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Commodities Briefing 09.Aug 2013

Posted on 09 August 2013 by VRS |  Email |Print

A debate has broken out over whether the country’s largest banks should be allowed to own physical commodities, including the facilities used to transport, store and process these goods.
This may be the strangest debate we have had about banking in the United States in the last five years, because the answer is completely obvious: it is a new and very bad idea to allow big banks to also dominate any dimension of the commodities business. It is also not sustainable politically, and the big banks will soon have to divest themselves of these activities………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

After weeks of discussions by regulators on whether banks should continue to be allowed to own physical commodity assets such as warehouses, oil tankers and power plants, Financial News looks at why bank ownership of commodity assets is so controversial.
At a hearing in front of the US Senate Banking Committee last week, Commodity Futures Trading Commission chairman Gary Gensler said: “These markets [commodities] matter. They matter on the dining table at night. They matter for somebody buying a six-pack of beer. They matter when we all fill up a tank of gas.”……………………………………….Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

When interacting with your customers, are you selling a product, or are you selling what that product will do to make their lives easier? In other words, are you providing value?
The competitive environment for virtually all products now stretches to the far corners of the globe. Increasingly, companies that have enjoyed market dominance are experiencing the commoditization of their offerings and find themselves competing primarily on price………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

The supply of commodities may not be able to meet long-term demand without investment in new technologies, a report has warned. Price Formation in Commodities Markets: Financialisation and Beyond surveyed 11 different markets, including oil, gas, iron, wheat and sugar, and covers elements such as supply and demand, financial markets, government intervention and weather.
The report, produced jointly by the Centre for European Policy Studies and the European Capital Markets Institute, said there had been a “structural shift” in prices over the past decade due to the growth of emerging economies………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

China’s imports of crude and iron ore rebounded from multi-month lows to hit record highs in July, as more raw materials were shipped in to rebuild depleted stocks, amid tentative signs of stabilizing activity in the world’s second-largest economy.
Economic growth in China has slowed for nine straight quarters, increasing scrutiny over whether the country’s appetite for raw materials falters in the second half………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Though it was summertime, a tinge of ice was in the June air at this year’s St. Petersburg International Economic Forum. “There is no magic wand we can wave,” said Russian President Vladimir Putin, acknowledging the abrupt drop in Russia’s growth rate. “Prices for our main exports rose fast” for many years, he told the forum, but now “the situation has changed. There are no magic solutions.”
What is giving Russia and many other countries the shivers is the China Chill that is the result of the slowing Chinese economy. It means a recalibration for the world’s exporters, who have come to count on vigorous Chinese demand. It will be a particular challenge for commodity exporters………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Mining companies and others dealing in commodities helped pull the stock market out of a three-day slump on Thursday.
News that China’s trade rebounded last month signaled the end of a six-month slowdown for the world’s biggest buyer of raw materials. The report drove prices up for copper and other commodities, and that helped lift Newmont Mining, Freeport-McMoRan and other stocks in the materials industry………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut shipments by the most since December as refiners in the U.S. and Europe conduct seasonal maintenance, tanker-tracker Oil Movements said.
The group, which supplies about 40 percent of the world’s oil, will cut exports by 740,000 barrels a day, or 3 percent, to about 23.7 million barrels a day in the four weeks to Aug. 24 from the period to July 27, the researcher said today in an e-mailed report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Crude oil output from the Organization of the Petroleum Exporting Countries (OPEC) fell 110,000 barrels per day (b/d) to 30.34 million b/d in July from 30.45 million b/d in June, a Platts survey of OPEC and oil industry officials and analysts showed Thursday.
“When the consuming world wonders why oil prices remain relatively high, the Libyan production drop-off cited in our report is a reason,” said John Kingston, Platts global director of oil, “as well as the declines seen from South Sudan, Egypt, Syria, and in particular, the decline in Nigeria, though it rose slightly this month.” The key production increases are coming from: the United States, Canada, and swing producer Saudi Arabia. (Press Release)

Posted on 09 August 2013 by VRS |  Email |Print

When Iraq surpassed Iran last year as the second-largest Opec producer for the first time since the late 1980s, it was heralded as a sign of the recovery of Baghdad’s energy industry a decade after the US-led invasion.
But less than 12 months later, Iraq has gone from being a leading source of growth in global oil supplies to an uncertain one – a development that is putting pressure on prices and posing challenges for policy makers in Baghdad, Washington and Riyadh………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Back in late April I wrote a post called ‘Dot-to-Dot-to…Not?’, which joined the dots from mortgage rates to oil prices…and how their price evolution had been counterintuitive to the move in equity markets: the risk aversion exhibited by fixed income markets and caution shown by oil prices did not jive with the emphatic rally seen in equities.
Just a few months later it seems worth revisiting the subject, as there has been some dramatic moves since and some key takeaways to, um, takeaway………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Gold has many uses, but as a hedge against inflation or a declining dollar, it’s a flop. That’s the conclusion of an exhaustive article in the current issue of the Financial Analysts Journal, which examines six different explanations for why gold prices rise and fall.
Authors Claude Erb and Campbell Harvey, a professor at Duke University’s Fuqua School of Business, conclude that the assumptions of most investors — that gold rises during times of inflation, or serves as a hedge against a collapsing dollar — don’t measure up. The most likely explanation for why gold prices go up is because gold prices are going up………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Gold bulls got kicked in the teeth on Monday when Don Kohn – who is on President Obama’s short list of candidates to replace Fed Chairman Ben Bernanke – sent around a note saying the Federal Reserve will begin “tapering” its QE program after the September meeting.
That news sent gold lower on the day, and could grease the skids for the yellow metal for another week or two………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

With the SPDR Gold Shares, the world’s largest ETF backed by physical gold, down nearly 24% this year, further significant retrenchment in gold prices may be a hard concept to fathom for some gold bugs.
As it is, with gold prices struggling to stay above $1,300 per ounce and move higher from there, profitability for some miners is threatened. Below $1,300 an ounce, speculation intensifies that even some of the large-cap miners will have a hard time profitably extracting the yellow metal from the earth. ……………………………………….Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Many retail investors in India believe that gold prices move only northward in the long term. The upward march of the yellow metal in the last decade or so has cemented their faith in the precious metal. However, they may have to change their opinion, say investment experts.
Many financial experts believe that the gold portfolio is not going to offer sparkling returns in the coming days. This is despite gold prices in India being relatively higher due to the rupee depreciating against the US dollar. In dollar terms, the yellow metal is losing lustre, as an improvement in the US economic scenario is strengthening the greenback………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

During silver (SLV) and gold’s (GLD) terrific move in 2011, very few analysts warned that a correction could come to shakeout all the Johnny come lately’s (momentum traders) who were pushing gold and silver to nosebleed levels. I got nervous as hell back in 2011, when the day traders and mass media started picking up the precious metals story and I warned of a correction.
In April of 2011 I was interviewed by CBS Marketwatch and was quoted saying, “I am very concerned that silver may be overheating as the herd tries to force their way into this trade.” This drastic move higher was to me a warning sign that we may see a significant shakeout………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

The monthly Rare Earths MMI took the biggest jump of any of the index readings, moving from a paltry 29 in July to 37 in August, on the back of big upward price movements for all 14 metals and oxides that comprise rare earth metals index.
Dudley Kingsnorth, a noted rare earth metals analyst, attributes the improved rare earth price levels to several factors including: rising demand for automation technology (and the rare earth metals that support it, such as: neodymium, dysprosium, europium and cerium), as well as China’s stop to new mining exploration within China and a curb on mining licenses………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

It has become a standard conversation, particularly when people bend my ear about investments: What exchange-traded fund (ETF) should I own? Which are the best? It’s a funny question, since the whole point of index funds and ETFs is to do away with the notion of “best” and get people to buy plain vanilla.
Now, naturally, nobody likes to buy anything “vanilla.” It’s a law in marketing that your brand has to be different, flavorful, exciting…not vanilla………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Near the end of 2012 PureFunds launched GEMS (ISE Diamond/Gemstone ETF, Expense Ratio 0.69%) which is the first entrant in the ETP space that offers exposure to “invest in the full life cycle of the gemstone industry” according to fund marketing literature.
Thus, the fund invests in companies that are involved in the life cycle of diamonds and gemstones from the initial mining to retail distribution for example, and it is important to note that this is an “equity” way to play this market (sub-category of the greater Commodity Producers space) and not a way to invest in physical diamonds………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Many ETF/ETP managers in Europe are adjusting their product offerings hoping to create and develop bestselling ETFs and ETPs. At the end of the first half of 2013, the European ETF/ETP industry had 1,954 ETFs/ETPs, with 6,156 listings, assets of US$357 billion, from 49 providers on 23 exchanges.
The breakeven point for a fund or ETF to cover its cost used by many consultants is US$100 million in assets under management (AUM)………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Worries have been building over the Chinese market, thanks to concerns regarding a number of aspects of the nation’s economy such as the financial sector and the still heavy dependence on manufacturing to power growth. This has culminated in sluggish GDP growth rates and speculation that annual GDP increases could fall below 7%.
These trends have led to poor trading not only for China ETFs, but for copper ETFs as well. After all, China is the largest consumer of copper in the world, so its economic outlook will have a huge impact on prices for the red metal………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some global agriculture stocks to your portfolio but don’t have the time or expertise to hand-pick a few, the IQ Global Agribusiness Small Cap ETF could save you a lot of trouble.
Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

There’s something odd happening with inflation. Not only has there been a surprising absence of deflation in the wake of the biggest global financial crisis since the Great Depression, but recently inflation has been popping up in places where it really should be slowing down.
The Indian central bank, for instance, is struggling against rising inflation against the backdrop of an economy that’s grinding to a halt. Brazil also has been battling faster than comfortable price rises–there are some hopeful signs prices are coming down, but at the expense of a faster slowdown in economic growth, while some figure the dip will only be temporary………………………………………..Full Article: Source

Posted on 09 August 2013 by VRS |  Email |Print

India’s central bank Thursday announced fresh steps to drain cash from the banking system, as it stepped up efforts to stop the rupee currency’s plunge. The Reserve Bank of India said it would sell 220 billion rupees ($3.6 billion) of short-term cash management bills every week on Mondays. Next week, it will sell 110 billion rupees each of 35-day and 34-day bills.
The move comes after the rupee Tuesday fell to a new low of 61.80 to the dollar, erasing the previous low of 61.21 set on July 8. Thursday, the rupee was trading at 60.88 and is down nearly 12% against the U.S. currency since early May………………………………………..Full Article: Source

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