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Commodities Briefing 12.Sep 2013

Posted on 12 September 2013 by VRS |  Email |Print

Since September 2008, commodities and equities have been showing a strong positive correlation, but that may no longer be the case, says a report by Barclays Research titled ‘Untangling commodity correlations’. Commodities may well get back the tag of being an asset class that equity investors can diversify into.
While equity indices in emerging markets have fallen, commodity prices have been relatively stable. The effects of the tapering of quantitative easing in the US and negative news from emerging markets have not affected this asset class the way equities have been affected………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Goldman Sachs Group Inc. cut its 12-month forecast for commodity returns, predicting a decline in precious metals, agriculture and energy. The bank kept its neutral recommendation on raw materials.
The Standard & Poor’s GSCI Enhanced Commodity Index will drop 2 percent, compared with an increase of 0.1 percent expected in July, analysts led by New York-based Jeffrey Currie said in a report today. Energy, with a 73.5 percent weighting, will probably fall 1 percent, while precious metals slide 15 percent and agriculture declines 7 percent, they said. Industrial metals may increase 2 percent………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Inventories of many base metals have soared to historically high levels in the aftermath of the Great Recession. In spite of a depressed demand backdrop (slow recovery and China doubts) the impact on spot prices has been limited.
If history were a guide, the level of inventories would have driven spot prices below the cost of production. This would have led to a downward adjustment of production, eventually bringing the market into equilibrium………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Over the last month, oil prices have been steadily climbing due to an assortment of factors. The oil crisis in Libya, production problems in Nigeria, and low OPEC spare capacity have all served to tighten the oil market. Exacerbating this is the looming threat of Syria, where the prevailing opinion is that any American intervention will send the price of crude oil skyward. Estimates as to how high said price spike will be and how long it will last vary considerably, but most agree that military action will be generally inflationary.
However, some claim that the opposite will happen. Carley Garner, co-founder of DeCarley Trading and author of A Trader’s First Book on Commodities, claims that the oil market might tumble following an American strike in Syria………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Fatih Birol, the International Energy Agency’s chief economist, comments on price of oil. He spoke in an interview today in the Chinese city of Dalian, where he’s attending the World Economic Forum’s Annual Meeting of the New Champions.
“Oil prices are still very high for the fragile economic recovery. It’s high for Europe and also too high for developing Asian countries. It is more than welcome that prices are going down a bit” and providing room for an economic recovery………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Oil supplies by OPEC will decrease in 2013 and 2014 reaching 35.82 million barrels per day (bpd) and 35.62 million bpd respectively, according to the Short-Term Energy Outlook published by the U.S. Energy Information Administration (EIA) on its official website.
In 2012, according to the EIA’s estimates, OPEC supply amounted to 36.59 million bpd. At the same time EIA stressed that in August, unplanned disruptions among the OPEC and non-OPEC producers reached expected 2.7 million bpd, the highest level since at least January 2011………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries (OPEC) predicts Azerbaijan’s oil production to increase by 20,000 barrels per day (bpd) and reach 0.9 million bpd in 2014.
In its Monthly Oil-Market Report for September published on Sept.10, OPEC said that the highest level of Azerbaijan’s oil production in 2014 will be observed in the fourth quarter and amount to 0.93 million bpd………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Developments in the U.S. oil and natural gas market are changing the conversation Washington has with its foreign partners, a State Department official said. The U.S. Energy Department said Tuesday domestic crude oil production increased last month to an average 7.6 million barrels per day, the highest for any month since 1989.
New drilling technologies used to tap into oil deposits locked in shale have translated to record lows in terms of U.S. imports of foreign oil………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

China has long benefited from cheap thermal coal imports from Indonesia. But that may be coming to an end. The Chinese government last week announced it will add a 3% tax to imports of lower-quality lignite coal. The move basically targets Indonesian coal, which accounted for 97% of all Chinese lignite imports through the first seven months of 2013.
It will be interesting to see what effect the new rules–effective as of August 30–have on China’s coal import mix………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

One of the most misunderstood factors that will impact the price of gold is energy. Many analysts forecast the future value of gold relative to the amount of fiat money circulating in the system as well as total government treasury and bond debt. However, the world may not have the available energy supply in the future to satisfy these massive debts.
Gold and silver are monetary metals because they function as a store of “Economic Energy”, a term coined my Mike Maloney. Basically, the precious metals are batteries that store this trade-able energy value………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Gold prices are likely to contract further in 2014, after tumbling for the first time in more than a decade this year with the case for bullion undone by confidence in a stabilising global economy, a metals consultancy said on Thursday.
In an update to its Gold Survey 2013, Thomson Reuters GFMS said the market could beat a retreat below $1,300 towards the end of 2014 as U.S. monetary stimulus is withdrawn, fuelling talk of rising interest rates………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Gold demand will fall in the second half as bar buying slips from a record and central banks add less to reserves, while prices may climb toward $1,500 an ounce by early next year before dropping, Thomson Reuters GFMS said.
Total demand will slide to 2,237 metric tons this half from 2,309 tons a year earlier and 2,533 tons in the first six months of 2013, the London-based researcher said today in a report. Jewelry demand that reached a six-year high in the first half on record buying in China will ease in the six months through December, it said………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

A possible U.S. attack on Syria, a possible quantitative easing (QE) taper by the U.S. Federal Reserve - these possibilities have meant daily volatility in the price of gold. But what anyone investing in gold should look at is the long-term gold price outlook and the driving forces behind it.
The fundamentals here will push gold prices above the current levels around $1,350 and above $1,400 an ounce in the months ahead, and higher next year………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Although gold prices have struggled to make new highs, strong technical support for spot gold at $1,350 to $1,355 an ounce helps to create a floor, at least for the short-term, say analysts,.
Ole Hansen, head of commodity strategy at Saxo Bank, said three technical factors make $1,350 an important support level, which is why it is drawing so much attention………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

If international gold price holds above USD 1,350 per ounce then it would retest USD 1,400 per ounce, says Jonathan Barratt of barratts-bulletin. “We are seeing a bit of a lull in buying. With tensions in Syria starting to abate a little bit, we are seeing some profit taking,” he said.
If international gold price holds above USD 1,350 per ounce then it would retest USD 1,400 per ounce , he added………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

I often talk about how the gold trade is really two separate trades. There’s the Fear Trade that buys gold out of fear of war or poor government policies. This crowd sees the precious metal as a safe haven during times of crisis, such as when gold rose over the fear of a war in Syria, but eased when a much more limited military action became likely.
However, there were other factors beyond Syria driving gold. That’s the Love Trade. This group gives gold as gifts for loved ones during important holidays and festivals………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

One of the questions most often asked by those interested in investing in silver pertains to not only how low, but how high silver’s price can go. The range is anywhere from a paper price of zero, given the role of the bullion banks in the decades long silver market price suppression conspiracy, to infinity in the event of a U.S. dollar hyperinflationary scenario.
Fair warning should be given that any discussion of price assumes that it is expressed in terms of a fiat currency or forced legal tender………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Industrial troubles in South Africa and easing fears of a US strike on Syria have helped arrest a three-week slide in palladium prices, in which the precious metal lost more than 10 per cent of its value.
The palladium price has hovered in the $680-$700 range this week after a sustained fall from a two-month high of $766 a troy ounce in mid-August. On Wednesday it was trading at $694 a troy ounce, up 0.4 per cent from the day before………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

The tin market is poised for a fifth year of shortages as new rules in Indonesia curb exports, driving up costs for manufacturers of everything from tablet computers to televisions to telephones.
Indonesia, accounting for 40 percent of global supply, introduced a rule Aug. 30 that refined tin must be traded on a local exchange before it can be shipped. A lack of buyers on domestic bourses and a delay in trading permits spurred PT Timah (TINS), the largest producer, and smaller smelters to halt most sales………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Gold miners have had a terrible year so far in the wake of tumbling gold prices. Although there was a brief period of gains in July, and then more recently on geopolitical worries, the space remains in a downward trend
During the first seven months this year, gold miners were battling, losing by a pretty wide margin of 40%.
While gold miners had high hopes for the long run of the QE, which could have favored the situation, data and comments from members of the Fed suggest that this might not be the case………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

The energy sector has been sluggish in recent years, but 2013 has given a boost to oil and gas stocks. Geopolitical unrest in the Middle East has resulted in a “risk premium” for crude, a weaker dollar has slightly lifted commodity prices, and hope of a turnaround in European manufacturing has emerged in recent months.
As a result, we have seen a lift to a number of energy plays. But naturally, not all oil stocks are created equal. Consider megacap Exxon Mobil (XOM), which is up a mere 2% year-to-date in 2013 vs. 18% for the S&P 500, or nationalized Chinese oil stock CNOOC (CEO), which is slightly in the red this year………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

It is obvious that China is up to something hoarding gold like a dragon. In fact, it is taking a leap forward to control the world currency and to replace it with the yuan, Dr. Thorsten Pattberg, China expert at the Peking University, said.
China is vowing to make more reforms, among them cutting red tape and establishing the yuan as a world currency. It’s perfectly reasonable to think that the Chinese want to see their currency become the next world currency, there’s a plan………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Currency movements are a fairly esoteric concept for most bond fund investors, but anyone who owns a fund invested in emerging-market bonds denominated in local currencies has been feeling the pinch lately.
Many emerging market currencies have plunged in recent weeks, adding to the already steep losses in emerging debt. Since April 30, the WisdomTree Emerging Currency Fund (CEW) — an ETF that invests in a basket of 15 emerging currencies — has lost 6.2%. The primary reason for this downturn is the prospect that the U.S. Federal Reserve will soon taper its quantitative easing policy, which has driven bond yields higher in the U.S………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

Division has emerged in Labor’s vow to block the Abbott government’s carbon tax repeal, as the Coalition accuses the Opposition of disrespecting its mandate. Chifley Labor MP Ed Husic on Wednesday revealed some in caucus believed the Howard government may have fallen in the late 1990s if it was allowed to implement its policies unopposed sooner.
His comments came after frontbencher Richard Marles signalled support for South Australia’s Nick Champion calls for Labor to abstain from the Senate vote and let the Coalition “hang themselves”………………………………………..Full Article: Source

Posted on 12 September 2013 by VRS |  Email |Print

A new analysis from research firm Bloomberg New Energy Finance suggests that the Coalition will succeed in repealing the carbon price after the new Senate sits from July 1 next year, but will come under intense pressure to produce its own carbon pricing mechanism.
The BNEF assessment says that the market is “mired by uncertainty,” despite Tony Abott’s sizeable election victory. Even though Labor and the Greens have vowed to fight the repeal of the current carbon pricing mechanism, energy markets are pricing in an 80 per cent likelihood that it will be repealed within 12 months………………………………………..Full Article: Source

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