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Commodities Briefing 28.Feb 2013

Posted on 28 February 2013 by VRS |  Email |Print

Commodities as a group have been underperforming equities for about six months now. The correlation between the two groups has been grinding lower. Even more important, I think the underperformance of commodities—and by extension emerging markets—will persist for some time.
Hang on. If the backdrop is improving growth expectations and continued, if not increased, global central bank base money expansion, why have they underperformed and why should it continue? Here’s my answer………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

One of things all investors should know for 2013 is how to invest in commodities, as the prices of many of these products head for huge gains. One of the reasons they will soar is because institutional investors have quickly abandoned them in the current risk on/risk off investment climate. There is right now roughly $424 billion invested in commodities, but that is a mere fraction of 1% of all global investment assets.
When all that money comes pouring back in, those commodity-related investments will skyrocket. The few institutions that jumped into the market were disappointed because the commodities “super-cycle” did not generate spectacular gains for them in a year or two. Also, with inflation appearing to be nonexistent in the government-reported numbers, institutions are bailing on commodities………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

When global mining giant BHP Billiton reported its results on Feb. 20, the company also updated the market on its view of global commodities. The company always provides great insight into what investors should watch within the commodity marketplace. Let’s take a look at the outlook that BHP sees across four of its key commodities.
Copper: According to BHP, the long-term fundamentals of copper remain compelling. While it sees robust supply growth resulting in a balanced market in the near term, the longer-term outlook is much stronger due to structural changes on the supply side of the marketplace………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

The oil & gas industry has experienced a good start to 2013 as improvements in the global economy has seen both the US Energy Information Administration (EIA) and OPEC raise their forecasts for global oil demand in 2013. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has gained over 6 percent year-to-date.
The EIA has raised its 2013 growth forecasts by 110,000 barrels per day (bpd) to 1.05 million bpd in 2013. Global oil demand is now expected to total 90.2 million bpd this year. The increase follows a report from OPEC earlier in the week projecting oil demand to increase by 840,000 bpd, 80,000 bpd higher than its previous estimate. Prices for Brent crude have gained approximately 10 percent year-to-date hitting a 10-month high of over $118 a barrel………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Asia should work to develop a trading hub and facilitate the emergence of a market as well as prices that better reflect supply and demand, the chief of the International Energy Agency said.
Governments in the region need to work to allow markets to decide natural gas prices with minimal interference and through price deregulation, while also meeting institutional requirements to attract new market participants, IEA Executive Director Maria van der Hoeven said………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Natural gas production and consumption are increasing globally and Asia is the fastest growing natural gas market, but the commodity’s price is still largely dictated by long-term contracts indexed to oil.
The relationship between oil and natural gas prices has disconnected and the spread has widened to historic levels, which puts Asian economic competitiveness at risk warns the IEA in a new report titled “Developing a Natural Gas Trading Hub in Asia - Obstacles and Opportunities.”……………………………………….Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Gold got hit by a double whammy last week – not only did the news come out that Funds controlled by George Soros and Louis Moore Bacon had reduced or offloaded completely some or all of their SPDR Trust and Sprott gold holdings in Q4 2012, but also some Fed governors gave the impression that perhaps the Fed’s QE programme might be nearing its end and monetary tightening – or rather less loosening – might soon be on the cards.
As we have pointed out before, some banks would undoubtedly come out with new assessments paring their gold price predictions – and sure enough Goldman Sachs analysts made what may prove to be an extremely ill-timed prediction that gold would slip further and accelerate downwards, sharply lowering their average gold price call for 2012 3-, 6- and 12-month gold price forecast by over $200 to $1,615/oz, $1,600toz and $1,550/oz from $1,825/oz, $1,805/oz and $1,800/oz………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Gold Bullion fell slightly in Wednesday morning’s London trading, but held above the $1600 per ounce level it rallied above yesterday after Federal Reserve chairman Ben Bernanke told Congress that that Fed’s ongoing quantitative easing policy “is providing important support to the recovery” and that the benefits “are clear”.
Stock markets also posted gains this morning, making up some ground lost, while commodities were broadly flat and longer-dated US Treasuries gained………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Gold headed for a fifth monthly decline in the longest run of losses since 1997 as investors reduced holdings by more than 100 metric tons on concern that U.S. stimulus may be curtailed as the economy recovers.
Spot gold was little changed at $1,597.50 an ounce at 9:18 a.m. in Singapore, down 4 percent in February. The metal reached $1,555.55 on Feb. 21, the lowest price since July, as some U.S. central bankers sought more flexibility on stimulus………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

One of things all investors should know for 2013 is how to invest in commodities, as the prices of many of these products head for huge gains. One of the reasons they will soar is because institutional investors have quickly abandoned them in the current risk on/risk off investment climate. There is right now roughly $424 billion invested in commodities, but that is a mere fraction of 1% of all global investment assets.
When all that money comes pouring back in, those commodity-related investments will skyrocket………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, dropped in the longest slump on record as the U.S. economy improves.
Holdings fell 12 metric tons, or 0.9 percent, to 1,258.40 tons, the lowest since August, according to data on the fund’s website today. The assets have fallen for seven straight sessions, the longest stretch since the fund was launched in 2004………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

The largest gold miner ETF is down more than 20% the past three months to fall to its lowest level against bullion prices in at least three years. Market Vectors Gold Miners ETFhas dropped 31.6% the past year to triple the loss of SPDR Gold Shares.
“The gold-mining industry, which has underperformed the precious metal for each of the past six years, is pledging to report costs more accurately as part of its efforts to win back investor confidence,” Bloomberg News reports Wednesday………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

Commodity prices started the year on a stronger note, rising 3.8 per cent month-over-month in January after losing significant ground late in 2012, according to the Scotiabank commodity price index.
“Riskier assets such as commodities and equities were buoyed in January by the 2012 fourth-quarter improvement in China’s economy,” the bank’s commodity market specialist Patricia Mohr said in remarks accompanying the release of the index Wednesday. “However, market conditions remain skittish, with some industrial commodity prices and equity markets easing back again in late February.”……………………………………….Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

One of the intriguing things about the foreign exchange markets is that it is all about relative prices. Many an American commentator, faced with trillion-dollar deficits, dysfunctional Washington and zero rates at the Federal Reserve, has predicted the collapse of the dollar.
A quick trawl on Amazon.com found books with titles such as “The Dollar Meltdown”, “The Dollar Crisis”*, “Survive and Thrive after the Collapse of the Dollar”, “The Collapse of the Dollar and How to Profit from It”, not to mention “The Trillion Dollar Conspiracy; How the New World Order, Man-Made Diseases and Zombie Banks are Destroying America”………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

The euro rose against the dollar Wednesday, with gains for the European shared currency coming after financially troubled Italy saw its borrowing costs rise less than had been feared.
The euro traded at $1.3136, up from $1.3065 late Tuesday. Against the Japanese currency, the euro rose to ¥121.11 compared with ¥120.05. The prospects for Italian political gridlock sent the euro skidding earlier this week after an inconclusive parliamentary election, which raised worries about demand for Italy’s debt………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

United Nations carbon credits for March jumped the most ever and trading rose to the highest in more than two months ahead of a deadline to surrender permits and offsets in the European Union’s carbon market.
March Certified Emission Reduction futures gained as much as 94 percent to 33 euro cents ($0.43) a metric ton on London’s ICE Futures Europe exchange. That’s the highest price since Dec. 11. ICE Futures handled 5.2 million tons of March offsets, the busiest day since Dec. 11. The contract closed 82 percent higher at 31 cents………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

In the knowledge that green is apparently the new black, it was highly appropriate that South Korea’s Kexim last week tapped hungry SRI funds with its first “green bond”. The acronym stands for Socially Responsible Investment, and Kexim will be investing the proceeds from the US$500m foray in the eco-friendly projects it sponsors around the world.
In the process the canny Korean policy bank managed to shave five basis points off its implied funding cost in conventional format at five years, which isn’t too shabby a result on a benchmark-sized trade………………………………………..Full Article: Source

Posted on 28 February 2013 by VRS |  Email |Print

The risk of carbon prices tumbling to zero is not scaring off investors in the European Union’s trading scheme, where fraught efforts to draw up a rescue plan have seen daily trade volumes soar.
Those rescue efforts are eclipsing energy prices, economic data and currency fluctuations as the market’s main driver in a trend likely to continue for months, even years. “The carbon market is broken in that it is driven by regulation, and not by fundamentals,” Paolo Coghe, analyst at Societe Generale, said………………………………………..Full Article: Source

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