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Commodities Briefing 12.Dec 2012

Posted on 12 December 2012 by VRS |  Email |Print

A leading investment strategist has called the end of the commodity ‘’super-cycle” that helped keep Australia out of recession during the global financial crisis.
”After an upturn lasting a decade, the commodity super-cycle’s end is at hand,” says the head of investment strategy for Australia at UBS, Mark Rider. Rider, who has worked for the Reserve Bank of Australia as the head of economic activity and forecasting, says the forces of supply and demand that contributed to a rapid and sustained rise in commodity prices over the past decade are now driving prices lower………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Global demand for commodities likely will survive domestic and global threats such as the fiscal cliff and the euro crisis over the next two years, buoyed by global growth and a stronger Chinese economy, analysts said at the Bank of America Merrill Lynch Global Research 2013 Year Ahead.
“We’ve heard about the impending fiscal cliff. This could be a big risk to markets,” said Francisco Blanch, head of global commodities and derivatives research at New York-based Bank of America Merrill Lynch. “(But) we expect global growth to be roughly 3.2 percent next year, and this will lend some support (to) commodity demand in general.”……………………………………….Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

The price of gold and the U.S. stock market will both hit record highs in 2013, contend forecasters at Merrill Lynch. The projections, made Tuesday at the investment bank’s annual outlook conference, are some of the most bullish in the current batch of year-end brokerage forecasts, the annual ritual in which investment analysts spend part of December peering into their crystal balls for clues on where their clients will find the best opportunities over the next 12 months.
Merrill’s upbeat take is based on its view that the global economy will strengthen gradually next year, as major central banks continue their easy-money policies………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Resource nationalism is making commodity prices more volatile and threatens global security, warns think-tank Chatham House. Based on new data concerning commodity trade flows, a report by the think-tank highlights how international politics has come to dominate resource markets.
It says “every country for itself” resource grabs mean markets do not respond properly to higher prices, risking trade wars, environmental degradation and famine in poorer countries unless new ways are found to govern resources………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Global growth should pick up slightly in 2013 on improvements in both the advanced and developing economies, says State Street Global Advisors’ global CIO Rick Lacaille. However, risks remain skewed to the downside, he said, reflecting potential fallout from the Chinese slowdown, the European debt crisis and the US fiscal cliff.
He adds: “Investors have become all too familiar with the headwinds to economic growth and corporate profits and therefore remain concerned with the potential for losses on risky assets………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

A plausible theory is circulating that the commodity super cycle driven by China and India will be more “differentiated” among raw materials, depending on supply-demand balances. Citigroup’s head of global commodities research, Edward L. Morse, believes the “super cycle” of commodity price gains is ending as China’s economy moving toward slower growth and an increase in supplies.
Morse thinks prices won’t climb “sharply” higher even though quantitative easing from global central banks lifts gold bullion demand. The S&P’s GSCI Spot Index of 24 raw materials, which has increased four fold since 2001, is up just shy of 1% this year evidenced by sluggish growth in global economies including China……………………………………….Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

OPEC is expected to keep output unchanged. However, OPEC ministers, in particular Saudi Arabia’s Oil Minister Ali al-Naimi, are expected to use this week’s meeting in Vienna to again push for Brent to average closer to $100 per barrel, Chris Weafer, chief strategist at Moscow’s Sberbank Investment Research, wrote.
He reminded that Saudi Arabia’s Oil Minister successfully talked the price down from over $120 per barrel to under $100 per barrel in the spring against a backdrop of renewed global growth concerns………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Saudi Arabia has cut oil output to its lowest level for a year as a combination of surging US crude production and weakening economic growth sapped demand.
The sharp fall in Saudi production, details of which were published ahead of a meeting in Vienna of the Opec oil cartel, contrasts with surging US energy output as hydraulic fracturing or “fracking” have unlocked vast quantities of shale oil and gas………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Most members of the Organization of Petroleum Exporting Countries are signaling they’ll keep production policy unchanged at a meeting in Vienna today as the group struggles to agree on a new secretary-general.
While OPEC’s own forecasts show that it’s pumping more than consumers need, Saudi Arabia, Iraq, Iran, the United Arab Emirates, Angola and Ecuador have indicated that supply and demand are approximately in balance, suggesting that the group will stick to its official output target of 30 million barrels a day………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Members of the Organization of the Petroleum Exporting Countries will officially meet Wednesday to discuss their production ceiling, and, while they aren’t expected to offer any surprises, they’ll certainly have a lot to discuss.
“What if they held an OPEC meeting and nobody came?” asked Phil Flynn, senior market analyst at Price Futures Group. “Really, OPEC seems to be an afterthought by traders who used to buy and sell on their every word. It is unlikely that OPEC is in a position to do anything of significance.”……………………………………….Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Hopes of the US Federal Reserve Bank announcing more stimulus measures to boost economy could drive gold higher on Tuesday. However, the dollar’s weakness against a basket of major currencies could cap gains.
Economists say that the US Fed will announce purchase of bonds worth $ 45 billion after its meeting on Tuesday and Wednesday. This would mean pumping money in the US economy to improve employment prospects………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Demand for gold coins in the US has leapt since the presidential election, as small investors and wealthy individuals fret about the lack of action to address America’s ballooning debt.
The US Mint’s sales of American Eagles, one of the most popular bullion coins, jumped by 131 per cent in November to hit their highest level in more than two years, while the Royal Canadian Mint had its strongest month of sales for the year so far. Terry Hanlon, president of metals at Dillon Gage, one of the largest bullion dealers in the country, said that sales had risen sharply “within a day or two” of the election………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

India, the world’s largest bullion buyer, should mobilize idle gold lying with its citizens to curb imports and lower a record current-account deficit, according to the All India Gems & Jewellery Trade Federation.
Households including temples carry about 25,000 metric tons and a successful plan to gather at least 10 percent of the gold reserves for lending to jewelers will ensure supplies for three years, Bachhraj Bamalwa, chairman of the federation, which represents about 300,000 jewelers, said……………………………………….Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

The Fed’s latest round of quantitative easing will total $1.1 trillion, with about $620 billion in mortgage-backed securities and $500 billion in Treasuries. They have to get the economy up to a speed where the momentum will carry it forward without this support. If they fail and momentum slows then the whole QE program will turn toxic and create accelerating monetary inflation. That’s why so many worry about quantitative easing so much.
Nevertheless it will undermine the value of the dollar anyway and in the process and over the longer term, boost precious metal prices. Any sign of runaway monetary inflation and precious metal prices will take off never to look back………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Private equity funds were increasingly looking at the mining and metals market for possible investment, advisory firm Ernst & Young (E&Y) Australia and Asia-Pacific mining and metals transaction leader Paul Murphy said.
“There is increasing interest in mining and metals from private equity funds, other specialist funds and sovereign wealth funds and we see this trend continuing into 2013,” Murphy said this week, which was despite the challenging market conditions facing junior and midtier miners………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

There is nothing wrong with metals. It is we who don’t have a real perception about these. The regular investor who is so equity-focused, a little fixed income-focused, is aware of gold and oil prices and that’s where it stops. When it comes to commodities or, say, metals, one has to cross the bridge.
The equity investors stay on one side and the commodity specialists on the other. Why is that so? Why are commodities or metals across the bridge? Why is it so hard for a regular investor to look at copper or zinc as investible assets?……………………………………….Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

Gold, copper, silver, platinum and palladium will outperform other commodities next year on easing by the U.S. Federal Reserve and supply constraints, according to Bank of America Corp. Global economic growth will average 3.2 percent in 2013, “modestly” supporting demand for raw materials, analysts led by Francisco Blanch said in a report today.
The so-called fiscal cliff of automatic tax increases and budget cuts could tip the U.S. economy into recession and “abrupt policy changes” in Europe may cause “large commodity price swings,” the analysts wrote. The bank is neutral on commodities, John Bilton, European investment strategist, said………………………………………..Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

The Polish zloty led a resurgence against the euro Tuesday. The currency, along with other emerging European currencies, got a boost after a key economic indicator in Germany surged in December raising expectations of growth in that economy.
Germany is the main market for Polish and Czech exports, and these economies had slowed in the third quarter due to weaker demand for goods. Investors had begun to worry that the downturn would extend well into 2013, and this had weakened the Polish zloty and Czech koruna…………………………………………Full Article: Source

Posted on 12 December 2012 by VRS |  Email |Print

The Aussie dollar has rallied to its highest level in almost three months after a rebound in German investor confidence lifted global markets. At 7am this morning, the currency was trading at US105.22 cents, up from US104.82c.
It reached a high of US105.33c overnight, its highest level since September 17, after a closely watched indicator of economic sentiment in Germany rose to 6.9 points, from minus 15.7 in November………………………………………..Full Article: Source

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