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Commodities Briefing 17.Jul 2013

Posted on 17 July 2013 by VRS |  Email |Print

Commodities jumped to a 14-week high as crop conditions declined and prospects improved for raw-material demand in the U.S. and China, the world’s largest consumers of everything from corn and oil to pork and copper.
The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 0.2 percent to settle at 645.99 at 3:43 p.m. in New York, after reaching 648.91, the highest since April 3. Soybeans and corn climbed more than 1.4 percent, cocoa jumped 3.1 percent and copper increased 1.3 percent. The GSCI has risen 5.7 percent this month, almost erasing its loss for the year………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Sooner or later OPEC members will have to reduce output to reflect their reduced share of the global oil market. The organisation’s members must come to terms with diminished demand for their crude as a result of booming shale oil production in North America and strong production growth in several other regions.
The only real questions are how much of the burden of cutting production will fall on Saudi Arabia and whether they will be implemented through the framework of OPEC or unilaterally………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

The US is abuzz with additional crude oil production shaking Opec relevance in the global market. Fereidun Fesharaki, chairman, FACTS Global Energy, a leading consultancy in the energy space, says oil prices will come down but for India domestic natural gas pricing will be a challenge.
The Indian government has been subsiding a lot and what it is now doing is reducing subsidy but the good news is oil price will go down by 20-25 per cent in the next two three years–everything from price of oil to petroleum products and natural gas indexed to oil will come down………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

If things go the way the CEO of Gulf Oil predicts, by the time of the holidays this year, the price for a barrel of oil could be half of the present $105 it is today, but don’t expect a stocking stuffer of half-priced gasoline.
The reason for oil to drop into the $50 range by year’s end, said Joe Petrowski on CNBC’s Squawk Box, is due to record amounts of natural gas and oil being supplied from the U.S. and Canada, as well as higher supplies from OPEC. However, even if this does come to pass, the resulting gasoline still needs to be refined and transported at existing costs, he said………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

The 20 Million Drawdown in a sluggish economy: The last two weeks oil inventories fell by a record 20 million barrels, this event has never happened in 30 years of historical data. So what the heck is going on here? It is not the case that this is the best economy in the last 30 years. It sure isn`t the case that Americans are using more fuel right now compared with any other time period during the last 30 years.
In fact, the US market is maturing and using less fuel these days for several reasons like alternative energy, higher fuel efficiencies, fuel blending requirements, and a struggling economy with the highest rate of population on food stamps………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Oil prices hit a three-month high on expectations of increased demand as refineries return from maintenance, coupled with supply concerns because of production shortfalls.
While the focus in the crude markets has been on the US, with the WTI rallying almost 16 per cent over the past three weeks, Brent, the international benchmark, has been gaining ground over the past month on the tighter supply and demand situation………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Tumbling gold prices are raising the prospect of a return to hedging - a strategy that’s been shunned by investors and producers who spent at least $10 billion at the end of the last decade unwinding forward sales.
“You can’t just stick your head in the sand and pray that gold is going to go back up again,” Gavin Thomas, chief executive officer of Sydney-based Kingsgate Consolidated Ltd. (KCN), operator of Thailand’s biggest gold mine, said by phone. He’s considering hedging despite investors’ resistance. “Hedging is a call on gold. If you believe it’s going up you don’t hedge, if you believe it’s going down you do hedge.”……………………………………….Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

As US interest rates have risen, owning gold has been a loser’s game for anyone is trying to hedge against inflation. Gold isn’t a smart inflation hedge, but many people have been using it that way because they think they have few alternatives.
A low-inflation rate has been punishing to gold investors for the past three months, and the Consumer Price Index has been running well under 2 per cent this year. As evidence, the leading gold bullion vehicle, the SPDR Gold Trust ETF, has lost nearly a quarter of its value over the past year as investors continue to sell out of their positions. It was down 23 per cent year to date through July 12………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

After 12 long years of being the darling commodity, gold is finally showing signs of mortality, as the precious metal has lost more than 20% in 2013. Though many felt the bull run, which included a dozen consecutive winning years, would continue with the Fed’s easing policy, the metal has finally succumb to the pressures around it.
While many continue to try and pinpoint the reason behind gold’s steep drop, commodity legend Jim Rogers points the blame to a popular emerging market. As Rogers notes, India is the largest buyer of gold in the world, giving them a fair amount of influence over the price of the metal. As gold continued to skyrocket in price, so too did India’s trade deficit, the largest drivers of which are gold and oil………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Eldorado Gold Corp said on Tuesday that it will cut capital spending in 2013 by more than 35 percent, deferring a full expansion at its Kisladag project in Turkey, in light of the recent drop in the gold price.
The Vancouver-based company also said it will bump back the start dates for three of its European development projects - Skouries and Perama in Greece and Certej in Romania - by at least a year, into 2016 or 2017………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

An interesting thing about the uptick in gold prices over the last couple days is the number of people asking me if I think gold has bottomed. This is somewhat amusing, since we all know that no one can time a market, and the questions are coming from my peers—professionals who should know better.
This reminds me of Doug Casey’s famous story about how he bottom-ticked the market in the 1970s: He was a broker at the time and put together an order for a client named Elmer who later reneged on the purchases. So Doug followed his own advice and bought the shares for himself. This happened to be the very day the market bottomed………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

In late June, the price of gold has fallen below 1,200 U.S. dollars per ounce; however, it rebounded slightly recently. At present, financial market fluctuates by the influence of domestic and international economic situation.
Under this circumstance, the price of gold, stocks and currencies goes up and down and thus, the risk of financial product is worth more attention. Here is a series of reports covering the ways and skills of personal wealth management. Through professional suggestions and analysis, we hope it can enlighten a large number of investors………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

I have not written a public article in several months. This is mainly because I have been waiting for a buying opportunity to develop in precious metals. As a fairly aggressive investor with a high risk tolerance, I took a stab when silver originally dropped to technical support around $27.
I have a few small cuts from attempting to catch the proverbial falling knife, but I was quick to release and walked away relatively unscathed………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

The recent turbulence in the silver futures market has many silver coin and bullion investors concerned. In a matter of only two months, the price of silver has dropped approximately 18%, leading many pundits to announce that the silver bull market that began in 2008 has finally come to an end.
However, further research indicates that the bottom in the silver market may be in, and that the price of silver may be poised for a nice rebound. We’ll discuss three fundamental reasons why we believe that the price of silver may be at or near a bottom and why now may be the best buying opportunity in three years………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Amid a slump in iron-ore prices, farsighted investors are eyeing cheap mining assets from Australia to Canada. The slide in the price of iron ore and other commodities has hammered mining companies’ share prices, forcing many to shed assets and opening the door to other investors, including big institutions and private-equity firms with no mining experience but with time to wait for prices to rise.
Canada’s two largest pension funds—CPP Investment Board and Caisse de depot et placement du Quebec—are each seeking possible partners for separate bids for Rio Tinto PLC’s stake in Iron Ore Co. of Canada, valued at about $4 billion, people familiar with the matter said last week………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Usually, gold miners trade as a leveraged play on underlying precious metals. This means that when gold prices are slumping, gold miners are really hurting, as they tend to experience more extreme losses than their bullion cousins.
This trend has certainly taken place for much of 2013 as top gold mining ETFs have fallen by about 50% YTD, compared to losses of roughly 25% for the underlying metal, as represented by products like GLD or IAU. However, the opposite is also true; when gold prices are rising, gold miners tend to be leading the pack higher to a large degree……………………………………….Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

When it comes to commodity investing, there is little doubt that silver is among the most popular options out there. With the iShares Silver Trust (SLV, C+) being the third largest commodity ETF by assets and the second most actively traded, there’s no denying a high demand for the white metal.
But silver has a unique makeup unlike any other commodity; while that has sometimes been a blessing for the precious metal, it has been something of a burden as of late……………………………………….Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Silver’s meteoric surge post 2008 global financial crisis was remarkable. It made the metal one of the best performing asset classes. At times, volatility in silver surpassed that in gold. This not only attracted more trader participants but also encouraged many new investors and hedgers to start taking their positions in silver.
From its peak of around $ 19.89 an ounce in the pre-crisis era of January 2008, silver fell to hit the bottom of $ 9 an ounce in November 2008. This was the level last seen in 2006………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Goldman Sachs Group Inc trimmed its commodities trading risk in the second quarter as raw materials prices declined,quarterly results from the Wall Street investment bank showed on Tuesday.
Goldman’s Value-at-Risk in commodities stood at $19 million per day in the second quarter, down $2 million from the first quarter and $1 million lower than a year earlier. VaR is a measure of the maximum amount of money a bank is prepared to lose in a day from trading a particular asset class………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

The government is considering a new regulation for spot commodity exchanges. There are three such exchanges but no single regulator. The commodity futures market regulator, the Forward Markets Commission (FMC), had in the past proposed a law in this regard. The Union ministry of consumer affairs (MCA) is considering this, say sources.
Recently, the MCA wrote to the National Spot Exchange (NSEL), promoted by Financial Technologies, forbidding it from launch of any new contract with a one-day carry forward facility, for which they had been earlier granted exemption. Without the exemption, spot exchanges cannot undertake forward trade. NSEL has said it will comply………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Until Oskar Lafontaine’s surprise interjection, EMU-bashing was the domain of Germany’s right. Now, what can the UK left do? Europe is deeply troubled, and the trouble is not going away. The problem is at its worst in the eurozone, where unemployment is above 12%, while youth unemployment in Greece and Spain exceeds 60%.
Britain is also stuck in the mire and the economies of central and eastern Europe lack dynamism – hardly surprising since the eurozone is underperforming. The legitimacy of the EU has declined and there is a rising tide of virulent rightwing euroscepticism………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Nothing lasts forever. After soaring earlier this year, China’s currency has fallen back to earth. But while the currency may be taking a breather, investors shouldn’t, Citi said in a note.
Uncertainties about Beijing’s plans for the country’s stumbling economy are weighing on the yuan, which is also known as the renminbi or RMB. The yuan has cooled in recent weeks after hitting a record high in late May, when the U.S. dollar-yuan pair traded at 6.1211. Tuesday’s close put the pair at 6.1350………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Ever since the outbreak of the financial crisis in 2008, discontents have been searching for an alternative to the current international monetary system, with its reliance on the US dollar.
Some have fixed on the yuan as a substitute for the greenback. Yet, although China’s leaders like the idea in principle, in practice they have been cautious about allowing greater international use of their currency. In any case, to hard-core critics of the existing financial architecture, the yuan suffers from just the same disadvantages as the US dollar………………………………………..Full Article: Source

Posted on 17 July 2013 by VRS |  Email |Print

Australia’s prime minister, Kevin Rudd, said Tuesday a deeply unpopular carbon tax will be replaced by a less-severe emissions trading scheme a year ahead of schedule in a bid to lower power bills for households as a tight national election looms.
The carbon tax on Australia’s worst industrial polluters, including its coal-reliant power producers, went into effect in July 2012 and was supposed to remain in place until 2015. At that point, it was set to be replaced by an emissions-trading scheme, in which the cost of emitting a tonne of carbon would be determined by buyers and sellers in a carbon market………………………………………..Full Article: Source

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