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Commodities Briefing 05.Jul 2013

Posted on 05 July 2013 by VRS |  Email |Print

Investors sold out of commodity exchange-traded products (ETPs) in June after the U.S. Federal Reserve signalled it would wind down its economic stimulus programme, pushing up real interest rates and making gold less attractive.
But the June outflow of $4.7 billion from commodity ETPs was less than May’s $6.3 billion and April’s record of $9.3 billion, according to data from BlackRock, the world’s largest asset manager. Gold ETP outflows at $4.1 billion accounted for most of the June total………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Sluggish global growth and a recent economic slowdown in resource-hungry China have hammered commodities markets this year, sending the price of everything from iron ore to copper tumbling.
With those sharp reversals—as well as the Fed’s comments about tapering the size of the United States’ monetary stimulus—fresh in their minds, the 300 clients who convened last week at Credit Suisse’s New York headquarters for the bank’s third annual Commodities Day had plenty to talk about………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Tobias Merath, head of Commodity and Alternative Investments Research at Credit Suisse, says market conditions for commodities remain challenging.In late June, prices sold-off following a period of stabilization.
The broad-based commodity indices are all down year-to-date. We think a rebound is possible in some markets but would not expect a broad move higher. Instead, leading economic indicators suggest that investors should remain cautious for now. In order to assess the outlook for commodity markets, we mainly look at three factors: cycle, valuation and technical analysis. On the cyclical side, there is currently not much impetus………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will boost shipments by 2.3 percent through late July as driving demand peaks during the northern hemisphere summer, according to Oil Movements.
The group that supplies about 40 percent of the world’s oil will ship 24.18 million barrels a day in the four weeks to July 20, up from 23.64 million in the period to June 22, the tanker tracker said in an e-mailed report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

A question that seems to come up quite often is, “Are we going to have inflation or deflation?” People want to figure out how to invest. Because of this, they want to know whether to expect a rise in prices, or a fall in prices, either in general, or in commodities, in the future.
The traditional “peak oil” response to this question has been that oil prices will tend to rise over time. There will not be enough oil available, so demand will outstrip supply. As a result, prices will rise both for oil and for food which depends on oil………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

The oil price stayed resolutely above the $100 a barrel mark today, holding on to most of the surge triggered by last night’s military coup in Egypt. Crude shot up to 14-month highs amid concerns among traders at the toppling of Mohamed Morsi. By lunchtime today London Brent crude was trading at $104.92 a barrel.
While Egypt itself is not a particularly big producer of oil — it is not in the Opec cartel — it is a major supply route thanks to the Suez canal and Sumed pipeline. The canal links the Red Sea and the Gulf of Suez with the Mediterranean, while Sumed provides capacity for cargoes too big to transit by ship………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

The removal of Egyptian president Mohamed Mursi by the military has impact on several fronts. While the development has eased the tension along the Suez canal, the fuel supplies from Middle East has helped crude oil prices to cool off from its sharp gains in two days.
A prolonged political stand-off at Egypt had paralyzed the country and the businesses along the important trade route. But the Egyptian army’s intervention has softened the worries about blockage of movement of shipments from Middle Eastern region along the Suez canal or a crude oil pipeline that runs through the country. The Suez Canal carries over 2% of world’s total oil needs through it daily………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

With the renowned American investor Jim Rogers on hand to complete the first transaction, a Singaporean entrepreneur called Victor Foo opened on July 3rd what he claims to be the world’s first physical precious-metals exchange.
The genial Mr Rogers, resident in Singapore since 2007, showed how it’s done: on the premises of a security company called Certis Cisco he bought a few coins which were then zipped up in a bag to be stored in their vaults, from where it can be sold on the new exchange whenever he wants (hopefully after the price goes up a bit). This is not about futures or derivatives………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Gold could fall below $1,000 an ounce, according to an investment specialist who has made financial bets that will pay off if gold continues to decline. Investors.com , a site from Investors Business Daily, includes the comment. But other experts estimate that since it costs about $1,000 per ounce to mine gold, production would fall when the price hits that $1,000 line, adding to factors that would keep the price from falling much further.
Dr. Doom—famous economist Nouriel Roubini—added his voice to the gold trash-talkers early in June an article carried by the UK’s Guardian. “There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015,” Roubini wrote………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Gold traders are the most bullish in a month after political instability in Portugal raised concern that Europe’s debt crisis will worsen and as a record quarterly drop in prices drove demand for jewelry.
Fourteen analysts surveyed by Bloomberg expect prices to rise next week, with 10 bearish and three neutral, the largest proportion of bulls since June 7. While hedge funds are the least bullish in six years and holdings in exchange-traded products dropped to a three-year low, demand for physical metal has been “strong,” Standard Bank Group Ltd. said………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

We have not revisited the topic of gold in Outside the Box recently, mostly due to the fact that nearly everything I read on the subject is derivative of what I have been reading for years. There hasn’t been much that would cause me to think about gold in a different way, and that is the purpose of Outside the Box: to present new perspectives and make us think.
I have recently started to read the work of Ben Hunt at Epsilon Theory. His ideas are interesting in that he examines markets from a behavioral economics perspective, with ample doses of game theory and history, a combination that few people can bring to the table………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Investors embraced platinum amid a general market inclination to sell commodity based Exchange Traded Products (ETPs) in the second quarter of this year. Commodity ETPs are products that allow investors to ‘bet’ on the price of commodities such as gold. With real interest rates rising and expectations of an early end to quantitative easing (QE) in the US, there was a record decline in ETP commodity assets under management between April and June 2013.
ETP assets dropped by $49 billion to $127 billion, the lowest level since 2010 according to data produced by ETF Securities………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

PGM prices have strong medium to long-term fundamentals, says RBC Capital Markets. But, for prices to move higher, either stronger economic indicators around the world or significant further labour disruptions in South Africa will be needed.
Writing in its latest Global Platinum Outlook note, out late last week, the RBCCM says the platinum market appears to be more balanced than the palladium market at the moment but, expects it to remain in a small deficit for the next several years………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

With a mining history that spans thousands of years, it is hard to believe that copper resources could be at their end. But the looming threat that the end is out there somewhere is an uncomfortable truth when dealing with finite resources. The only question is when.
What’s peak copper? Peak copper will mark the beginning of the end for the red metal. It is the point at which copper will have reached its maximum global production, starting its steady decline to depletion. In 2011, concerns that peak copper was on the horizon were exacerbated by the rapid industrialization seen in China………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

A gradual shift in European attitudes and policy toward mining in the past four years, spurred by the need to create jobs and to ensure supply of critical materials, has led to investment and a nascent revival of the industry.
New or resurrected mining and smelting projects in some areas of Europe are providing some prospects for growth in the region as countries struggle with recession and crippling unemployment………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Warehousing sounds dull. But investors should pay attention: it may be about to reshape the global metals markets.
The buzz among metals traders this week was not about Chinese growth or US monetary policy, but a proposed change in warehousing rules by the London Metal Exchange………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Investors dumped units of gold exchange-traded funds on an unprecedented scale in the second quarter, London-based ETF Securities said, as a brightening macroeconomic outlook tarnished the metal’s appeal as a haven and the hunt for yields drove investors elsewhere.
Global gold ETFs registered net outflows of $18.5 billion in the March-to-June period, the largest quarterly selloff since ETF Securities launched the first gold ETF in 2003, the firm said Thursday. This accounted for more than 90% of the $19.6 billion of outflows from total commodity ETFs in the second quarter. Estimates from other industry experts have been similar………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

More than one-third of institutions in Canada using exchange-traded funds (ETFs) expect to increase their allocations to ETFs in the coming year, according to a study.
Greenwich Associates’ study, Versatility Fuels ETF Growth in Canadian Institutional Portfolios, finds that nearly 45% of institutional funds expect to increase allocations to ETFs by 2014 and no funds plan to decrease allocations………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Canada’s banks are considering a plan to make Toronto the first North American trading hub for China’s yuan, joining a global race for a share of trading in the currency of the world’s second-largest economy.
Some of Canada’s largest banks, insurance companies and pension funds met with government representatives and the Bank of Canada in Toronto on June 21 to discuss establishing a yuan trading hub, according to the Toronto Financial Services Alliance, an industry group that set up the meeting………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

The International Energy Agency (IEA) has released its Technology Roadmap: Carbon Capture and Storage with the aim of “assisting governments and industry in integrating CCS in their emissions reduction strategies and in creating the conditions for scaled-up deployment of all three components of the CCS chain: CO2 capture, transport and storage.”
“As long as fossil fuels and carbon-intensive industries play dominant roles in our economies, CCS will remain a critical greenhouse gas reduction solution,” say the IEA in its overview of the roadmap. “To get us onto the right pathway, this roadmap highlights seven key actions needed in the next seven years to create a solid foundation for deployment of CCS starting by 2020.”……………………………………….Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

The European Parliament voted to prop up its ailing emissions trading scheme, a move likely to drive up European carbon prices closer to Australia’s price. European MPs voted 344 to 311 to temporarily remove up to 900 million permits – known as “back-loading” – for up to seven years. A similar proposal was rejected by the Parliament months ago.
The vote is seen as one of the first steps towards structural reform of the European emissions trading system, which has been plagued by over-supply of permits due to generous allocations to industry and slow economic growth………………………………………..Full Article: Source

Posted on 05 July 2013 by VRS |  Email |Print

Is the global economic downturn going to accelerate as we roll into the second half of this year? There is turmoil in the Middle East, we are seeing things happen in the bond markets that we have not seen happen in more than 30 years, and much of Europe has already plunged into a full-blown economic depression.
Sadly, most Americans will never understand what is happening until financial disaster strikes them personally. As long as they can go to work during the day and eat frozen pizza and watch reality television at night, most of them will consider everything to be just fine………………………………………..Full Article: Source

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