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Commodities Briefing 18.Dec 2012

Posted on 18 December 2012 by VRS |  Email |Print

Investors almost doubled purchases of commodities this year, at a time when Goldman Sachs Group Inc. and Morgan Stanley are forecasting higher prices and Citigroup Inc. says the best returns are over.
Money invested in commodity funds increased by $21.6 billion this year, up 92 percent from the gain in 2011, according to Cambridge, Massachusetts-based EPFR Global, which tracks the flows. Hedge funds’ bets on a rally are 51 percent bigger than a year ago, U.S. government data show. Precious metals will lead returns in 2013, rising as much as 25 percent, as grains advance 18 percent and industrial metals 16…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Commodities funds still have an important role to play in investors’ portfolios despite the threat posed to the sector by the Chinese slowdown, according to Jason Hollands, managing director of communications at Bestinvest. Chinese demand has become critical to commodity markets and, as growth in the world’s second-largest economy has slowed, prices in the asset class have suffered.
However, Hollands says that the outlook for the sector is not as clear-cut as many think. “Our view is that it’s quite finely balanced,” he commented. “We subscribe to the view that China has been a major driver of commodity markets and we are nervous about this.”……………………………………Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

The International Energy Agency slightly raised its forecast for oil demand for 2013, but said the tepid rate of global economic expansion would keep demand relatively sluggish. In its monthly market report, the Paris-based agency, which represents major energy-consuming nations, upped its forecast for global oil demand in 2013 by 110,000 barrels a day to 90.5 million barrels a day.
The IEA said emerging markets continue to dominate growth, five of the top-10 oil consuming nations now are non-OECD countries. As OPEC ministers meet in Vienna Wednesday, the report shows how growth in oil demand is shifting to emerging market economies and away from the world’s developed economies. Oil prices have stayed consistently high, despite declining growth in Europe and in the U.S…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

The outlook for Gold remains positive with physical buying supporitive and looks supportive as the Lunar Year approaches but market needs to break above $1755/Oz for bullish trend to be confirmed, according to Barclays Research.
On Monday electronic trading, Comex Gold for February delivery is down $5.2 at $1691.8 /Oz. Barclays report said that support is seen at $1684, 1672 while resistance is sseen at $1713 and 1723/Oz. However reasons to buy are emerging in the $1670 areas and this will form a base for the next leg higher…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Gold has divided the analyst community through this volatile 2012, with some, like Goldman Sachs, calling for the end of its decade-long rally, while others expect it to average $2,000 an ounce by the end of next year. There’s one thesis that has built consensus, though: gold is set to rally in the first half of the year as a result of the Fed’s latest round of quantitative easing, possibly to fresh all-time highs.
Gold has always been a divisive asset class, sparking intense debates between gold-bugs and those that call them fear mongers…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Calling a peak to the gold (and silver) bull markets are probably premature as record low interest rates, fear of currency debasement and eventually rising inflation will continue to support. We see the potential for gold reaching 2075 before weakening to trade the year at an average of 1840 USD/oz.
Commodities with tight supplies should do well despite uncertainties about the economic outlook. Here we primarily think of precious……………………………………Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

With experts predicting rising gold prices for at least the next year, it’s no surprise that more and more investors want to know how to buy gold.
According to the facts and figures cited last month by Money Morning Global Resources Specialist Peter Krauth, 2013 should be a banner year for gold. Krauth projects prices for the primary precious metal could easily climb from the current $1,700 an ounce to $2,200 – or even more – a one-year gain in excess of 25%…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Those who follow the day to day developments in the gold and silver markets have typically seen rampant market manipulation by large traders and bullion banks.
Although supposedly against the rules — and even being subjected to an ongoing investigation by the CFTC that now reaches into its fifth year — this market bullying is nevertheless allowed to happen over and over again without effective regulatory intervention…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

With just two weeks left in 2012, it is never too late to start thinking about how the markets will likely behave at the start of 2013. By all metrics, this has been a phenomenal year for equities on a real-return basis, and it appears that Armageddon in Europe has been avoided despite the pundits arguing with 100% certainty that a Lehman repeat would occur.
It appears that many hedge funds completely missed the rally in risk, and now I see many on Twitter making the bear case for 2013 due to the fiscal cliff, overreaction on the upside and slowing growth. However, the problem I have with such statements is that they are opinions divorced from what actually matters in markets, which is crowd expectations…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

There are many reasons to own physical gold. They arise from the financial and monetary uncertainty impacting investors around the globe. Some of the more obvious reasons are: Weakening economic activity and rising inflationary pressures bring back unpleasant memories of the stagflation experienced in the 1970s, Geopolitical tensions remain a major area of focus and the ongoing sovereign debt crisis and the knock-on effect it is having on the solvency of some of the world’s largest banks because they own too much government paper.
By owning physical gold you are protected from the above because physical metal does not have counterparty risk. But do you also want to own the shares of gold mining companies? There are two things that need to be considered to answer this question…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

The Reserve Bank of Australia said its decision to cut the official cash rate to its equal lowest point ever was influenced by its belief that Australia’s mining boom is nearing its peak. In the minutes of its December policy meeting, the central bank said the short-term outlook for investment in sectors outside of resources remained subdued.
“At this meeting, the information on labour costs and softening labour market conditions suggested that the inflation outlook still afforded the board some scope to provide additional support to demand,” the RBA said…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Precious metals investors have been on a wild ride this year, as economies pulled back and forth and a number of major events had these metals all over the board. This year saw the announcement of QE3, QE4 and the re-election of president Barack Obama; all of which had big implications for precious metals.
But what many investors are concerned about is not necessarily how these commodities performed as a whole, but who outshined the rest…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Exchange traded funds (ETFs) could soon replace traditional mutual funds as the primary investment vehicle for individuals because of the huge cost, tax, and liquidity advantages they offer. That’s the learned opinion of my friend, Tom Lyden, who runs a site dedicated to this versatile security.
Tom’s site offers updates on new ETF launches, research tools, and a free newsletter presenting a half dozen investment ideas a day. He finds ETFs so attractive that he has converted his own management practice for high net worth individuals at www.globaltrend.com from one focused on mutual funds, to an ETF orientation…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Inflows into European gold exchange-traded products (ETPs) have reached $6.8 billion year to date (15.4% growth), bringing total assets to $44.2 billion in a year when the spot gold price has increased by 9% year to date in US dollar terms and ranged from $1,540 to $1,790/oz.
As demand for gold and other precious metals has continued to grow, investors have increasingly adopted physically-secured ETPs as their vehicle of choice.One such product, the Source Physical Gold P-ETC (SGLD), has gathered $1.5 billion in net new assets (NNA) so far in 2012, the highest of any European gold ETP year to date…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

Europe’s currency is toughening up, in part because fiscal crises in the US and Japan suddenly seem much more dire. But how long will it last? The euro had been in decline against the dollar and the yen since the end of February through July 24. After a rally through Oct. 17, it dropped again until Nov. 13. During those specific declines and during that seven-month period in general, money flowed into dollars and yen and into assets denominated in those currencies.
A rising dollar weighed on the price of commodities such as gold and oil. Japanese exporters found themselves at a painful disadvantage in selling their goods — such as cars — to European customers who weren’t inclined to buy anyway as their economies slipped into recession…………………………………….Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

A massive sell-off by speculators fuelled a decline in values of US wheat which has left the grain looking amongst the cheapest in the world, challenging Indian supplies on price. Managed money, a proxy for speculators, cut it net long position in Chicago wheat futures and options by more than 22,000 contracts, the biggest sell-down since January, regulatory data showed.
The data were for the week to December 11 – a day marked by the US Department of Agriculture’s 50m-bushel cut to its forecast for US wheat exports in 2012-13, a downgrade which sent prices of the grain tumbling to their lowest since July……………………………………Full Article: Source

Posted on 18 December 2012 by VRS |  Email |Print

According to the Financial Times, “a mysterious white substance is being smuggled over the border from Vietnam to China in growing quantities.” Of course this substance is a staple of modern Western society and something increasingly in demand in China and other emerging markets.
The FT states that: “China is the world’s top importer of raw sugar and third-largest consumer overall. Toby Cohen, a director at London sugar merchant Czarnikow, points out that China’s overall sugar consumption is still low in per capita terms, and expects it to keep growing. China could consume “double the volume of sugar it is consuming today, and still be consuming less on a per capita basis than the western economies,” he said.”……………………………………Full Article: Source

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