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Commodities Briefing 20.Dec 2012

Posted on 20 December 2012 by VRS |  Email |Print

The first part of next year could be good for cyclical and risky assets, says ETF Securities in a research note. Signs of improving global growth and continued strong central bank commitment to a highly accommodative monetary policy, the note says, would indicate that commodities could perform well as an asset class.
The more growth-sensitive commodities, such as base metals and the white precious metals, have most potential to outperform. The more cyclical commodities and those most directly related to Chinese demand will likely perform most strongly, in particular if Chinese growth recovers next year………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

The money that flowed into US commodity products and funds in November was the smallest in one-and-a-half years and little improvement is expected before the year end as investors worry about a fiscal crisis, according to fund tracker Lipper.
For a fourth straight month, Lipper’s fund flow data, which was released on Wednesday, showed that gold products and gold funds attracted the most money in commodities — over $1-billion — as investors saw the precious metal as a quickly saleable asset to cover losses elsewhere………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Resources managers George Cheveley and Bradley George have been increasing their net market exposure to commodities as they see positive macro signs for equities in gold, iron ore and the energy majors over the next few months.
Cheveley told Citywire Global that he expected an upturn in meaningful Chinese growth in the first two quarters of next year, which would benefit iron ore companies in particular, and said the large diversified miners such as core holdings BHP and Rio Tinto would also be able to surprise the market with better than expected cost savings………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Without key domestic economic drivers to shelter Canada from a continued weak global economy, GDP growth will slip to 1.7% in 2013, says CIBC. “Having earlier tapped fiscal stimulus and a housing boom to shelter the economy from sluggishness abroad, the country’s ability to set its own course is now much more limited,” says Avery Shenfeld, chief economist at CIBC.
He adds, “Escaping economic mediocrity will depend on the kindness of strangers, with exports and related capital spending critical to Canada’s fate in 2013-14.”……………………………………….Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Non-OPEC crude production is set to outpace OPEC output over the next decade, driven by higher Canadian oil sands and American shale oil production, according to the International Energy Agency (IEA).
While Canadian output is set to rise well past 2020, American and other non-OPEC producers will plateau or start declining. After growing slowly in the next eight years, OPEC production is forecast to power ahead over the next few decades until 2035, to retain its influence as the world’s largest supply block in global markets, says the IEA………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

The International Energy Agency (IEA) has provided an unrealistically high oil forecasts in its new 2012 World Energy Outlook (WEO) according to Gail Tverberg and reported in the Oil Voice Magazine of December 2012.
The IEA claims that the US will become the world’s largest oil producer by 2020 and will become a net oil exporter by 2030. One reason that the WEO 2012 estimates are unreasonable is because the oil prices shown are comparatively low relative to the production amounts forecast in the report. This is mainly because easy –to –produce oil becomes depleted and when more difficult reservoirs are tapped, the cost of extraction will increase………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

According to the International Energy Agency’s (IEA) annual Medium-Term Coal Market Report 2012 coal will rival oil as the world’s top energy source by 2017.
Although the growth rate of coal usage will slow from the “breakneck” pace of the last decade, the IEA forecasts global consumption in 2017 at 4.32 billion metric tons of oil equivalent (BTOE). The projection for oil is 4.40 BTOE………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Is gold’s extraordinary rally finally about to end as it limps towards the close of its twelfth year of gains? Even a fright over the US budget has failed to revive much interest in a commodity, often treated as a safe investment in troubled times, that has seen its average annual prices climb every year starting in 2001.
Most banks still cling to forecasts for gold to hit record highs in 2013, but the factors they cite - ultra-low interest rates, fears of inflation - have so far failed to propel prices out of the past year’s sideways trading channel………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Global gold prices ended sharply lower on the Comex division of the New York Mercantile Exchange and reached a fresh three and half month low on Tuesday, but TD Securities still believes prices will reach new record high in 2013.
The most active February gold contract on the Comex division of the New York Mercantile Exchange last traded down $29.20 an ounce at $1,688.80. Spot gold was last quoted down $30.10 at $1,668.50. The gold market started to sell off in late-morning trading right about the time that U.S. House Speaker Boehner mentioned a “Plan B” on the fiscal cliff negotiations………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Although gold has gained only 4.56 percent in 2012, Fat Prophets has been its strong supporter for sometime. David Lennox of Fat Prophets says he is very bullish on gold. “We think gold will trade somewhere between USD 2,300-2,500 an ounce through 2013,” he adds.
Also, we think a switch from investors looking into the US and perhaps wanting to reinvest back into the euro would place a lot of pressure on the US dollar. We think that, that will be one of the very good drivers of gold prices in 2013………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

At the beginning of 2012 gold bulls had a straight forward thesis: Central banks around the world will continue to debase their currencies. The virtually unfettered money printing with no set ending would, the thinking went, result in rampant inflation and in so doing drive investors into gold.
Jeff Kilburg, founder and CEO of KKM Financial is among those with a bullish gold thesis. In November he came on Breakout suggesting investors get long the SPDR Gold Trust (GLD) in anticipation of the FOMC’s balance sheet expansion. He got the expansion, but the GLD yawned………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Gold prices have advanced every year in the last decade and are poised for their eleventh straight year of gains in 2012. Next year, gold prices could reach $2,000 an ounce for the first time ever.
As we look forward to 2013 and beyond, I see signs that gold and the entire precious metals complex will remain key components in portfolios of small and large investors alike. Rising volume and open interest on the futures exchanges, ETF markets and over the counter physical market continue to indicate that investment demand for precious metals has never been greater………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Saxo Bank, the online multi-asset trading and investment specialist, on Tuesday released its annual batch of ten Outrageous Predictions for 2013. This is Saxo Bank’s annual exercise in rooting out relatively extreme market and political events for which the probability is perhaps low, if still vastly under-appreciated.
Among these predictions is that Germany will move toward accepting the mutualisation of Euro debt, which combined with other strains could cause the DAX to plunge by about a third from near multi-year highs to 5,000. Another is that gold will fall by around $500 to $1,200 per ounce on faster US growth and a stronger US dollar and despite the overhang of Fed’s easy monetary policy………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Prices to buy gold with dollars rallied from their lowest levels since late August on Wednesday morning in London, recovering 0.7% from yesterday’s drop to $1,662 per ounce. The drop came as Greece was upgraded Tuesday by the S&P ratings agency from “selective default” to “junk” status, following payment of the latest €34.3 billion in new loans from Greece’s euro-zone partners.
Versus the dollar the euro leapt to its highest level since May. The gold price for euro-zone investors sank to €1255 per ounce – a six-month low almost 10% beneath October’s new record high………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Gold versus Silver. It’s a long-standing debate among precious-metal investors as to which commodity is a wiser investment. Both are seen as a hedge against inflation, as the prospects of ever-weakening currencies could send investors flocking to these hard assets.
Yet silver has an edge over gold in once crucial aspect: It has a wide range of industrial applications and typically sees rising demand as global industrial activity heats up………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

While gold, with its sky-high prices, gets most of the media attention, investors should be just as interested in how to buy silver.
Silver turned in a solid performance in the second half of 2012, rising from a June 28 low of $26.13 an ounce to a recent reading above $33.00. And, to steal a line from poet Robert Browning (or, if you prefer, Frank Sinatra), “the best is yet to come.”……………………………………….Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

One of the biggest challenges for commodity investors is the state of the global economy, as I stated in this article. Weak economic growth in 2012 has kept a lid on the sector, so most commodities have fallen in price from a year ago. Copper, which is used in a range of economically-sensitive industries such as construction, is especially vulnerable to the vagaries of the global economy.
As has been the case since the Great Recession of 2008, the only bright spot for commodities has been China, and even that country showed signs of slowing in 2012………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

World wide stainless steel crude steel production has increased in the first nine months of 2012 by 2.9% compared to the same period of 2011. Total production for the first three quarters was 26.1 mn metric tons (Mt). This is 0.7 Mt more than in the same period of 2011.
Total production for the quarter was 8.3 Mt – a new all-time high for a third quarter. However, there were big differences in the performance of the individual regions – states a preliminary data released by the International Stainless Steel Forum (ISSF)………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

The lowering of the official cash rate from 3.25 to 3 per cent in early December was partly inspired by a belief that the mining boom in Australia is beginning to plateau, according to the Reserve Bank of Australia (RBA).
According to the Central Bank, short-term investment outlook outside of the resources sector is soft enough to prompt supportive measures on interest rates. RBA governor Glenn Stevens forecasts a gap in growth in 2013 if sectors away from mining do not see improvement………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

With the SPDR S&P 500 up 15.8 percent year-to-date, now is the time to drill down on what sectors have been driving the broader market’s bullish ways and what industry groups have been laggards. It is possible that some old laggards will become new leaders while it is also possible that this year’s outperformers will continue to deliver alpha next year.
There is something else to note about sector ETFs . With bond, dividend and emerging markets ETFs among the leaders in terms of 2012 inflows , many sector funds are suddenly starved for attention………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

This past year shaped out to be quite the roller coaster ride for many investors; equity markets persevered through tumultuous, and seemingly never-ending, eurozone debt drama, while the economic recovery at home remains slow and steady at best.
Heading into 2013, clouds of uncertainty continue to threaten investors’ confidence as the outcome of the much feared “fiscal cliff” has many on edge. Amid this mixed economic environment, we outline 13 ETF ideas that appear to be positioned for success in 2013……………………………………….Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

The tepid response of commodities following the latest FOMC release can be viewed as bearish for the general complex. Federal Reserve easing has usually precipitated greater positive action in the commodities complex.
This time, it might be different. Commodities have dropped below their post-August FOMC highs, and without macro data to suggest that global demand will accelerate in the coming months, it appears unlikely that positive momentum will be generated going into the new year………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

An $8 billion exchange merger is in the works that underscores how the global market for derivatives has eclipsed that for stocks. The owner of the venerable New York Stock Exchange is in talks to be acquired by an upstart commodities and derivatives trading platform, according to people briefed on the matter.
The IntercontinentalExchange is expected to offer about $33 a share, with two-thirds of that in stock, one of these people said. That represents a premium of 37 percent to NYSE Euronext’s closing stock price on Wednesday. A deal could be announced as soon as Thursday morning……………………………………….Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Japan’s newly elected president, Shinzo Abe, has signaled his intention to do whatever he can to devalue the Japanese yen in order to provide a boost to the nation’s ailing economy. This virtually assures a lower yen and this article looks at how traders and investors can profit from it.
Last weekend Japan’s Liberal Democratic Party (LDP) led by Shinzo Abe won a clear majority in the country’s general election. Shinzo Abe has said that his top priority is the Japanese economy which has been combating deflation for over two decades………………………………………..Full Article: Source

Posted on 20 December 2012 by VRS |  Email |Print

Psychologically, Sugar prices have turned bullish for the near-term, as prices rallied off recent lows after a rather bearish surplus estimate failed to draw in short-sellers. Though current momentum is now favoring Sugar bulls, we may not see any major fresh buying by large speculators unless we can see a strong close through the 20-cent per pound level.
After trading at 28-month lows, Sugar futures prices are beginning to rebound, as some traders start to exit bearish trades going into the new year. Sugar futures were one of the worst performing commodities in 2012, as a large supply surplus and average demand sent prices to lows not seen in over 2 years………………………………………..Full Article: Source

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