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Commodities Briefing 22.Oct 2013

Posted on 22 October 2013 by VRS |  Email |Print

One of the biggest questions in investing right now is can beaten-down mining and investments recover? If they can then investment trusts investing in the sector could be well placed.
The latest edition of our Investment Trust Insider ezine takes a wider look at how investment trusts can generate an income for investors. As part of this we look at investment trusts in the commodities & natural resources sector………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Glencore Xstrata, Vitol and Trafigura face the prospect of increased competition and lower margins, as national companies from the Middle East, the former Soviet Union and southeast Asia enter the commodity trading market.
Graham Sharp, one of the founders of Trafigura and an adviser at industry consultancy Oliver Wyman, has predicted that between five and 10 “significant” competitors will emerge over the next five years, as national companies try to squeeze higher returns from assets and protect access to end markets………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

“Bank holding companies ought to confine their activities to the management and control of banks,” the Senate Banking Committee wrote in 1955, reporting favourably on legislation that eventually became the 1956 Bank Holding Company Act.
“Bank holding companies ought not to manage or control nonbanking assets having no close relationship to banking,” the committee went on. Bank holding companies were required to divest shares in nonbanking enterprises and forbidden to acquire new ones, with a few carefully limited exceptions………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

The Oracle of Omaha has been quoted many times stating that he does not like to invest in companies that rely on commodities as a main source of income. Having said that, this has not stopped him from directing Berkshire’s cash to companies such as ExxonMobil and ConocoPhillips in the past. Of course, Buffett’s Conoco bet led to a $1 billion loss, leading the sage himself to openly admitted that the Conoco investment in particular was a mistake.
So why does Buffett like to stay away from commodity companies? Well, the answer becomes pretty clear we we take a quick look at the erratic earnings of companies that rely on commodities as their main source of income………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Oil prices could top US$150 if Opec countries stop investing in new capacity, warned the head of the oil exporters’ group. Although the market was currently well supplied, said Abdalla El Badri, the secretary general of Opec, his comments underlined the group’s importance in global markets.
OPEC faces increased competition from rivals reaping the benefits of fracking technology, allowing long-time clients, such as the United States to decrease crude imports………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

OPEC sees a possible drop in energy demand caused by a weaker world economy as its “main area of concern” for the next several months, the group’s secretary-general said.
“As we approach the end of 2013 and into next year, we need to remain vigilant,” Abdalla El-Badri said at a conference today in Muscat, Oman. “The economy remains the major worry, particularly in the short and medium term.”……………………………………….Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

The International Energy Agency (IAE) has announced that it is the continuing conflict in the Middle East and in the Northern parts of Africa that are preventing oil prices from dropping in their latest analysis of the current market.
On a more positive note the company identified that global oil demand was increasing again as certain countries are beginning to experience economic recovery. This has been matched by an increase in oil production, which paints a promising picture for the current workings of the oil business………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Benchmark U.S. crude prices may dip further below $100 a barrel this week, reflecting favorable supply dynamics and weaker growth prospects in the U.S., according to CNBC’s latest market survey of traders, analysts and strategists.
Almost three-quarters of the respondents in CNBC’s latest poll of oil market sentiment (18 out of 25) believe prices will fall this week, 20 percent (5 out 25) expect gains and 8 percent (2 out of 25) are neutral………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

OPEC will be in a position to increase crude oil output by an additional 6mn barrels per day (bpd) by 2018 to offset declining production in the US and other places, according to its secretary general.
Speaking at the Oman Energy Forum, Abdalla Salem el Badri said, “The increase would make up for declining output elsewhere, in particular in the US, where tight-oil output is expected to start declining by then. OPEC output stood at 30.05mn bpd in September, down 400,000bpd from August levels.”……………………………………….Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Wind power may multiply more than sixfold to generate as much as 18 percent of the world’s electricity in 2050, the International Energy Agency said, raising an earlier estimate by half.
Spending on new wind farms would need to ramp up to about $150 billion a year from $78 billion last year to achieve the necessary level of installed capacity, the Paris-based IEA said today in a statement on its website. As much as 10 times the current capacity of almost 300 gigawatts is needed, it said………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Revolutionary changes in the way energy is produced, stored and consumed world wide will lead to a dramatic increase in capacity addition in storage ,according to a new sustainability research paper by Bank J. Safra Sarasin titled, ‘Electricity Storage-the missing link in the energy revolution’.
The global requirement for storage capacity is likely to almost double by 2050. The development of storage solutions is a key component in the smart grids of the future. The five different storage categories vary in terms of energy volume and discharge time………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Going short gold was the top commodity investment pick for the next 12 months by two top-ranked analysts at the recent World Commodities Week conference in London.
There is nothing wrong with this view as there are solid reasons to believe the precious metal may decline further, such as the likely scaling back of quantitative easing in the United States and a generally more positive global economic outlook………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Analysts at BofA Merrill Lynch and Morgan Stanley are telling clients that gold is set to rally as Indian festival season gets underway. In a note to clients today, BAML analysts led by Michael Jalonen write: Gold markets - Poised for a November rally?
Last week, the gold price rose 3.5% ending Friday at $1,316/oz. This belied considerable intra-week volatility as bullion fell to an intra week low of $1,255/oz before rallying sharply (some $60/oz) due to the end of US Government shutdown and an expansion of the debt ceiling………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

It is amazing how different investor sentiment can be around the globe regarding just one topic: gold bullion. Most of you are quite aware that the price for gold bullion here in America has dropped significantly this year. One could come to the conclusion that investor sentiment has left the precious metal for good.
However, looking at investor sentiment for gold bullion on an international basis, the picture is very different……………………………………….Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

In 2008, when the key stock indices started to plummet after Lehman Brothers fell, there was uncertainty across the board. There was too much noise, and the direction of key stock indices was very unpredictable. The bottom was not placed until March of 2009.
Fast-forwarding to today, we have one market that’s seeing something similar: gold. Gold bullion isn’t liked by many these days, to say the least; it’s not uncommon to hear something along the lines of how the store of value doesn’t hold value itself anymore. The gold bears love what’s happening in the gold bullion market, and will take any chance they get to talk against it………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

All that Glitters is not Gold, it may be Silver! The global financial crisis that began around 2008 sent investors into a tailspin. As the value of stocks plummeted, so the urgency to seek investment safe havens grew. The ongoing volatility in global financial markets is a natural catalyst for alternative investments such as precious metals.
Among the most well-known precious metals is gold. However, silver is not to be underestimated in any way. As traders seek to limit their losses and grow their net worth, alternative investments in precious metals become more attractive. Not only do these types of investments add variety and depth to a portfolio, they also act as safe havens against rising economic uncertainty………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Platinum prices to hit $1,700 an ounce by the end of first quarter of next year and palladium passing $850 an ounce, said TD Securities in a snippet.
According to TDS, this optimistic view is based on our expectation that the combination of investment and industrial demand will outweigh supply by a wide margin for both platinum and palladium next year,” TDS added………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

LME copper futures for three-month delivery gained 0.21 per cent to 7,245 dollars/metric ton last Friday, in-line with the risk-on appetite which was to be observed in financial markets generally at the end of last week.
Furthermore, figures out overnight on Monday showed Chinese import shipments of copper rose by 18% in September, to reach 347,305 metric tons. West Texas crude futures ended the Friday session 9 cents higher to stand at $100.81/barrel by the close of trading on the NYMEX. Market commentary out over the weekend described the on-going nuclear negotiations with Iran as moderately positive………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

In a note out late last week, French bank, Natixis, queries the assumption that the copper market is already in surplus. While it doesn’t dispute that the copper market could move into surplus over the next few years, the bank maintains that saying it is already in surplus could be premature.
The reason for the dispute is the level of stocking or destocking in China that has taken place over the last few months - an issue that caused problems for copper price predictions previously………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

The pace of gold outflows from exchange-traded funds has picked up again in October although nowhere near as heavy as it was during a spring sell-off, analysts said.
“We have seen a very sharp decline in gold ETF holdings since the end of 2012,” said Bart Melek, head of commodities strategy with TD Securities. He and others pointed out that holdings globally are down by a little more than a quarter in 2013 so far………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Money has been flowing in and out of financial markets more rapidly than ever before this year, a bullish signal as the threat of a U.S. government default fades.
About $47 billion has gone to exchange-traded funds that track everything from stocks to bonds to commodities since Sept. 1, according to data compiled by Bloomberg. That followed about $18 billion pulled in August, $40 billion added in July and $11 billion pulled in June, making it the most volatile period on record for flows. Almost $7 billion went to ETFs on Oct. 17 alone, as Congress passed legislation to avoid a default………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

Singapore Exchange Ltd (SGX) , the city-state’s bourse operator, is to develop commodity derivatives with the Shanghai Futures Exchange for both markets, the SGX said on Monday.
The two will collaborate on derivatives for energy, metals, chemicals and commodity indexes, it said in a statement, without giving further detail. The Shanghai Futures Exchange, China’s biggest futures market, trades base metals, precious metals, steel products, oil products and natural rubber………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

The Australian dollar rose to a fresh four-month high today, supported by rising commodity prices and perceptions the RBA has finished cutting interest rates. At 5pm (AEST), the Australian dollar was trading around US96.73c compared with US96.27c late on Friday. It traded as high as US96.81c during the day.
Prices for iron ore, Australia’s biggest export, have remained resilient despite the ramp-up in world supply, pointing to signs of robust Chinese steel industry activity, said Ray Attrill, head of currency strategy at National Australia Bank………………………………………..Full Article: Source

Posted on 22 October 2013 by VRS |  Email |Print

The coalition could introduce its Direct Action approach to reduce carbon emissions through regulations instead of trying to wrangle the policy through a hostile Senate. As Labor’s new shadow ministry held initial talks on how it will handle Tony Abbott’s bid to scrap the carbon tax, Environment Minister Greg Hunt opened the door to bypassing Parliament to implement its replacement.
Key elements of Direct Action include setting up a $1.55 billion fund over three years for successful bidders to abate carbon emissions, such as paying farmers to bury emissions, and penalising companies that emit carbon dioxide above a business-as-usual baseline………………………………………..Full Article: Source

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