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Commodities Briefing 10.Dec 2012

Posted on 10 December 2012 by VRS |  Email |Print

Investors cut bullish commodity bets for the first time in three weeks as U.S. lawmakers appeared no closer to an agreement to avert more than $600 billion in automatic tax increases and spending cuts and Europe cut its growth outlook.
Speculators and money managers decreased net-long positions across 18 U.S. futures and options by 3.4 percent to 898,380 contracts in the week ended Dec. 4, U.S. Commodity Futures Trading Commission data show. Gold holdings fell 25 percent, the biggest drop since March, as Goldman Sachs Group Inc. said the longest winning streak in at least nine decades will peak next year. Wheat bets fell for the second time in three weeks………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Asset prices across the world have risen to heady levels not seen since the credit boom five years ago and may be losing touch with economic reality yet again, the Bank for International Settlements has warned.
“Some asset prices appeared highly valued in a historical context relative to indicators of their riskiness,” said the bank in its quarterly report………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

There were a few flickers of light in the global economic news over the weekend with a decent jobs report in the US and a higher turn in a range of key Chinese data. The Sunday data dump out of China suggests the world’s second largest economy is about to pick up from the three-year slowdown with industrial production and retail spending stronger than expected in November. Fixed asset investment was also strong as the business investment growth slowly recovers from a nine-year low.
At the same time, China’s annual inflation rate edged higher to 2.0 per cent in the year to November from 1.7 per cent in the year to October, while producer prices fell sharply at an annual pace of 2.2 per cent………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Oil rose from the lowest level in three weeks in New York after China’s crude processing climbed to a record and industrial output beat estimates. OPEC meets in Vienna this week to discuss its production quota.
Futures advanced as much as 0.4 percent after falling the past four days. China’s refining climbed 9.1 percent in November from a year ago to 10.2 million barrels a day and industrial production jumped 10.1 percent, the National Bureau of Statistics in Beijing said……………………………………….Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

As OPEC meets in Vienna this week, discussions are likely to be dominated by clashes over the appointment of a new leader for the group, leaving it ill-equipped to grapple with a major shake-up under way in the global oil market.
Insiders and analysts say the Organization of the Petroleum Exporting Countries has little chance of responding effectively to the shale-oil boom, which is forecast to rewrite global trade movements and turn the U.S. into the world’s largest oil producer by 2020, if it can’t overcome its divisions and agree on a candidate to lead the group for the next three years………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Organisation of Petroleum Exporting Countries’ (Opec) likely decision to leave quotas unchanged next week belies the growing prospect of having to make the deepest oil-production cuts since 2009 as a global supply surge threatens to weaken prices.
The Opec may need to lower output by 1 million barrels a day, or 3 per cent, in the first half of next year, according to Societe Generale. Brent crude may drop 20 per cent by June if the group doesn’t reduce the amount it pumps, the Centre for Global Energy Studies said………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Just like the mythical free lunch, there is no such thing as the price of oil. That’s not to say oil isn’t priced; just that there is no single price.
Of course, there’s no single price of petrol, either, and you may well pass by several gas stations in search of a better deal. But in the oil markets there are not only differing grades (such as in density and sulphur content) in different locations, but now additionally very substantial discrepancies between the key benchmarks………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Jim Rogers, the legendary commodity investor speculates that he may have a knowledge gap when it comes to shale gas but points out the fact that “ the number of drilling rigs for shale gas (in US) has gone down 75 percent in the last 18 months or so.”
The wells are generally short-lived, he said: “they’re great for the first 30 days. But by year three or four, they’re very expensive to maintain.”……………………………………….Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

The Obama Administration has only approved one terminal to export natural gas so far, apparently waiting for an economic study before deciding whether or not to release more outlets for exporting the gas. The delay in deciding the fate of natural gas may soon be coming to an end, however.
A study released by the government on Wednesday confirms that the exporting of natural gas would be financially beneficial to our country - enough to offset the rise in prices that exporting may pass onto those who use natural gas domestically for things such as heating………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

With supply expected to grow by about 1.4 Bcf/d y/y through the winter (Dec 2012-Mar 2013), natural gas needs to be deep within the coal stack in the Eastern power markets for the gas market to balance, assuming normal weather. “This keeps a lid on gas prices despite tightening market fundamentals.” Barclays said in a report.
In December, unless weather patterns return to normal or become colder, there could be further downside to prices, as the y/y short fall in nuclear generation is due to more than halve in the month, lending less support to power burn………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

With oil and gas demand shifting to eastern economies, the IEA said China could account for as much as 40 percent of the global renewable energy growth. China has a five-year development plan to limit coal production and use by 10 percent of 2011 levels by 2015. The International Energy Agency said China aims to double the amount of natural gas it uses by 2015.
The official Xinhua news agency this week reported that China’s development plan through 2015 calls for the addition of 123 trillion cubic feet of proven conventional natural gas reserves. ……………………………………….Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

From 1913 to 1971, the price of gold went from $18.92 an ounce to $40.62 an ounce. But after the Bretton Woods system was taken down in 1971, the price of gold started to skyrocket. It went from $40.62 an ounce to $871.96 (average gold price in 2008) to $1,571.52 (average price in 2011) to over $1,700 today.
It seems that within the last 10 years the price of gold has been unstoppable and has continuously gone up regardless of market trends. Are those prices here to stay, or is gold going to keep up its momentum?……………………………………….Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

The best way to take advantage of this imminent further devaluation of the dollar is to move as much of your investable funds into physical gold and silver as you can. Also, you can create rate of return leverage with this by investing in mining stocks (which are egregiously cheap right now).
To implement this strategy, you would be piggy-backing an investor class with the best look at “inside” information regarding the issues of money printing and economic health: the world’s Central Banks. As chronicled by this report, Central Banks globally have purchased a record amount of over 500 tonnes of gold during 2012………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Goldman Sachs has put out a negative call on gold saying that the bull market is over, exactly the sort of market maneuver predicted six weeks ago by “Mr. Gold” Jim Sinclair, the widely followed veteran of the 1970s gold boom.
Then he claimed the bullion banks would look to pull gold down one last time to allow them cover to reverse their own huge short positions in the market. Once this is safely accomplished they will go fully long in their own positions and take the gold price far higher………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

The United States “confiscation” of 1933 is well-known (in fact a compulsory purchase, made at the then-price of $28 per ounce before the price was raised to $35.) But with gold still central to the monetary system, many governments were looking to acquire more. With a smile, of course.
December 1935 saw popular Fascist dictator Benito Mussolini appeal to the patriotism of Italy’s wives, urging them to swap their gold wedding bands for steel rings instead. Yes, really. ……………………………………….Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

According to several sources the consensus forecast among analysts ahead of the report was for 93,000 jobs added in November, with the official unemployment rate expected to hold steady at 7.9%. “US payroll data will be the main number focus today but there’s probably two reasons why we might expect less reaction than normal,” says Standard Bank analyst Steve Barrow.
“The first is that the markets are clearly fixated by the fiscal cliff and it is doubtful that any data is going to have a significant impact until the cliff is sorted. Secondly, economic growth this quarter will be written off due to the impact of [Hurricane] Sandy.”……………………………………….Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

If the president wants to avoid an economic calamity next year, he could always show up at a news conference bearing two shiny platinum coins, each worth … $1 trillion.
This sounds utterly insane. But some economists and legal scholars have suggested that the “platinum coin solution” is one way to defuse a crisis if Congress cannot or will not lift the debt ceiling soon. At least in theory………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

As 2012 nears its close, investors are beginning to look toward a new year, one that will hopefully be less volatile for the commodity world. The precious metals world, in particular, saw a fair amount of volatility throughout the past year as this elite group of four has rarely had a quiet period. With the approaching fiscal cliff and economic uncertainty fresh in the minds of many, predicting where these commodities will end up next year has become a hobby of analysts all across the market.
Citigroup (C) recently came out with its forecast for these four metals for the coming year, and Citi has some insights that investors may want to pay attention to prior to making allocations………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

World steel market is expected to grow in both consuming and exporting regions, positive trends have been observed recently in Asia, USA, China during the past two months, according to The Steel Index monthly report on steel.
The TSI report has quoted a research note from Goldman Sachs’ analysts which expects little change for HR sheet for the remainder of 2012, seeing price stability around the US$640/short ton mark with possible upside to the price in early Q1………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

For listed mining companies everywhere, this year has been all about stock prices facing headwinds, along with relentless pressure on CEOs. The benchmark stock, BHP Billiton, the world’s biggest diversified resources group, saw its stock price in US dollar terms peak out in the latter stages of 2010.
Given the wobbles in the global economy, the fall from there has been relatively modest, from around US$26.00 a share to recent trades around US$19.00. Vale, the world’s No 2 miner by market value, has seen its stock price fall by just over 50%, to current levels around US$17.00 a share………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

While many of us believe in buying gold in the form of coins and ornaments, investors are increasingly looking at exchange traded funds (ETFs) with gold as the underlying asset.
The reasons are straightforward. One, when you buy a unit of an ETF you get to buy gold of certified purity at prices closest to the prevailing international prices, at the current exchange rates. The only additional cost you incur is brokerage………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

The Australian dollar is slightly higher as a sell-off in the euro currency weighs against positive sentiment from US employment figures released late last week. Around midday, the currency was trading at 104.82 US cents, up from 104.78 US cents on Friday afternoon.
Easy Forex currency dealer Tony Darvall said the sell-off in the euro was weighing against the Australian dollar. The euro has fallen against major currencies after Italian Prime Minister Mario Monti announced his intention to resign………………………………………..Full Article: Source

Posted on 10 December 2012 by VRS |  Email |Print

Climate campaigner Cindy Baxter fears carbon trading has been put at risk by New Zealand’s position on greenhouse gases. A United Nations meeting in Doha on Saturday decided to extend the life of the Kyoto Protocol until 2020, but New Zealand was one of four countries that voted against.
Ms Baxter said New Zealand will now be shut out of trading with the European carbon market as a result of its position. She said that could leave companies that have already bought carbon credits dangerously exposed………………………………………..Full Article: Source

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