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Commodities Briefing 17.Jun 2013

Posted on 17 June 2013 by VRS |  Email |Print

European authorities are close to agreeing on the final draft of markets abuse rules that will make the standard commodities market practice of trading on inside information illegal.
Commodities market players say the draft regulation, which will lay the ground work for jail terms for insider trading, could force them to reveal their trading strategies and undermine their businesses……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Commodities traders from around the world will begin gathering in Hong Kong for the annual “LME Week” on Friday - the first time the London Metal Exchange get-together will be held outside London.
About 1,000 visitors are expected to fly in for the event, including commodity traders, users and producers. Hong Kong brokers have welcomed the decision to stage the event in the city and say it will increase awareness of the little-known commodities trading here and help offset the impact of the closure of the Hong Kong Mercantile Exchange (HKMEx)……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Over recent months much attention has been paid to claims that investors are exacerbating commodity price inflation, as well as a focus on direct investment in productive assets (such as farmland), which have proven increasingly attractive. This has led to initiatives such as the Principles for Responsible Investment in Farmland which have sought to provide guidance on how to ensure such investments are genuinely sustainable.
Whilst these types of participation by financial actors have been the subject of intense scrutiny, less attention has been paid to the exposure investors have through their holdings in listed equities and bonds along the agricultural value chain……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The peak oil theory, which states that we have passed the moment of maximum global oil production, was described 40 years ago by Marion Hubbert, a former Royal Dutch Shell geophysicist. However, once again, human innovation has saved the day.
Unconventional oil, such as the Canadian oil sands, shale oil deposits in North Dakota and Texas and deepwater drilling in Africa and South America have helped to bolster global energy supplies……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The US Energy Information Administration recently released its report showing oil consumption by country updated through 2012. Based on this report, it appears that at current high oil prices, demand in both China and India is being reduced. Thus, for those who are wondering how high oil prices need to be, to be “too high,” the answer is, “We are already there. In fact, continued high oil prices are a big reason behind the recessionary forces we are now seeing around the world.”
A big part of China and India’s problems is that they, like the United States and most of Europe, are oil importers. In this post, I also explain why there is a big difference in the impact of high oil prices on oil importing countries compared to oil exporting countries……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The process of “fracking” in the production of oil is increasing global oil reserves by around 11%. More importantly, it has been a success in the US but is yet to be used in Europe and Russia to the same extent. Nevertheless, this is expected to happen. The initial impact is that the world’s dependence on Middle Eastern oil is falling fast and the stranglehold Opec has had on oil prices is weakening considerably. But how should this affect the gold price you may well ask?
To show how important a factor this is, we should look at how oil is paid for. The US Dollar is still the oil currency. Most nations that buy oil must sell their own currency for the US Dollar, and then use those Dollars to buy oil. This is how the US Dollar became the sole global reserve currency……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Hedge funds cut wagers on a gold rally for the first time in three weeks on mounting speculation central banks will curb record stimulus and as this year’s slump in bullion spurred losses for billionaire John Paulson.
The funds and other large speculators lowered their net-long position by 4.1 percent to 54,779 futures and options by June 11, U.S. Commodity Futures Trading Commission data show. Net-bullish wagers across 18 U.S.-traded commodities rose 0.1 percent. Bearish copper bets more than doubled as the metal had its longest slump since November. Cocoa holdings advanced to the highest since 2008 before the biggest weekly slide since January…………………………………….Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The latest OECD composite leading indicators (CLIs) have pointed to only moderate improvements in growth in most major economies; and if any evidence was required to reinforce this, global commodity markets provided it.
The US and Japan are the only countries where the lead indicators point to economic growth firming. In other major economies, they point to limited growth momentum. CLIs are designed to anticipate turning points in economic activity relative to trend……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

James Steel, chief commodities analyst at HSBC in New York continues to be constructive on gold in the medium and long term and sees gold rising to $1,600/oz in the second half of 2013.
Steel said that this year the gold market has been under pressure and has experienced a rotational shift out of commodities in general driven by the constant chatter of a tapering off in QE and experienced very steep declines in mid April. He likens it to a rugby scrum pulling back and forth near the $1/400oz level, between ETF outflows and strong physical demand for coins and bars, notably from China……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The high in gold is almost 2 years behind us. We’ve failed to make a new high and broken many trend lines support. Gold is a broken commodity and is likely to head lower. Gold is likely to head lower even with all the news of the Fed expanding reserves to the system.
The trend seems to be downward, and if $1,200 is broken, the next level of support is $1,000. Because gold is simply valued upon what someone else is willing to pay for it, the simplest methods of valuation are often the best. Gold doesn’t generate a cash flow, there is simply a supply and demand, and where the two meet is the price……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Australia’s gold output fell 5 percent in the first quarter on weather-related disruption and a weaker currency would likely have cushioned a sharper fall in the current quarter when the metal’s price plunged, a consultant said.
Output at the world’s no. 2 gold producer after China fell to 63.5 tonnes in the first quarter from 67 tonnes in the fourth quarter of last year, according to the latest Gold Quarterly Review by Surbiton Associates. The decline equates to around $170 million worth of gold based on the current bullion price……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

A drop of the gold price to $ 500/ounce is highly unlikely in view of the sharply rising National Debt in the USA but also in Europe. To quote John Hathaway, manager of one of a most respected gold fund, a sharp rise of the gold price is more likely:
“With gold and silver under continued attack from the mainstream media, John Hathaway warned King World News that we are at the point where global investors will be shocked as gold is quickly repriced a jaw-dropping $1,000 higher, taking gold to new all-time highs……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Gold ETP outflows exceeded 139 tons in April even as physical demand for the commodity is also at its seasonal lows putting pressure on prices. “Given the seasonally weaker period for physical demand, we expect the slowdown in physical demand to be greater than the slowdown in investor demand, placing downside pressure on gold prices in the near term,” said Barclays in a report on gold.
The price of gold has traded above the $1400/oz level; however, the commodity has struggled to retain gains and sustain above that level. There exists a strong physcial appetite for gold; but the weakness in ETPs have not been completely offset by strength in physical demand……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Gold cannot be printed or manufactured in contrast to the currency. That’s why over the long term it has kept its value as the ultimate currency. There can be no “gold war.” However, we often hear about a currency war. Sounds familiar, where did we hear this before?
The phrase “currency war” was coined by Brazilian Finance Minister Guido Mantega after the financial crisis of 2008. The idea is that highly indebted nations weaken the value of their currency by cutting interest rates down to zero and printing fiat currency in order to gain trade advantages (cheaper products to export) and to pay less debt service on their bonds……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Could China be the big silver long? Who else has deep enough pockets to endure the recent price weakness and the increased margin requirements that typically follow? Nevertheless, the Chinese willingness to accept fungible dollars instead of precious metal seems to be waning. They are quietly accumulating metals.
Perhaps this explains why the silver open interest has remained stubbornly high throughout the most egregious washouts the silver market has seen in years……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The platinum market is likely to hit a record deficit of 844,000 ounces in 2013, HSBC says, as supply shrinks and demand, especially from ETFs picks up. But, despite this favourable fundamental picture, the bank has cut its average price forecasts for this year and next to $1,580/oz and $1,725/oz from $1,710/oz and $1,800/oz respectively.
The reason for this, the bank writes, is that “Platinum has been more influenced than we had anticipated by the sharp swings in the gold price and this will pull average prices lower for this year and next.”…………………………………….Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Options traders are paying the most in two months to protect against drops in the largest Chinese exchange-traded fund in the U.S. on concern a local money-market cash crunch will deepen a slump in Asia’s biggest economy.
The cost of three-month puts on the iShares FTSE China 25 Index Fund (FXI) soared to the highest since September last week, option data compiled by Bloomberg showed. The 4.3-point premium of puts over calls was the widest since April 17. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slumped the most in four months last week, led by a 16 percent drop in Yanzhou Coal Mining Co……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

The euro is emerging as an unlikely oasis in the latest bout of market turmoil. Assets ranging from Japanese stocks to emerging-market bonds to U.S. Treasurys have slumped this spring, as investors brace for the possible pullback from easy-money policies by the world’s major central banks.
But the euro has largely avoided the volatile trading that has whipsawed other currencies, including the dollar and the Japanese yen, gaining about 4% against the greenback over the past four weeks to trade late Friday at $1.3345, near a four-month high……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

Market manipulation aficionados have had a field day since the global financial crisis, but short-selling attacks in markets as diverse as equities and gold and the London Interbank interest-rate fixing scandal would be put in the shade if this week’s reports that currency trading has been systematically rorted were confirmed.
They probably won’t be, however. At least one regulator is investigating, but the $US3.6 trillion ($3.76 billion) foreign exchange market is probably too big to rig, or at least, too big to rig effectively……………………………………..Full Article: Source

Posted on 17 June 2013 by VRS |  Email |Print

China’s economic growth has come on the back of unparalleled coal use, unbreathable air and the unenviable title of being the world’s biggest greenhouse gas emitter.
So as it prepares to launch its first pilot carbon market on Tuesday, there is intense speculation about the scheme’s likely impact, both domestically and whether it boosts China’s support for a binding global treaty to lower carbon emissions……………………………………..Full Article: Source

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