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Commodities Briefing 02.Sep 2013

Posted on 02 September 2013 by VRS |  Email |Print

The recent price gains in a range of commodities covering mainly energy products and metals have once again raised questions whether the global markets have returned to the so-called commodity super cycle or boom period despite some setbacks and whether the recent performance is sustainable over time.
This quarter so far, commodities have been among the strongest performing assets even as equity markets faced losses. Coming in the backdrop of sluggish global growth and indifferent demand, the price gains are clearly attributable to the risk of supply disruptions, especially in oil………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Commodities beat bonds, stocks and the dollar for a third month, the longest winning streak in two years, as the prospect of military strikes in Syria boosted oil and gold. Emerging markets declined as currencies plunged from Brazil to Turkey to India.
The Standard & Poor’s GSCI Total Return Index of 24 raw materials rose 3.4 percent in August as U.S. crude reached a two-year high and gold rallied close to a bull market………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Investors have been dumping commodities at an astonishing rate, with more positions liquidated in the second quarter of this year than at the height of the financial crisis. Legendary investor Warren Buffett says you should be fearful when others are greedy, and greedy when others are fearful. So does this mean now is a good time to buy?
There have been a number of observers declaring the end of the commodities “supercycle” over the past few months. However, a slowdown in China and other emerging economies means many investors have now lost faith. Barclays has estimated that $63bn (£40.6bn) was removed from commodity investments in the second quarter alone………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

It’s a very risky environment for the markets right now. It’s also a very good time to be an investor. These two propositions may seem contradictory, but they’re not — at least in the view of David P. Kelly, chief global strategist at J.P. Morgan Funds.
“There are many problems in the economy and in the markets, certainly,” Mr. Kelly said in an interview. Short-term losses could easily be on the way, and they could be painful. “But the answer for a long-term investor isn’t to avoid risk,” he said. “It is to be extremely diversified — and to invest in equities. You’re likely to do much better that way than if you stay out of the markets.”……………………………………….Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

The sectors that deserve bullishness are those focused on commodities that are consumed, like energy and agriculture, specifically fertilizer. Much has been said and many charts have been plotted to prove that the commodity “supercycle” has run its course.
The days of $1,800 gold, $150 oil, and $18 soybeans have passed. But before we write this group off, we should first understand that placing them all under the umbrella of “commodities” limits our ability to analyze this wide range of products and resources………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

The possibility of a short-term Nato-led military strike on Syria has intensified concerns over security of oil supply and could cause a spike in range of $120-$130 per barrel, according to a report released by BofA Merrill Lynch.
Prior to international sanctions imposed in late 2011, Syria produced 350 thousand barrels per day, added the latest Global Energy Weekly from Bank of America (BofA) Merrill Lynch. Now, output is down to 50 thousand barrels per day. However, the real concern with Syria is that any conflict could draw in Iran, Russia, and other Middle East nations, the report said………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

“No one knows just what a war would bring, of course, or what the effect would be on oil supplies. Some analysts, looking at the bidding in the oil markets so far, say the price could [increase by 65%].”
That was a quote from The New York Times … on Sept. 28, 1990. The Iraqi invasion of Kuwait and the subsequent threat of NATO intervention had sent oil prices soaring 166% higher than prices only three months prior. Pundits and analysts in the article were pontificating about the possibility of $100 oil, which would have quite possibly created a global economic collapse, considering prices in July 1990 were in the $16 range……………………………………….Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

The Economic Development Ministry lowered its projections for Russia’s economy, downgrading growth to only 1.8 percent for 2013. But the Urals crude has traded above its forecasts this year, and higher oil prices could provide an economic boost since oil and gas account for roughly 75 percent of Russia’s exports and almost half of its budget revenue. The worrisome question is what happens beyond this year.
The latest oil price increase was triggered by fears of a U.S. missile strike on Syria, but even if it doesn’t occur, the region will remain turbulent and the risk premium, which has pushed oil prices to a five-year high, will endure. Potential supply disruptions are attracting speculators, who are flush with liquidity provided by major central banks, especially the U.S. Federal Reserve………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

The lower Australian dollar is set to have big benefits for gold and oil exporters in the coming year, with prices for both commodities set in US dollars. Australia is home to many companies seeking and extracting oil and gold, but which one is best for your money?
Gold has been a magnet for speculators and investors for as long as history books can record. It is also arguably the world’s most enduring store of value. If the baby Jesus were to be born today it is entirely possible he would have still been gifted gold. But does that make gold-producing stocks an investment for wise men?……………………………………….Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Hedge funds and other speculators are making the biggest bet on a gold rally since January amid mounting signs that the U.S. will lead a military strike against Syria drove prices to a three-month high.
Money managers boosted their net-long position by 34 percent to 97,902 futures and options by Aug. 27, the most since Jan. 22, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts tumbled 37 percent to 32,088, the biggest drop in 11 months. Net-bullish holdings across 18 U.S.- traded commodities climbed 18 percent to 824,251, the highest since February………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

“I suspect we are in for a wonderfull Fall,” John Embry, Sprott Asset Management’s chief investment strategist, told Mineweb’s Gold Weekly Podcast, primarily because the yellow metal is currently very under-priced and the Indian market has been taking note.
“At this point I am probably as bullish as I’ve been in living memory actually,” Embry said, “adding “I thought this summer might be a little slow because it’s a quiet market and you can play around in the paper market, but I think that’s going to change quite significantly in the fall and I would not be surprised if, by early next year, we weren’t challenging all-time high.”……………………………………….Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

The gold price rose again in August, following up a 10 percent gain in July with an increase of 6 percent last month, however, precious metals are still working their way out of very deep holes in 2013.
On Wednesday, gold rose above $1,430 an ounce for the first time since May as silver approached the $25 mark for the first time since April, but both metals gave back these gains later in the week as the dollar strengthened………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Two-thirds of aluminum producers would be losing money because of lower premiums paid on top of exchange benchmarks if the world’s biggest metals bourse approves rules to cut waiting times at its warehouses, according to JPMorgan Chase & Co.
Premiums to obtain the metal will drop 60 percent to about $100 a metric ton as a result of the new rules the London Metal Exchange is expected to approve in October, Benjamin Defay, an analyst at the bank in London, wrote in a report. The LME proposed to oblige warehouses where waits extend for 100 days or more to let more metal out than they take in………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Which is better: investing in mutual funds or in exchange-traded funds? That question is somewhat like asking a person which is his favorite organ: his heart or his lungs. There is no good answer when you put at odds two things that are not either/or.
Mutual funds are a perfectly good investment instrument, as are ETFs. If buying and selling intraday is important, then ETFs are the right choice. But, if trading during the day is not relevant, an investor is well served with either mutual funds or ETFs. ETFs tend to have lower expense ratios than mutual funds, but that is a generalization, because extremely low-cost index funds are widely available………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

If exchange traded funds had ears then they would definitely be burning right now. A lot has been spoken about ETFs over the past few weeks and the bulk of it has not been very kind – at least that is what the proponents of the fund structure, once perceived as transparent and uncomplicated, would have you believe.
In fact, the cheerleaders of ETFs, which replicate the returns of different types of securities or indices while trading on exchanges just like stocks, believe the sector is under a sustained attack – and wrongly so………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

BRICS countries may reach consensus at next month’s G20 summit on creating a $100 billion currency reserve fund to help ease short-term liquidity pressure and safeguard financial stability of major emerging economies, a senior Chinese central bank official said today.
Yi Gang, deputy governor of the People’s Bank of China, said leaders of the BRICS group, Brazil, Russia, India, China and South Africa, have agreed on the ratio of contributions, operation mechanisms, governance structure and loan-to-value ratio of a Contingent Reserve Arrangement (CRA)………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

In the event of independence, Scotland’s choice of currency will have far-reaching implications for deals and contracts, says Charles Livingston.
One of the key issues in the Scottish independence debate has been whether an independent Scotland would retain sterling or adopt a new currency. The answer to that question would have significant consequences for businesses in the event of a Yes vote on 18 September, 2014………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

The Syrian Central Bank warned that foreign currency traffickers could face up to 15 years in jail without trial, as the pound seemed to recover slightly on the black market, but was still much weaker than before Western powers weighed military options.
“Penalties will include temporary detention of up to 15 years for those who move foreign currencies outside the country, whether through authorized money transfer companies or through border crossings,” Syrian Central Bank Governor Adib Mayaleh said in a statement published Thursday by the official Syrian news agency SANA………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Tea prices have plunged more than a third over the past year as the crisis in Egypt, the world’s fifth largest importer, has cut demand just as global production has rebounded after several years of bad crops.
The commodity, which is critical to several east African economies, is now selling at its lowest price in more than three years. Kenya is the world’s largest exporter of black tea, followed by Sri Lanka and India………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

Indonesia and Japan recently signed the Joint Crediting Mechanism (JCM) for carbon trading, enabling both countries to benefit from investments in environmentally friendly projects, said an official on Friday.
“We will benefit from Japan`s investments in Indonesia, particularly in projects aimed at reducing carbon emissions. Meanwhile, Japan can get credit for its efforts to reduce carbon emissions,” explained Deputy of Coordinating Minister for the Economy Rizal Affandi Lukman. The new mechanism is expected to boost the volume and quality of Japanese investments in Indonesia………………………………………..Full Article: Source

Posted on 02 September 2013 by VRS |  Email |Print

As the northern hemisphere summer draws to a close, three new emerging global crises threaten to dominate the rest of the year.
1) In the Middle East Bashar, Assad’s likely use of chemical weapons on his own citizens is certain to draw a military response from the West. Despite talk of a surgical strike and limited intervention, time and again over hundreds of years the Middle East has shown itself to be a quagmire, capable of embroiling even its most reluctant invader………………………………………..Full Article: Source

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