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Commodities Briefing 07.Oct 2013

Posted on 07 October 2013 by VRS |  Email |Print

Mark Mobius, arguably the world’s most famous emerging market investor, has moved to explain the recent poor performance of his $15.9bn (£9.7bn) Templeton Asian Growth fund.
The US-born manager, renowned for hopping around far-flung markets in his company’s private jet, has delivered strong returns over the past five years, although his recent numbers have been patchy………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Jim Rogers, ‘the Chinese-driven commodity boom is not over.” Savvy commodities analysts and participants including Jim Rogers have seen long-running Bull Markets stumble, falter and end, and some not so savvy folks try to predict their end, mostly missing the call. Instead of ending, the Bull Markets turned into a “frenzy” that finished in a “bubble.”
“I haven’t seen the frenzy yet,” say Mr. Rogers, who correctly predicted this Chinese-driven a commodities boom. ”I’ve been around markets long enough to know that when everybody’s on one side of the boat, it’s probably not the right side to be on………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Commodity stocks, lagging behind the Standard & Poor’s 500 Index by the most in 15 years, are poised to rally as analysts estimate profits will rise almost twice as fast as the rest of U.S. industry in 2014.
Mining companies and chemical producers in the S&P 500 will increase earnings by 18 percent in 2014, compared with a 11 percent gain for the equity gauge, according to the average of more than 9,000 estimates compiled by Bloomberg………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Kuwaiti Oil Minister Mustafa al-Shamali said that an oil price of between $100 (74 euros) to $110 per barrel is acceptable to both producers and consumers, in remarks published on Sunday.
“The acceptable and fair price for oil at this stage is $100 to $110 a barrel,” Shamali told Al-Seyassah newspaper. “These prices are good and acceptable to all parties. They help producers to complete their production and exploration projects, besides they are suitable to consumers and the global economy,” he said………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

The oil markets are feverish again because of events in Syria, Egypt and Libya. There is talk of $150 per barrel and dire predictions about what that all means for the future.
But let’s take all that with a pinch of salt. First, because markets are uncaring beasts and if past experience is anything to go by, have already factored in a strike in Syria. Nassim Nicholas Taleb relates in his latest book “Antifragile” how one of his mentors, “Fat Tony”, made his fortune because he bet on oil prices actually dropping in 1991 when the US went to war against Saddam Hussein for the first time………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Chancellor George Osborne gained an unexpected fan at the top of the Organisation of the Petroleum Exporting Countries (Opec) last week when he announced a freeze on fuel duties until 2015.
For Abdalla el-Badri, kingpin of the 12-nation group of oil producers that controls a third of the world’s supply, says that governments increasing taxes on fuel are the main culprits behind higher prices at the petrol pump and not the actual cost of crude oil, which Opec is often accused of manipulating………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Instability in Libya and other parts of North Africa may be giving international investors the jitters. In August, U.S. energy explorer Apache Corp. said it had enough of the political upheaval in Egypt and sold its assets there to its Chinese counterpart, Sinopec. In neighboring Libya, Exxon and Royal Dutch Shell said they’d had enough of the unrest, though Italy’s Eni and Spain’s Repsol weren’t so squeamish.
To the west, in Algeria, while BP and Statoil remained resilient, BG Group and ConocoPhillips said they’d take their business elsewhere. With much of the region in a static state of upheaval, Iran could be the unlikely winner of the post-Arab Spring energy prize………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

In contrast to much of history, WTI has traded at a discount to Brent crude oil pretty consistently since August 2010 as rising U.S. output led to gluts in the Midwest. In the 12 months ended in July, Cushing inventories averaged 47 million barrels, up from 33 million in the same period ending in July 2010.
WTI’s discount to Brent peaked at almost $27 a barrel last September. By July, though, it was catching up fast. The reason: New pipeline capacity was opening up, providing options for draining the oil toward the coast, where it could be refined for exporting at global, or Brent-like, prices. Cushing inventories have dropped by a third since the end of June………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

The big news of last week, the US government shutdown, has been engaging the attention of not only politicians but also businesses and markets. The debt ceiling issue is also looming and there is expectation of an agreement on the issue; if achieved it will boost the US business confidence.
As for commodity markets, despite some catalysts for upward price movement, gold has failed to benefit from the shutdown or reassert its haven status. Delayed tapering of QE has also not really benefited the yellow metal. Simply put, investor interest in this commodity has been subdued this year with sluggish demand growth contributing to reduced interest………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Last week’s two percent decline in spot gold prices is not discouraging gold bulls who’re turning their sights on Asian demand, which they say remains resilient and is set to strengthen on seasonal buying from India.
However, softer economic growth from Asia’s third-largest economy, a depreciating Indian rupee and limits placed on gold imports aimed at reducing U.S. dollar outflows in a bid to improve the trade gap and narrow the current account deficit may mean the tone of celebrations – and gold purchases – from the world’s biggest gold consumer are a little less extravagant this season………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Gold miners may be tempted back into the take-over game by lower prices and the need to replace reserves, but they are likely to shy away from flashy mega-projects that require big capital expenditures. Mining deals have slowed to a crawl, thanks to a volatile market and pressure from investors still angry about the steep premiums paid during boom times. The pause can’t last forever, but the excesses of the last cycle will cast a long shadow.
“Everyone is really gun-shy of the high capex projects,” said Randy Smallwood, chief executive of Silver Wheaton Corp, which provides miners with cash to finance mine construction in exchange for the right to buy future silver production at a set price………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Rumours of U.S. Fed tapering drive the gold price down. Decisions not to taper see it rise again, although often not to the level from which it has fallen. Meanwhile, the general stock markets continue their upwards paths. Detractors say gold is in a bear market, if not deflating from a bubble situation.
Yet perhaps the markets in general are in more of a bubble situation than gold – and should be seen as being even more vulnerable to tapering than the gold price. What much of the investment community seems to ignore is that the big increases we have seen in the Dow, the S&P, the FTSE, the Dax etc. since 2008 have really been driven most by Quantitative Easing in the U.S. and Europe………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

A widely accepted best-practice of investing is diversification. In common terms, do not put all of your eggs in one basket. If your investments primarily occupy one area of the market: stocks, bonds, or currency, consider diversifying and including precious metals in your revamped portfolio. Often overlooked, investing in precious metals will strengthen your portfolio in a number of ways.
Precious metals include commodities like gold, silver, platinum, palladium, and copper and can be purchased in a variety of ways, which can help guard your investments against losses………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

China is expected to import more refined copper next year as Beijing steps up building of power networks, rail lines and low-cost homes, while domestic production is likely to be squeezed by tight scrap supply, industry sources said.
Refined copper consumption might rise 5 per cent to 6 per cent next year, three large end-users and producers estimated. This would take consumption to about 8.6 million tonnes, based on 8.1 million tonnes estimated for this year by state-backed research firm Beijing Antaike Information and Development………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

The London Metal Exchange’s plan to ease congestion at warehouses storing near-record amounts of aluminum will accelerate deliveries and reduce premiums paid for supply, at a time when prices are already near a four-year low.
Waiting times lengthened to a year or more in some locations, driving premiums added to the LME price to a record. Delays at depots spurred at least 16 lawsuits filed in U.S. courts as well as scrutiny from lawmakers and regulators. The surcharges, which rose almost 15-fold since 2008, are now retreating as traders anticipate the changes, which are scheduled to be reviewed by the LME’s board this month………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

A possible significant reduction in nickel, nickel ore supply caused by shutdown of mine(s), smelters and a ban on nickel ore exports by the Indonesian governemnt are expected to support the commodity prices later this year and in the early 2014. However, persisting concerns over the health of the global economy are likely to limit a significant up-tick in the commodity prices.
Last week, Votorantim stated that it was shutting down its 19Kty nickel matte Fortaleza smelter in Brazil due to weak nickel prices. The facility is expected close its operations in November 2013 with no current expectation of a re-open date………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

They’re a newer breed, serving those who have neither the time nor the inclination to make their own ETF buying decisions. Not only is the number of exchange-traded funds growing in Canada. So, too, are the ranks of advisers who specialize in putting together ETF portfolios.
They’re a newer breed of advice-giver, serving those who have neither the time nor the inclination to make their own ETF buying decisions. These advisers are known as ETF investment strategists, a description applied mostly to investment counsellors who serve high-net-worth investors………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Strong net inflows of US$35 billion in September and positive market performance helped to push global ETF and ETP assets to US$2.22 trillion, a new record high, at the end of Q3 2013, according to ETFGI’s Q3 2013 Global ETF and ETP industry insights report. The Global ETF/ETP industry now has 4,982 ETFs/ETPs, with 10,019 listing, from 212 providers listed on 57 exchanges.
“The Federal Reserve’s decision in their last meeting to maintain the QE scheme at its current size and positive market performance encouraged investors to put net inflows of US$35 billion back into the market through ETFs/ETPs” according to Deborah Fuhr, Managing Partner at ETFGI………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

The Indian rupee’s plummet to record lows recently prompted one fund manager to ask whether the currency is the Cinderella of its emerging market peers – or the ugly sister.
Some investors believe the worst of the currency turmoil is over after Raghuram Rajan, India’s new central bank governor, stepped in to calm the crisis by raising interest rates to 7.5 per cent last month………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Faced with currency volatility, BRICS, a grouping of major developing economies, including India, can work out a mechanism to settle trade in local currencies, South African Trade Minister Rob Davies has said.
“…in BRICS, we are discussing if we can actually structure our trade in a way based on the mechanisms…that settlement can be made based on the countries currency,” Davies said………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

A first-ever global deal on curbing the airline industry’s rising carbon emissions was agreed upon Friday, the International Civil Aviation Organization said, though hammering out the details could take years. The full agreement is not scheduled to take effect until 2020 but the most contentious issues have been resolved, officials said in Montreal.
Air transport “now becomes the only major industry sector to have a multilateral global market-based mechanism agreement in place to help govern future greenhouse gas emissions,” ICAO Council President Roberto Kobeh Gonzalez said………………………………………..Full Article: Source

Posted on 07 October 2013 by VRS |  Email |Print

Investors and traders live on weekly and monthly economic reports published by private and public data agencies. With the government shut down, much of the popular economic data — like the closely followed monthly U.S. jobs report — has been delayed.
But maybe we’re better off without some of these reports. The Bank of England keeps a table of which indicators correspond nicely to observed global growth. Air freight and Suez Canal data are useful, but there are plenty of other indicators out there that are just unreliable or overrated………………………………………..Full Article: Source

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