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Commodities Briefing 19.Jul 2013

Posted on 19 July 2013 by VRS |  Email |Print

Funds betting on commodity price moves have lost money every month since January, their joint longest losing streak on record, raising more doubts about their ability to make money at a time when the commodity “supercycle” may be over.
The average fund slid 3.58 percent in the first half of 2013, according to a widely watched Newedge commodity index. Funds have suffered five straight losing months only once before, in 2002-03, the index shows. Hedge funds market themselves are capable of making money in all markets, yet funds trading commodities as varied as gold, grains and gas have failed to turn an annual profit in the past three years………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Market perceptions of weaker Chinese growth and a resurgent U.S. dollar are a “toxic mix” for already battered commodity prices, and these headwinds will continue to impact prices in the second half of the year, says HSBC.
The bank this week cut its price forecasts for base metals in 2013 by up to 12 percent and also revised down next year’s price targets by up to 13 percent. Andrew Keen, global head of metals & mining at HSBC, said the adjustment to near term forecasts for base metals is a reflection of poor market sentiment for the sector going into the second half of the year………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Falling oil prices can have a lot of benefits. They put money into consumers’ pockets. They cut trade deficits. They make it cheaper for businesses to sell stuff.
But if oil prices fall over the next few years, as some analysts predict, the effects won’t be all roses. OPEC, for example, could be on the losing end. And that could lead to unrest in countries around the world………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Saudi Arabia has been publicly skeptical of North America’s energy surge, but there are now clear signs that its economy is directly hit by developments in Fort McMurray, Eagle Ford and the Bakken.
The massive oil sector of the Middle East’s largest economy shrank 6.3% in the first quarter of the year, its lowest reading since quarterly data was made available in 2010. Brent crude prices contracted 7% during the period while production was down nearly 8%………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Crude shipments from the Organization of Petroleum Exporting Countries rose to near their highest for the year as refiners have purchased most of their requirements for the peak summer season, Oil Movements said.
The group, which supplies about 40 percent of the world’s oil, will export 24.16 million barrels a day in the four weeks to Aug. 3, an increase of 40,000 barrels from 24.12 million in the period to July 6, the tanker tracker said today in an e-mailed report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

While Ron Paul is no longer part of the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again. Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.
“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t portend to either………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Federal Reserve Chairman Ben Bernanke’s second day of congressional testimony did not have a major impact on gold prices Thursday, but he nevertheless raised the eyebrows of those in the industry when he offered some views on the gold market.
He suggesting the yellow metal has fallen in recent months since investors for now are less worried about needing protection in their portfolios. The Fed chief also commented that “nobody really understands gold prices,” including him………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

It’s only a trickle at the moment, but it could become a flood if gold prices continue to fall. I’m talking about gold mines being closed or put on care and maintenance with operations suspended.
The price of gold fell from its all-time high of US$1,921 an ounce in September 2011 to its current price of around US$1,290 an ounce. That obviously has an effect on gold miners, and with the average global all in production cost per ounce estimated at anywhere between US$1,000 and US$1,300, what were once huge margins for gold miners are now wafer thin……………………………………….Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Readying to exit from gold? Wait. Think again. Gold is set to hit roof yet again and in a shorter span. A historical chart showing gold prices and gold stocks revealed that after a prolonged downside, gold has spiked to make fresh highs.
In an article, Jordan Roy-Byrne, CMT explains that a projection based on the historical chart shows that Gold’s initial rebound would peak at around $1500 in February 2014………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Naked shorting of silver is not really the issue, as silver analyst, Ted Butler has been pointing out for decades, it is more about the extreme concentration of short silver positions and less about the big players being caught red-handed sending blatant signals of market price fixing collusion.
Also, forget about gold and silver being valued as commodities, since most people will agree that these metals both have a monetary demand associated with them. The market seems like two loose wheels on an axel careening down miles and miles of “monetary hills.” They are not fixed and tend to drift back and forth along the axel, and this determines the price. Different axels price different currencies………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Industrial metals analysts at Barclays bank Thursday trimmed their 2014 forecasts for some base metals, including aluminum, due to significant surpluses, and said copper prices are most vulnerable to a decline due to China’s economic growth slowdown.
“Supply will once again drive surpluses across the metals,” said the bank in its monthly metals report. “We expect a relatively flat price outlook given that, arguably, the market is already expecting these surpluses to continue, and in view of our economists’ forecast of a steadying in Chinese economic growth at lower levels.” The bank said that copper, the flagship of the London Metal Exchange, was the most vulnerable of the metals to a downside move, expecting prices to fall below $6,000 a metric ton by the end of next year. The metal Thursday traded around the $6,900 mark………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

The nickel market has been in large surplus this year and without significant production cuts will remain in alarge surplus this year, Macquarie Commodities Research advised. “The market is looking to China for further cuts in nickel pig iron production but this is not enough to rebalance the market and cuts outside China may well be a catalyst for a short-covering rally,” said Macquarie.
In their analysis, Macquarie observed, “Nickel remains the worst performer among the base metals this year. A large surplus between supply and demand has opened up and prices have collapsed………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Major institutions such as JPMorgan are predicting uranium prices could move to $90 in 2016. I think it could happen even sooner. Uranium could soar over the second half of this year. I believe the sector is making a major comeback. Long-term uranium investors are well aware of the exceptional gains in this sector like in 2007 when many uranium miners soared more than a 1,000% due to a supply shortfall. It could happen again sooner rather than later.
Most of the investment community is totally unaware of the increasing demand worldwide for clean base-load energy sources. I know you may not find nuclear power or uranium mining exciting, but it could be the greatest area for growth over the coming decades. That is why investors such as Microsoft’s Bill Gates believe in the long-term viability of nuclear………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Japan equity is among readers’ favourites, while natural resources have fallen off the list amid fears the commodity “super cycle” is over. It’s wise to keep in mind that users of Morningstar.co.uk search for funds not only when they’re considering an investment, but also when they’re concerned and are considering selling share classes.
As such, while several of the usual suspects dominate the list of most-searched-for funds on Morningstar.co.uk in the second quarter, some are notable for their emerging market debt exposure—an asset class that is widely considered to be overvalued at present and has therefore had investors running for the doors. ……………………………………….Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Hedge fund investors withdrew an estimated $10.1 billion from the investment vehicles last month, according to a new report from eVestment out. The June redemptions turned hedge fund flows negative for the whole second quarter, to the tune of $4.3 billion, and flows for the first half of the year, at $1.7 billion, mark the second slowest rate of growth in the past ten years. It comes in behind only the first half of 2009, when jittery investors pulled their money in the wake of the financial crisis.
Commodity funds had their best quarter of inflows in the last five, albeit with relatively flat flows. This is a marked improvement from the prior four quarters when about $4.0 billion was removed. We are always looking for potential trend shifts and this may be one………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Hit by a whipsawing yen in the last two months, many FX hedge funds are still determined to bet the Bank of Japan will succeed in weakening the currency over time while the dollar climbs as the Federal Reserve withdraws its stimulus.
The Fed’s first hints in May that it may start to pull back from its $85 billion dollars-per-month programme led to a rebound in the safe-haven yen as investors stampeded out of emerging markets and commodity currencies………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Hot on the heels of the phenomenal success of its platinum exchange-traded fund, South Africa’s Absa Capital may enjoy even greater demand for a palladium fund it is planning if it manages to clear the hurdles in the way to its launch.
Accumulating more than 500,000 ounces of the metal since inception on April 26, NewPlat ETF, the first South African platinum-backed fund of its type, already accounts for around one quarter of global platinum ETF holdings………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Morgan Stanley CEO James Gorman said that he’s encouraged by Merrill Lynch’s higher profit margin: “It’s great news, because it’s proof positive that doubling up in this space was a smart thing to do…I always like to see somebody out there who’s setting a higher bar as a demonstration of what can be done.”
On the banking industry, Gorman said, “I think things are pretty rational right now to be honest. I’ve been in and around the industry for 25 years. It is a sober environment that we operate in. The leadership of the banks, all of whom I know pretty well, are very sober quality professional people. I don’t see a lot of holes at the large institutions in terms of rational behavior at all.”……………………………………….Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Since the early 1990s, there have been many cases of currency investors who have been caught off guard, which lead to runs on currencies and capital flight. What makes currency investors and international financiers respond and act like this?
Do they evaluate the minutia of an economy, or do they go by gut instinct? In this article, we’ll look at currency instability and uncover what really causes it………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Currency hedging is both an art and a science. It is an approach that has the purpose of managing the degree of risk that can present itself when engaged in a strategy using foreign investment. The currency’s hedging structure would provide a buffer to compensate for fluctuations in the relative value of the currency type used in the investment.
WIth this buffer, it minimizes the exposure of the investor for the sudden shifts in the market to be able to obtain a reasonable return on the investment even if the currency declines or devalues during a given period………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

Just over one year after a carbon price was introduced in Australia, the government has decided to transition from a fixed carbon price to a flexible carbon price a year earlier than planned. Much has been made of the “termination” of the carbon “tax”, however few appreciate that Australia’s Carbon Pricing Mechanism, which started on July 1, 2012, was never really a tax in the true sense.
It was always established as an emissions trading scheme, but one which began with a fixed price per tonne of carbon emissions, rather than a market driven price………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

United Nations Emission Reduction Units surged 39 percent after Europe specified which credits are ineligible for use in its carbon market, the world’s biggest.
ERUs for December jumped as high as 25 euro cents ($0.33) a metric ton, the highest since Jan. 31, on the ICE Futures Europe exchange in London. The European Commission, the bloc’s regulatory arm, upgraded its carbon registry yesterday to clarify which offsets can be used to meet emissions obligations………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

The longest-ever rally in United Nations carbon prices shows little sign of easing as traders bet companies running emission-reduction projects will stop creating credits because it’s no longer profitable to do so.
UN-approved Certified Emission Reductions, or CERs, for December have more than doubled to 49 cents (64 U.S. cents) from a record low in April on the ICE Futures Europe exchange. It costs a combined 50 to 80 cents a ton to have emission cuts at clean-technology projects verified and the corresponding certificates issued by the UN, said Luca Bertali, an emissions broker in London at TFS Green, a unit of Cie. Financiere Tradition SA, one of the largest inter-dealer brokers………………………………………..Full Article: Source

Posted on 19 July 2013 by VRS |  Email |Print

We hear a lot about global crises every day — terrorism, global warming, children starving, children obese, running out of oil, and population bombs. Come to think of it, crisis mongering is not new. The media loves crises: they get more watchers and consequently, more ad revenues.
You might remember Paul R. Ehrlich, a Noble Prize winner and Stanford Professor. Back in 1980, he wrote “The Population Bomb” in which he claimed population growth would soon outrun the supply of food and natural resources — a real global crisis. Julian Simon, also an academic, was skeptical, so he offered Ehrlich a wager………………………………………..Full Article: Source

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