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Commodities Briefing 22.Apr 2013

Posted on 22 April 2013 by VRS |  Email |Print

Lower airfares, cheaper food and rising profit margins are among the benefits that should flow from tumbling oil and commodity prices - but only after a long lead time.
Having poured $400 billion into commodities over the past decade, many investors are now selling. Their confidence that risky assets could only float higher on a rising tide of cheap central bank money has crumbled as the global economy fails to respond to the stimulus……………………………………….Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Fed Chief Ben Bernanke must be pleased as punch that this is likely to be his last spring at the helm of the Federal Reserve. That’s because for five years now, an auspicious start to the new year has turned ugly by the time the cherry blossoms bloom along DC’s Tidal Basin.
Don’t be fooled by the headline-grabbing rally in stocks. Although the Dow and S&P 500 have been on a well-publicized tear, more disquieting signals are being flashed in the commodities markets around the globe — with everything from gold to silver to oil down more than double digits in percentage terms so far this year………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Last Monday, the gold price suffered its greatest percentage fall in 30 years, as the Cyprus government pushes for the sale of its central bank’s gold reserves. On Tuesday, Brent crude dropped below $100 a barrel for the first time since July last year, while the copper price – a barometer of global industrial health, moved closer to $7,000 a tonne.
These price upheavals were triggered by slightly lower than expected gross domestic product growth in China, reviving fears of further slowdowns in the country’s economy………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Zhang Lianjin remembers the 2008 global financial crisis well. It nearly shuttered his brand-new metal casting factory in Wuhan, the steel centre of China.
Sales for the firm, SAFE-Cronite Asia, have been recovering slowly since the crisis. But while orders are still rising, so far this year they’re growing at only about half the pace the company was expecting. The company’s automotive business is strong, but there’s been a drop-off in orders tied to heavy machinery. And the broader steel industry in China is a worry………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

There’s no way of falling off a cycle gracefully, but that won’t stop Wall Street from trying. The past week or so has seen a clutch of reports from bank analysts signaling that the end is nigh for the commodities supercycle, with at least two on Friday alone. It comes amid a broad sell-off in hard assets of all descriptions, with gold’s slide the most prominent.
But given the efforts of the past decade or so to promote commodities as an investment for the masses—via such novelties as metal-backed exchange traded funds—don’t expect a quick funeral………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Hedge funds increased bets on gold rallying after prices plunged the most in 33 years, underscoring billionaire John Paulson’s view that bullion will rebound.
Fund managers and other speculators increased net-long positions in gold by 9.8 percent to 61,579 futures and options in the week ended April 16, U.S. Commodity Futures Trading Commission data show. Investors turned bullish on silver for the first time in three weeks. Wagers on higher prices across 18 U.S.-traded raw materials climbed 5.1 percent to 453,467 contracts, the first gain in three weeks………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Hedge funds and other big speculators plowed new money into gold even after the precious metal posted a record loss in dollar terms this week, according to trading data on Friday that also showed inflows for many other commodities.
The net long money held by money managers across 22 U.S.-traded commodities rose nearly $950 million, or 6 percent, to $56.5 billion in the week ended April 16, according to Reuters calculations of data released by the Commodity Futures Trading Commission (CFTC)………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

The precious metals continue to consolidate after the major losses suffered early last week. Given the reaction to China GDP last Sunday, it will be important to keep an eye on HSBC China PMI due out on April 23rd at 2:30GMT. There will also be some important data to monitor out of the US this week such as Existing Home Sales, Durable Goods, and Advanced GDP.
Given the recent misses in global economic data, any further misses will not likely bode well for commodities markets in the coming weeks. The US Dollar Index remains fairly range bound, but any strength would also be a negative factor for commodities prices in coming sessions………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

The collapse in the gold price is the result of market manipulation by huge overseas bullion-price speculators rather than an end to the conditions which drove prices sky-high, says one local gold dealer.
Brent Hindman of New Zealand Mint, a private business which sells bullion to investors here and overseas, said there had been a lot of unnecessary hand-wringing over the recent gold price plunge while speculators would be happy with recent events………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

In the James Bond film “Goldfinger”, the gold-intoxicated villain - the film’s namesake - leaves Bond with this thought: “This is gold Mr. Bond. All my life I have been in love with its color, its brilliance, its divine eminence.”
Movies like this epitomise the human fascination with this precious metal and the greed that it sometimes inspires. Contrary to what Goldfinger thought, gold may not be the most valuable investment in the world - it may be nothing more than a form of insurance………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Since the start of the year we have been expecting the gold price to fall. What we were not expecting was the speed and aggressiveness of the decline in the gold price. Gold had its largest one-day fall in its history, and so far attempts at recovery have been fairly moderate. What does this tell us, and where have all the gold bugs gone?
We have talked about the fundamental reasons to sell gold in the past: we are in a low inflation environment and since gold is a traditional inflation hedge, if inflation is low, why do you need gold?……………………………………….Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Hedge funds and other large speculators increased their net bet on higher gold prices during the week the market recorded its largest-ever two-day selloff, according to government data released on Friday.
Money managers cut the number of bets on lower gold prices by 8.2% during the week ended Tuesday and left their amount of bets on higher prices nearly unchanged, according to data from the Commodity Futures Trading Commission………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

It’s been a volatile week for gold prices, which tumbled by the most in 30 years. Although gold is still not obviously undervalued, we think the recent market moves make stock prices of gold miners look attractive when compared with prices of the precious metal.
On Monday, gold posted its largest one-day price drop since 1983. The decline actually began on Friday, April 12, as fears of central bank gold sales in Cyprus and Europe added to concerns that the Fed might withdraw US monetary stimulus sooner than expected. Central bank gold purchases and money printing underlie much of the doubling in price since the global financial crisis (GFC), so a threat to either is cause for concern………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Gold bugs must feel like investment road-kill after the precious metal’s brutal sell-off this month. Gold bullion had its biggest two-day fall in 30 years, amid talk of weakening jewellery demand from India and China, and potential forced sales of gold from troubled European countries.
Australian gold stocks tumbled. Led by sharp falls in Newcrest Mining, the S&P / ASX Ordinaries Gold index has slumped 42 per cent over one year, and on a total return basis (including dividend reinvestment) has underperformed the ASX 200 by about 64 per cent………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

The precious metals have seen dramatic sell-offs before, although the primary difference between previous precious metal declines and the recent drop is the current shortage of physical metal.
It is also worth considering how well the commercial bullion traders are positioned for a rally after these past two days of sharply dropping prices, especially when the latest price drop came on top of a physical market signaling tightness all along………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Central banks around the globe are expected to continue with gold purchase and activity thus far this year has been firmly on the demand side, stated London based Barclays in its recent market analysis.
Reported data to February show net buying of 29.7 tons so far, with limited appetite to sell. The bank expects net central bank buying to reach 300 tons in 2013 and a similar magnitude for 2014………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Gold prices are expected to average $1483/oz in 2013 and $1450/oz in 2014. The commodity needs to find support from the physical market in the near term, stated London based Barclays in its recent market analysis.
After hitting its all-time high in September 2011, gold has had three failed attempts at the $1800/oz level, with the last one being after QE3 was announced in September 2012………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

There have been many calls on peak oil – the tipping point at which global production reaches a peak – and, due to dwindling reserves, production declines, even if demand continues to rise. In reality, the industry and the technology have proved more resourceful than predictions have allowed and production has continued to rise.
Indeed, the recent opening up of tight oil reserves in the US heralds the possibility that the US may become self-sufficient in a number of years if rates of production growth continue………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Iran sees no need for an emergency meeting of OPEC over a recent drop in crude prices before the producers’ annual session at the end of May, Oil Minister Rostam Qasemi sai.
“No extraordinary meeting is needed as the May 31 meeting is coming up, and the price of oil had not gone below $ 100 per barrel for a long time,” Qasemi said on the sidelines of an oil and gas trade fair in Tehran. In the last meeting of OPEC, held on December 12, oil producers decided to hold an emergency session if oil prices fall below 100 dollars per barrel, Qasemi said………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Mohammad Ali Khatibi, who is also the National Iranian Oil Company’s Director for International Affairs told the oil ministry’s website that in a report earlier this year, OPEC’s Secretariat has predicted oil supply would surpass demand.
Khatibi added that following growth in oil production in Non-OPEC countries and rising oil withdrawal from non-conventional reserves including shale oil, it is predicted world oil supply to go beyond demand. ……………………………………….Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Maria van der Hoeven, executive director of the International Energy Agency (IEA), is no stranger to India. She has been engaged in discussions with Indian policymakers and planners for facilitating India’s association with the IEA.
Van der Hoeven, who was in India to attend the fourth Clean Energy Ministerial (CEM) that concluded on Thursday, spoke in an interview about the need for India to improve its energy data and emergency systems, the relevance of the United Nations (UN) climate negotiations, and potential developments in the global energy markets. ……………………………………….Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Fortescue Metals chief executive Nev Power predicts the iron price will hover between $139 and $140 per tonne in the short term because of low iron ore stocks.
Australia’s third largest iron ore miner says the commodity will then trade between $120 to $130 a tonne for the foreseeable future, preventing a repeat of last year’s scare when the iron ore price tanked………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

In the fast-changing world of securities exchanges, Hong Kong Exchanges and Clearing sits in an enviable position. The Hong Kong Stock Exchange, which it operates, is the worlds fifth largest by the market capitalization of its listed companies, $2.83 trillion, and one of the most profitable.
Over the past five years, it has had a greater volume of initial public offerings, $141.7 billion, than any other exchange in the world thanks to its status as the premier gateway to corporate China. At home it enjoys a statutory monopoly that protects it from upstart electronic exchanges, which have bedeviled established bourses elsewhere………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

If you had asked me yesterday, I would have said we are on the verge of a global carbon market that was shaping up to look quite attractive. Ask me today, after the EU voted down a backloading proposal, and I’m not so sure. There are other big carbon markets forming and they are starting to cross borders, but the EU’s is the largest and now it will lose its impetus, which could set back the whole thing.
Before yesterday’s vote in the EU parliament, predictions were that the global trade in carbon would grow by 13-14% this year, to reach a volume of 12 gigatons of carbon dioxide equivalent. ……………………………………….Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

For carbon markets across the world it was the best of times, it was the worst of times. Plummeting European Union carbon prices following a key EU vote seem to demonstrate in the clearest terms that cap and trade is doomed to fail. After all, “if carbon trading can’t make it in Europe, it can’t make it anywhere,” said Bryan Walsh of Time.
But declaring the death of carbon markets and cap and trade policy over Europe’s struggles is a knee-jerk reaction which overlooks significant developments for carbon trading around the world – ones which could ultimately rescue the EU and cement cap and trade as a global climate change solution………………………………………..Full Article: Source

Posted on 22 April 2013 by VRS |  Email |Print

Federal Treasurer Wayne Swan says it’s a folly to take a spot price of the plummeting European carbon price and draw conclusions about the Australian carbon price in years to come.
Treasury is forecasting a carbon price of $29 a tonne in 2015 when a local emissions trading scheme is linked to the European ETS………………………………………..Full Article: Source

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