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Commodities Briefing 01.Jul 2013

Posted on 01 July 2013 by VRS |  Email |Print

Commodities appear to be in freefall with lots of catalysts being thrown around: a stronger dollar index, changes in the global macro-economic outlook, core PCE inflation in the U.S still slowing, and the Fed openly contemplating tapering its asset-purchase program. All of these factors are likely to put commodities under further selling pressure.
Naturally, investors can still profit from declining commodities by shorting companies that have high exposure to them or by purchasing ETFs with an inverse exposure to commodities………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

$5.60: The price difference between benchmark oil prices in the U.S. and overseas. The U.S. oil boom is finally affecting global energy prices — but don’t expect cheap prices at the pump as a result.
U.S. oil production peaked in the early 1970s and has been on a more or less steady decline ever since. Or at least, that was the case until five years ago, when the fracking boom in North Dakota and elsewhere led to a sudden surge in domestic crude production………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

US Energy Secretary Ernest Moniz said on Sunday he believed the oil market would be able to cope with any further reduction of Iran’s oil exports from the tightening of sanctions on Tehran over its nuclear programme.
Iranian crude exports are not now a “dominant player in the market”, and there is increased production in the United States and in Iraq as well as substantial reserve capacity in some OPEC producers, Moniz said in an interview………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

The world’s biggest natural gas exporters will seek to defend linking prices to the cost of oil even after courts ruled they overcharged customers and rising output from the U.S. to Australia challenges their dominance.
Tying gas costs to oil will dominate “in the long-term” as the system provides visibility and transparency for buyers, the Gas Exporting Countries Forum said before its second summit of heads of state today in Moscow. RWE AG (RWE) said June 27 an arbitration court ruled that Germany’s second-largest utility had paid Russia’s OAO Gazprom too much since May 2010 and forced the group’s biggest producer to add links to market prices in its formula………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

WTI, traded on CME Group Inc.’s New York Mercantile Exchange, is the world’s biggest energy-futures contract. Will FTC delve deep into this issue of price distortion, remains to be seen? The WTI today is hovering at around $95/barrel on NYMEX, while only a few years ago, during the early months of the Obama’s first term, it was in mid-30s.
This all is baffling to analysts; especially when one considers that US inventories are near all time record highs, that American oil production is expanding dramatically, that American consumers are using significantly less gasoline/diesel than even a few years ago, and natural gas heating units are replacing oil heating units in homes all over America………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

OPEC crude output has fallen in June due to disruptions in Libya and Nigeria, a Reuters survey has found, inadvertently bringing supply closer to the organization’s target.
Supply from the Organization of the Petroleum Exporting Countries has averaged 30.38 million barrels per day (bpd), down from a revised 30.46 million bpd in May, the survey of shipping data and sources at oil firms, OPEC and consultants found………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Iran’s Governor at OPEC Mohammad Ali Khatibi said the Gas Exporting Countries’ Forum (GECF) has a bright future ahead. Khatibi expressed the hope that the GECF would be able to solve the problems of the gas market through cooperation among its members.
He added that the situation arising from shale gas boom is more alarming than shale oil because shale gas has made gas producing countries worried and the gas market unstable. Khatibi further said GECF is able to bring stability to gas market through a coordinated and collective action………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

The U.S. government is not waging a “war on coal” but rather expects it to still play a significant role, U.S. Energy Secretary Ernest Moniz said on Sunday, rejecting criticism of President Barack Obama’s climate change plan.
Obama tried last week to revive his stalled climate change agenda, promising new rules to cut carbon emissions from U.S. power plants and other domestic actions including support for renewable energy………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

This week, two events occurred that could point to a new second wind for the battered alternative energy sector—which has been on its heels for much of the last couple years. First, President Obama unveiled a broad swath of measures to combat carbon emissions, including new funding for clean energy technology and setting a goal to double the amount of electricity generated by wind and solar.
Second, the International Energy Agency (IEA) released a report forecasting that renewable energy—wind, solar, biofuels and the like—will eclipse natural gas and nuclear as a source of electricity by 2016………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Hedge funds cut wagers on a gold rally to a five-year low as a record quarterly drop drove prices below $1,200 an ounce for the first time since 2010 and Goldman Sachs Group Inc. forecast more declines.
Money managers reduced their net-long position by 20 percent to 31,197 futures and options by June 25, U.S. Commodity Futures Trading Commission data show. That’s the lowest since June 2007. Holdings of short contracts climbed 5 percent to 77,027, the second-highest on record. Net-bullish wagers across 18 commodities tumbled 9 percent, the most in 12 weeks………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Plunging gold prices have forced miners to change their plans, with Oceana Gold moving to mothball an open pit on the West Coast while the world’s biggest miner, Barrick, has taken a multi-billion dollar hit on one of its projects and axed 30 per cent of its corporate staff.
In Waihi, Newmont says it is watching the gold price but is pushing ahead with seeking final approval for its big new underground project in the town. Its Denver and Perth offices had laid off staff, and while it had not shed any of its employees at Waihi, some contractors had lost jobs as projects came to an end………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Bullion must rise to $1,500 an ounce for the gold mining industry to be sustainable, according to Gold Fields Ltd. (GFI)’s Chief Executive Officer Nick Holland.
“The industry is not sustainable at $1,230 an ounce, which is where the gold price is at the moment,” Holland said today in a telephone interview. “We’re going to need at least $1,500 an ounce to sustain this industry in any reasonable form.”…………………………………Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Chinese investors have continued their buying frenzy for gold as the price of the precious metal headed for $1,200 per ounce. But analysts have warned that gold’s price volatility is expected to remain, reminding over-eager buyers that the metal’s immediate outlook remains bleak.
Buyers such as Madame Chen in Lao Fengxiang Jewelry store on Shanghai’s famous East Nanjing Road on Friday have been out in force, in the hope of making a profit as prices remain low. She said she had bought five 30-gram specially designed gold bars at the city’s largest and oldest jeweler, for 291 yuan ($46.37) per gram………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Neither finance minister P Chidambaram , nor the fear of a bad investment is deterring people from buying gold. In fact, the sharp dip in prices has only brought more customers to jewellers though some are waiting for gold to slip even more.
Dismissing the minister’s plea to refrain from buying gold for the next few months, people are giving in to the lure of the yellow metal. “This is off-season for us but sales continue to be normal,” said Alok Bhattacharya, store manager of B.C.Sen Jewellers in Gurgaon. With a few months to go before the onset of the wedding season, when gold sales gain momentum , sales should be mostly stagnant now. …………………………………Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Another round of lowered price forecasts for precious metals combined with more outflows from ETFs to spur yet another sell-off for gold and silver. A short-covering rally late in the week recouped some of those losses, but, absent a new catalyst to drive metal prices higher, the trend remains decidedly down as the gold price closed out its worst quarter in more than four decades.
Fears of the Federal Reserve winding down its money printing effort sooner rather than later, rising bond yields, declining inflation expectations, and a stronger dollar were all cited for last week’s decline. Perhaps more importantly, lower prices have not prompted another big surge in physical demand in Asia, traditionally the world’s biggest buyer of gold, and this does not bode well for gold and silver prices over the summer………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

As gold continues its sell-off, a book by a Toronto bullion fund manager predicts better things lie ahead. It’s been a dreadful stretch for gold bugs. The past three months have seen a record quarterly drop in gold’s price. In the bigger picture, gold is more than a third below its peak of $1,900 (U.S.) an ounce, reached in 2011. Last week, the spot price tumbled anew, settling near $1,225.
Goldman Sachs now sees a price of $1,050 by the end of next year. Barrick Gold, one of the world’s biggest gold miners trimmed 100 head office jobs mostly in Toronto. And Australia’s Newcrest Mining wrote down the value of its assets by $5.5 billion………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Every year Ronni Stoeferle, formerly of Austria’s Erste Bank and now with specialist advisors, Incrementum AG in Leichtenstein (although remaining a consultant to Erste Bank), produces one of the most comprehensive analyses of the global gold market available under the ongoing title – ‘In Gold We Trust’.
Stoeferle is very much a believer in gold as a monetary metal rather than as a commodity and notes that gold analysis should be the preserve of those who study monetary matters rather than those who specialise in commodities which is the normal pattern amongst the major financial institutions………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

From a technical perspective, the outlook for gold is looking increasingly bearish, according to analysis by Australia New Zealand Bank (ANZ), which says the recent sharp declines open the risk of much sharper corrections.
If the yellow metal slides below a key support level of $1,150, the selloff could accelerate to $1,030 or even $870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Gold swung between gains and losses after dropping to the lowest in 34 months last week as investors weighed prospects for growth against stimulus, while holdings in the largest bullion-backed exchange-traded product held steady.
Spot bullion, which rose and fell at least 0.7 percent, traded at $1,236.38 an ounce at 9:47 a.m. in Singapore from $1,234.57 on June 28, when prices sank to $1,180.50, the lowest since August 2010. The 14-day relative strength index was below 30 from June 20 to June 28, signaling to some investors who study charts that a rebound may be imminent………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Gold futures have rebounded from the previous day’s near-three-year lows, but still have locked in the largest quarterly loss since modern gold trading began in the 1970s. Gold for August delivery, the most actively traded contract, on Friday rose $US12.10, or one per cent, to settle at $US1,223.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
Futures early Friday fell as low as $US1,179.40 an ounce, the lowest intraday price since August 2010. Gold futures pushed into positive territory, as investors who had bet on lower prices during the market’s recent slide closed out those bets on the last trading day of the week, month and quarter………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Ouch! That is really the only way to describe the last 9 months for investors in precious metals and mining stocks. The damage that has been done to the price of these investments is on a level that we haven’t seen in nearly two decades.
Both institutional and retail investors have been shunning these hard assets due to fears of global deflation. Taking a look at some of the biggest exchange traded funds in this sector shows just how bad the carnage has been since their 2012 high………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Copper prices in China may witness new lows in the fourth quarter of this year on rising copper mine supply, recent liquidity tightening and lower base metals consumption, stated London based Barclays in its recent market analysis.
“Our economists have cautioned that implementation of the new government’s agenda of no stimulus, deleveraging and structural reform means there is an increasing downside that China could experience a temporary hard landing in the next three years,” the bank noted………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

A well-balanced investment portfolio might contain a mix of stocks, bonds, cash, real estate and what are known in financial circles as “alternative investments.” This last mysterious category includes (among other exotica) 10,000 hedge funds now wielding nearly $2.4 trillion in assets worldwide.
Hedge funds have littered the financial pages and gossip rags for years. But how exactly do they put that massive mountain of capital to work? Those answers involve complex calculations larded with Greek letters, but you don’t need a Ph.D. from Harvard to grasp the basics………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

The rupee leads the losers’ chart among Asian currencies in the April-June quarter by plunging 8.6%, during the period due to massive capital outflows on worries of withdrawal of the US stimulus and reported cash crunch in China.
The rupee lost 8.6% in the quarter as foreign investors sold a whopping $7 billion in June alone in debt and equities, recording the worst fall in a decade among the Asian currencies, as per an analysis of the currency. The rupee closed at an all-time low of 60.72 against the US dollar last week on June 26 on heavy capital outflows and month-end dollar demand from importers………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

The ruble was poised for the biggest quarterly drop in a year on concern commodities will decline and as companies finished paying taxes. The ruble depreciated 0.3 percent against the dollar to 32.9075 by 6 p.m. in Moscow, a 5.6 percent decline in the quarter. The currency lost 0.2 percent against the dollar-euro basket to 37.4005, extending its drop in the quarter to 6.4 percent.
Russia’s central bank has been buying rubles since May 29 to slow a 3.1 percent slide against the basket this month after U.S. Federal Reserve Chairman Ben S. Bernanke said the regulator may start reducing bond purchases that have fueled asset-price gains………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Saxo Capital Markets looked at the major currencies and assessed who is riding to the bottom the fastest looking at the real effective exchange rates. Japan came in first with a percentage change of -18.12%.
Devaluing currencies should help an economy become more competitive as the price for its exports fall, but the effect is muted………………………………….Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

A significant section of business prefers an emissions trading scheme to a fixed carbon tax to cut Australia’s greenhouse gases, a survey has found, as federal cabinet considers on Monday an earlier move to carbon trading.
The survey was commissioned by Businesses for a Clean Economy - a pro-carbon pricing industry group - with 570 companies approached from among its own members, the ASX 100, and those paying the carbon tax. All up, 180 responses were received. …………………………………Full Article: Source

Posted on 01 July 2013 by VRS |  Email |Print

Kevin Rudd is going back to the future, with a carbon-trading plan that promises to slash costs for business and wedges the Australian Greens and Coalition to higher-cost positions on either side of Labor.
A deal to scrap the carbon tax and quickly link Australia to the much lower international carbon price represents a rerun of negotiations in the Prime Minister’s first term that exposed the Greens as a protest party unable to compromise, and claimed the scalp of former Liberal leader Malcolm Turnbull………………………………….Full Article: Source

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