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Commodities Briefing 29.Jul 2013

Posted on 29 July 2013 by VRS |  Email |Print

A report by the Bank for International Settlements (BIS) released last week defies conventional wisdom to suggest commodities do not diversify investments at all. A new study released last week is causing a bit of a buzz in commodity markets.
Traditional wisdom dictates that investing in commodities is supposed to act as a portfolio “hedge” and reduce overall volatility. However, the report by the Bank for International Settlements (BIS) released last week suggests commodities do not actually diversify investments at all. “The popular view that commodities are to be included in one’s portfolio is not grounded,” said the study, by Marco J. Lombardi and Francesco Ravazzolo………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

China’s sovereign wealth fund has switched emphasis away from commodities to financial stocks in its overseas equity holdings over the past year. The investment shift by China Investment Corp is notable because the fund is uniquely placed to make a call about the global commodities market, with Chinese demand one of the biggest drivers of prices.
Since its establishment in 2007 CIC had focused most heavily on commodities. But the fund, which had $575bn of assets under management at the end of last year, changed tack as Chinese growth slowed………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

A copper price collapse of more than 60 percent, zinc cut by up to a half and oil down to $70 a barrel. That’s the fate facing world commodity markets should China’s growth dip to 3 percent in the next three years — a scenario economists at Barclays Plc (BARC) are now examining.
They’re not the only ones building models based on a steep decline in growth in the world’s second-biggest economy. Nomura Holdings Inc. (8604) estimates a one-in-three chance of a sharp drop by the end of 2014, and Societe Generale SA sees a “non-negligible risk” of less than 6 percent growth this year and an outside chance of 3 percent average expansion for this half and next………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

A slowdown in China has hit its financial markets hard this year as fund managers cut exposure to the world’s second largest economy, but some investors say it may be time to jump back in.
The country’s downturn is being felt around the world. Energy and materials stocks have been hit, commodities prices are lower, and the currencies of China’s trading partners, including Australia, Taiwan and South Korea, have tumbled………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries (Opec) oil revenue is set to go down, suggest the US Energy Information Administraion (EIA). THe EIA noted that all Opec members excluding Iran, earned nearly $982 billion in net oil export revenues in 2012 - a 5.4 per cent increase from 2011.
After adjusting for inflation with 2005 dollars as a constant, Opec’s revenue increased by 3.2pc to $835bn in 2012, the EIA added. However, Opec’s sales revenue is now projected to tumble by 4.3pc in 2013 to $940bn and by further 3.9pc to $903bn in 2014, the EIA underlined………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

As an energy writer, the most common question I get from friends and family concerns the price of gasoline. Just the other day I was talking to my dad when he mentioned that gas prices back home in New York were now over $3.80 a gallon. I guess I need to stop complaining about local prices that have now shot up to more than $3.30 a gallon.
The bad news, which I had to relay to my dad, is that prices aren’t likely to go down again anytime soon. Worse yet, drivers probably should get ready for higher gas prices. Last week’s $0.12 jump could only be the beginning because a confluence of factors driving supply and demand are likely to push prices higher………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

An Iranian lawmaker says chances are high for the Islamic Republic to assume the presidency of the Organization of the Petroleum Exporting Countries (OPEC).
“Iran is among the countries which, since the beginning of OPEC’s activity, has had an effective presence in the organization and enjoys a high level of expertise and experience compared to the other members of the organization,” said Hossein Amiri Khamkani, a member of the Economic Committee of Iran’s Majlis, on Saturday………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

Saudi Prince Alwaleed bin Talal told Oil Minister Ali Al-Naimi in an open letter that the kingdom won’t be able to raise production capacity to 15 million barrels of crude a day as planned, and that he disagrees with him over the impact of U.S. shale gas output.
The prince published the letter Sunday on Twitter, saying there’s a “clear and increasing decline” in demand for crude from members of the Organization of Petroleum Exporting Countries, particularly Saudi Arabia. The kingdom is now pumping at less than its production capacity as consumers limit oil imports, Alwaleed said………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

The International Monetary Fund said it expects the European economy will remain in recession for 2013 and expand by less than 1 percent next year. That translates to lower demand for oil and natural gas. On strategic issues, EU leaders last week said they were concerned about the ability to defend the bloc’s national interests in the age of austerity.
With demand centers for energy resources shifting to Asian economies, and production gains continuing in North America, the European Union may find itself in desperate need of a revolution on many fronts if it wants to stay relevant in the international community………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

Four weeks into the third quarter of the year, global commodity markets are still groping for direction. A clutch of factors including demand and supply side issues, varying monetary policy stance of central banks, volatile exchange rates and geopolitics to name a few have created a sense of uncertainty.
There indeed are concerns over global growth. In the coming months, communication from central banks especially in advanced economies will have a far reaching impact on commodity markets with potential effect on volatility………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

Jewellery sales are gaining momentum while gold coins and bars are in high demand in the wake of the plunge in the prices of the yellow metal this year, industry players say.
Major retailers and gold jewellers have redesigned their business strategies and are now comfortable with present gold prices, which resulted in strong double-digit sales during the first half of 2013. However, some shop owners and customers in Dubai and Sharjah have complained about a shortage of “Swiss brand” gold bars and coins in the market………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

“Buy gold now at 20 per cent discount below market price. Limited quantities available so act.” This was an SMS sent earlier this week by a commodity trading company operating from Dubai. Is it a marketing gimmick or a dubious scheme?
Posing as an investor, when this reporter called the company, a senior consultant (name withheld) said: “This is the best opportunity to buy gold… we are selling it 20 per cent below the current market price.” As per the offer, the minimum quantity that one has to buy is seven ounce, which will roughly cost Dh34,536. Gold in physical form will be delivered between two and four months………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

Hedge funds raised wagers on a gold rally as speculation that the Federal Reserve will hold off on curbing stimulus drove prices toward the biggest gain in 18 months. Goldman Sachs Group Inc. expects the rally to reverse.
Money managers increased their net-long position by 26 percent to 70,067 futures and options as of July 23, U.S. Commodity Futures Trading Commission data show. The fourth consecutive weekly gain is the longest streak since October. Bullish wagers across 18 U.S.-traded commodities gained 7.4 percent to 615,140. Investors more than doubled bets on lower corn prices to a record net-short holding………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

Gold is one of history’s most famous and important metals and has been the basis for monetary systems for thousands of years. This influential metal that has sculpted our history may not even be from our planet. Researchers have recently found new evidence that gold actually comes from the collisions of dead neutron stars.
While this discovery may do little as a price mover for this precious metal, it may give us an insight into just how rare gold is………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

The millions of tonnes of aluminium stockpiled by Goldman Sachs and Glencore have led to claims that the firms have used their dominance to control prices of the metal for their own gain.
Brewer Miller Coors last week told the US Senate that inflated aluminium prices were costing consumers $3bn (£2bn) a year, putting the focus on the stockpiles held by the Wall Street investment bank and the world’s largest commodity trading firm………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

JPMorgan Chase & Co is exiting physical commodities trading, the bank said in a surprise statement, as Wall Street’s role in the trading of raw materials comes under unprecedented political and regulatory pressure.
After spending billions of dollars and five years building the banking world’s biggest commodity desk, JPMorgan said it would pursue “strategic alternatives” for its trading assets that stretch from Baltimore to Johor, and a global team dealing in everything from African crude oil to Chilean copper………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

JPMorgan has been feeling the pressure regarding its commodities business from U.S. lawmakers, and on Friday the company announced it would be downsizing this aspect of its operations. The Wall Street Journal reports that JPMorgan is putting up warehouses and other physical properties for sale, though it is unclear whether the motivation is declining revenues or heightened regulation.
On the regulation front, JPMorgan had another opportunity to hear from Washington lawmakers earlier this week. Senator Sherrod Brown (D-Ohio) held hearings on the issue of precious metal storage, power plant ownership, and other key components of the biggest banks’ commodities business on Tuesday………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

NSE has emerged as the largest bourse globally in the number of currency derivative contracts traded on its platform in first half of 2013 — leading the second-ranked Moscow Exchange by over 125 per cent.
As per the latest data complied by the World Federation of Exchanges (WFE), 59.71 crore currency derivative contracts were traded on NSE between January and June, a rise of 52 per cent from the year-ago period………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

Americans want a stable currency, and they have it. The design of U.S. paper currency has not changed significantly since 1929, when all bills were reduced to their current size, roughly 6 inches by 2 inches.
Since then the U.S. Treasury has added security features to the bills to frustrate counterfeiters. Watermarks, colored threads and color-shifting ink have been added. Text, seals, emblems and portrait sizes have been tweaked. But the faces on the bills have not changed since the late 1920s, and even the color palette changes of the past decade have been subtle rather than revolutionary………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

On July 18, one month after China launched its first pilot carbon-trading program in Shenzhen, Guangdong province, the city began consulting local businesses and government departments about its draft regulations for the project. The regulations emphasize that carbon credits are corporate assets.
The launch ceremony of the Shenzhen Emissions Trading Scheme saw Shenzhen Energy Group sell 10,000 metric tons of carbon credits to PetroChina International Guangdong at 28 yuan ($4.60) per ton. Hanergy Holding Group also bought 10,000 tons at 30 yuan per ton. Both businesses purchased the credits for investment purposes………………………………………..Full Article: Source

Posted on 29 July 2013 by VRS |  Email |Print

After highly publicized visits to China and India, U.S. Secretary of State John Kerry has the world thinking that the U.S. is taking the reins on addressing climate change. Unfortunately, that is not the case.
This is not to disparage the progress made in the new partnerships announced by Secretary Kerry and his counterparts in Beijing and New Delhi. If mankind is to have any chance in mitigating the effects of climate change, it needs everyone on board………………………………………..Full Article: Source

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