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Commodities Briefing 04.Sep 2013

Posted on 04 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 04 September 2013 by VRS |  Email |Print

The Reserve Bank of Australia last night released its commodity price index for the month of August, which registered an increase in commodity prices in both Australian Dollar and special drawing rights (SDR) terms (effectively a measure of commodity prices based on a broad range of currencies) on the back of rises in iron ore and gold prices:
Preliminary estimates for August indicate that the index rose by 0.2 per cent (on a monthly average basis) in SDR terms, after rising by 1.6 per cent in July (revised). The largest contributors to the rise in August were increases in the prices of iron ore and gold. The prices of base metals also increased, while the prices of many rural commodities declined in the month. In Australian dollar terms, the index rose by 2.7 per cent in August………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Commodity producers and traders have no doubt been cheered by the recent recovery in China’s key manufacturing sector, but the boost may be more to sentiment than actual demand.
This is because there is a fairly weak correlation between movements in China’s official Purchasing Managers’ Index (PMI) and imports of key commodities such as crude oil, iron ore and copper. There is a far better correlation between China’s imports and the price of these commodities………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Believe it or not, a Syria strike could send oil prices tumbling — yes tumbling. That may seem counter-intuitive, but that’s exactly what Cramer is hearing from Carley Garner, the co-founder of DeCarley Trading and author of A Trader’s First Book on Commodities.
She tells Cramer that historical patterns would suggest a strike should generate some watershed selling. Looking back two years, when the US went into Libya, the price of oil domestically dropped by 10% almost immediately. And after America invaded Iraq a decade ago, oil futures tumbled 15%………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Iran will not back down in its quest for an Iranian head of OPEC, the country’s new oil minister, Bijan Zanganeh, was quoted by Mehr news agency as saying on Tuesday.
The long deadlock over who should be the next secretary general of the Organization of the Petroleum Exporting Countries has highlighted political tensions within the 12-country group that have increased due to Western sanctions on Iran………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

The U.S. is expected to spend about 8.5% of its GDP on energy in 2013. In 2008, when oil prices peaked, it was closing in on 10%. U.S. oil production provides a buffer to supply shocks — which happens frequently in the Middle East and North Africa, two key crude supply regions. In July 2013, disruptions to crude oil and liquids production were nearly 2.7 million barrels per day.
Of the supply disruptions, 800,000 barrels were from non-OPEC nations and the other 1.9 million from OPEC, according to the U.S. Energy Information Administration (EIA). August is estimated at a 2.8 million shortfall………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Goldman Sachs raised its second-half 2013 gold price forecast to $1,388 from $1,300 an ounce on recent price activity but maintained its medium- and long-term price forecasts. “We believe the recent uptick is a result of investors positioning themselves for an increase in inflation rates and speculation regarding a potential military strike on Syria,” the bank said in an equity research note dated Sept 2.
Despite the raised forecast, the bank said longer term it expected prices to ease on improvement in U.S. economic activity and the reining in of accommodative monetary policy………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Where is the gold price going? It’s a simple matter of following the S. That’s S for silver, not Syria. COMEX silver has led the gold price since 2011, with silver reaching a price peak in April 2011 before Gold peaked in September 2011. The collapse following these price peaks showed the same behavior for both silver and gold. Traders who followed silver had clear warning of how gold would behave once the peak was established.
In 2012 the silver price leadership advantage was reduced. The retreat in silver after it reached a 2012 price peak in September was mirrored by gold in October 2012. While silver still provided a leading indication of gold price behavior, the lead time was reduced………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

In the last week or so there has been a changing sentiment toward what is driving gold, a large part of the focus is now directed toward Syria and less so on the FOMC’s tapering. Depending on whom you believe, Syria may determine the outlook for the gold and silver price.
But how much of an impact will a war with Syria really have on the gold price? Other commodities, such as oil are also impacted by murmurings of war but even they too are looking at factors beyond Syria as price drivers………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Hedge funds and other speculators are making the biggest bet on a gold rally since January as 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% 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% to 32,088, the biggest drop in 11 months. Net-bullish holdings across 18 U.S.- traded commodities climbed 18% to 824,251, the highest since February………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Of the many markets that I follow, gold bullion has seen the most significant shift in investor sentimentover the past year. From exuberance last fall to pessimism in late June, gold bullion has been nothing short of a roller coaster ride.
Because commodities can have such violent swings in investor sentiment, it’s important to look at several factors when making an investment decision. The more potentially positive factors you have behind an investment thesis, the greater the likelihood of success………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

A monthlong copper rally tied to China’s improving economy is running out of steam as signs grow that Chinese manufacturers, the world’s biggest buyers, are cutting back on demand.
Copper surged about 7.8% in the first half of August, but the rally has since stalled and prices are down 2.6% from their high last month. The metal is seen as a key barometer for Chinese growth because of its wide use in making items ranging from power cables to automobiles. The recent slide potentially muddies the outlook for Asia’s biggest economy, with data elsewhere pointing to an accelerating economy………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Silver ETFs are outperforming gold prices again after a four-day break. The iShares Silver Trust vaulted nearly 4% on Tuesday while SPDR Gold Shares added 0.5%. Silver was leading gold after strong manufacturing data in the U.S. and China.
“Manufacturing is a key driver of silver demand as it is used in solar panels and electronics as well as jewelry,” Investing.com reports. There are also signs that silver ETFs have provided support for the metal’s price………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

For the bulk of 2013, investors have shown a preference for stocks over commodities and fears regarding tapering of the Federal Reserve’s quantitative easing program have only added to the pressure on commodities ETFs and ETNs. Year-to-date, marquee commodities ETFs such as the SPDR Gold Shares and the iShares Silver Trust are still saddled with significant losses.
GLD, once the second-largest ETF in the world, is down 17.5% this year while SLV is off 24.5%. While GLD, SLV and other commodities ETFs and ETNs still have a long way to turn green on the year, some commodities funds made significant progress in August. Of the top-25 non-leveraged, long only ETFs and ETNs last month, 20 were commodities-related……………………………………….Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Investors pulled a record amount of money out of exchange-traded funds in August, but given the growth of the ETF industry, a record isn’t what it used to be.
On its face, August was the worst month ever for outflows from U.S.-listed ETFs, according to BlackRock Inc. Some $17.5 billion flowed out of all U.S. ETFs, topping the previous record for $17.1 billion, set in January 2010………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Canada’s dollar snapped four days of losses on speculation tensions in Syria will drag on, creating demand for the currencies of commodities-exporting nations.
The Canadian currency rose against 14 of its 16 most-traded peers after U.S. President Barack Obama decided to seek authorization from Congress before ordering a strike against Syria for the alleged use of chemical weapons. Futures on crude oil, Canada’s largest export, gained as much as 1.2 percent………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

The Taiwan dollar rose to its strongest level in almost three months after overseas investors boosted holdings of the island’s stocks amid optimism a global economic recovery was gathering pace.
International funds bought more Taiwanese equities than they sold in the past four days, bringing net purchases to US$557 million. The stock market’s weighted index rose for a fifth day yesterday, the longest winning streak since July………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

European companies that have ridden a boom in sales to Brazilian, Indian and South African consumers now face an uncomfortable third quarter as currency routs crimp demand and weigh on profits.
Consumer staples companies are expected to bear the brunt of prolonged currency weakness in these and other prominent emerging economies since the U.S. Federal Reserve began to talk of running down the policy that has pumped cheap cash around the world………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

The Brazilian government will work to reduce the volatility of the country’s real currency that could negatively impact the economy, Treasury chief Arno Augustin said on Tuesday.
He added that the South American nation holds plenty of international reserves and has solid economic fundamentals to shield its economy from a sharp drop in global liquidity………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Economist Ronald Coase garnered a Nobel Prize for work that, among other things, provided the intellectual framework for reducing pollution by trading carbon credits instead of enforcing antipollution laws, as well as for auctioning the airwaves for cellphones and pagers.
Mr. Coase, who died Monday at age 102, was one of the most-cited economists of the 20th century. Decrying “blackboard economics” that used formulas to describe what he called an “imaginary” world, the University of Chicago Law School economist tried to describe the actual constraints firms and people face as they make economic decisions………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

Have you heard of carbon trading? Where a country or region sets a cap for its emissions, and then uses permit trading to seek out the cheapest cuts. I’m guessing you have. But what about the carbon in trade? The carbon that moves around the world in the form of fossil fuels and finished products. Heard of it?
When we talk about carbon emissions we invariably talk about where emissions occur due to fossil fuel combustion. But carbon moves around a lot. Oil moves from the Middle East to Europe before being used and products purchased in the US are often made in China. These movements have important implications for climate policy………………………………………..Full Article: Source

Posted on 04 September 2013 by VRS |  Email |Print

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas emissions.
The Shenzhen Emissions Trading Scheme program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year………………………………………..Full Article: Source

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