for oil, Africa for gold, and Asia for foods such as rice. In doing so, they sometimes ignore commodity-rich Canada.
Canada has the seventh-largest economy in the world and is the second-largest country by land mass. It has a wealth of natural resources, making it a large energy and minerals exporter. For commodity traders looking to invest primarily in North America, Canada presents a compelling opportunity………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Volume growth in derivatives and commodities trading and clearing hit a record high last month, but the securities market activity declined, said the Singapore Exchange (SGX).
According to its monthly report, the turnover for securities fell 6 per cent year-on-year to S$26 billion last month, while daily average value (SDAV) fell 14 per cent to S$1.2 billion. Month-on-month, turnover fell 8 per cent from September, while SDAV was down 16 per cent………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

The turnover of China’s futures market hit 134.74 trillion yuan ($21.39 trillion) during the first 10 months of 2012, a year-on-year increase of 18.84 percent, latest data has indicated.
More than 1.15 billion transactions took place on the country’s futures market in the January-October period, up 32.51 percent from the previous year’s equivalent period, according to a China Futures Association statement issued on Saturday………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

On 26 October, the Chinese currency’s (the renminbi) spot exchange rate against the US dollar reached the upper limit of its floating range for the second consecutive trading day. The rise began when the trading band for the renminbi’s dollar exchange rate was widened to ±1%, and has now reached an all-time high since 1994.
With little sign of improved economic fundamentals, rapid currency appreciation is a potentially dangerous development for China—in part owing to the risk of an abrupt and painful reversal………………………………………..Full Article: Source

Posted on 05 November 2012 by VRS |  Email |Print

Taiwan’s transformation into the world’s second offshore yuan center, after Hong Kong, will give central bank Governor Perng Fai-nan ammunition in his fight against currency appreciation.
SinoPac Financial Holdings Co., overseeing the island’s biggest yuan bond fund, and Uni-President Assets Management Corp., part of a Taiwanese conglomerate, say they will consider shifting more investments into higher-yielding assets denominated in China’s currency as officials finalize a clearing agreement first signed in August………………………………………..Full Article: Source

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