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Commodities Briefing 05.Nov 2013

Posted on 05 November 2013 by VRS |  Email |Print

Price increases for commodities in the third quarter have rekindled investors’ optimism. The commodities sector gained in the third quarter. The S&P GSCI index, which comprises 24 commodity futures, recovered its losses from the first two quarters of the year.
In the energy sector the supply of US natural gas and crude oil increased, partly because of fracking, which squeezed prices in the first half of the year………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Global industrial production rose to a new high during August and is up 2.6% year-over-year. So why has the Commodity Research Bureau Raw Industrials Spot Price index been weak so far this year? I am starting to think it might be a misleading indicator of the global economy. The commodity index was highly correlated with the production index from 2001 to 2011, during the so-called commodity supercycle.
It was super but it was short, lasting only 10 years. Lots of capital was invested to increase the supplies of industrial commodities. It paid off in more supplies but weaker prices. Even the recent weakness of the dollar doesn’t seem to be lifting commodity prices as it did in the past………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

How commodity funds have stacked up in the past six months. We screened for the 15 best-performing funds for the six months ended Sept. 30. The U.S. dollar, segregated and duplicate versions of funds were excluded, along with funds closed to new investors.
These funds invest first and foremost in physical commodities, or use derivatives to increase exposure to this sector. Only one fund managed a positive return in the period as the commodities sector continues to get pummelled from all sides………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Sophisticated commodity funds that switch between different strategies in pursuit of performance are gaining favour with investors, who have lost patience with single-strategy products. Commodity investors complain they are paying active management fees for returns that are essentially no better than the market as a whole - or “beta” in investment management parlance.
Mark Higgins, managing director of UK-based financial group 1Oak Capital, said some commodity hedge funds persisted for too long with non-performing strategies and have had to close or have suffered large drawdowns as a result………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Oil prices could drop by as much as $15 per barrel should countries such as Libya restore production and sanctions on Iran be eased, forcing some of the most expensive US oil projects to stop pumping, the head of the world’s largest oil trader said.
Ian Taylor, chief executive of Swiss trading house Vitol , said he also expected a number of European refineries to close in the next few years under tremendous competitive pressure from rivals in the Middle East and Asia………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

OPEC’s supply averaged 29.90 million barrels per day, down from a revised 30.01 million bpd in September. OPEC’s oil output has fallen below 30 million barrels per day for the first time in two years in October, a Reuters survey found, as near-record Saudi Arabian output fails to offset disruption in Libya and lower supply from Iran and Nigeria.
Supply from the Organization of the Petroleum Exporting Countries has averaged 29.90 million barrels per day (bpd), down from a revised 30.01 million bpd in September, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries will cut crude exports through mid-November as rising US output allows the nation to curb purchases from the Middle East and Africa, according to Oil Movements.
OPEC, which supplies about 40 percent of the world’s oil, will reduce sailings by 80,000 barrels a day, or 0.3 per cent, to 23.78 million barrels in the four weeks to Nov. 16, the tanker tracker said in a report. That compares with 23.86 million in the period to Oct. 19. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Managers backing miners bears hallmarks of a classic contrarian trade that investors should be wary of missing. Some of the country’s leading fund buyers are backing gold miners and commodity-related equities to bounce back from heavy losses – and it bears all the hallmarks of a classic contrarian trade that investors should be wary of missing out on.
Multi-managers including Jupiter’s John Chatfeild-Roberts and Cazenove’s Marcus Brookes have bought into gold equities in the past few months, primarily backing BlackRock’s star commodities manager Evy Hambro and his £1.5bn BlackRock Gold & General fund………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

While the price of gold itself is down about 22% this year, gold mining stocks have performed much worse, some down 50%. Gold miners spent a lot of money in the 2000s buying assets to improve gold production, but with slumping gold prices, these companies are now just trying to survive.
Investors who are considering buying gold or gold stocks should be very careful. Gold can be a higher-risk play than investing in stocks. If the U.S. economy continues to grow and inflation remains tame, gold prices may remain flat for a while………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

While current fundamentals for gold are looking weak on the back of changing investor perception, demand for the commodity in the long run will remain intact, say analysts.
“From one’s portfolio point of view, gold continues to retain its long-term charm and once investors get accustomed to higher prices, and as the global economic scenario settles, a re-run in gold investments could be seen,” Angel Broking said in a report authored by Reena Rohit and Anuj Gupta………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

As the gold price (GLD) flattened out since April 2013, investors are currently wondering if the gold price will finally rise or continue to go down lower. I continue to believe that the gold price has bottomed out and there are several reasons for this assumption.
First off, we have a negative gold forward rate for the second time since July 2013, indicating shortages in gold. Every time when we see this event happening, the gold price moves up and this time will be no different………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Al Jazeera released a TV interview with Nick Barisheff, CEO of Toronto based Bullion Management Group and author of the book “$10,000 – Why gold’s inevitable rise is the investor’s safe haven” Bullion Management Group has close to 0.5 billion of dollars worth of assets. Barisheff explains why he thinks gold could go to $10,000 in this decade and what the real value is of gold.
Coincidence or not, the video is not accessible in the US (some sources report it is blocked on Youtube). That is why we are providing the transcript in this article of the most important elements of the interview………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Jim Sinclair did suggest that in what he sees as a definitely possible scenario, gold could hit a massive $50,000 an ounce, perhaps by 2020 – but the circumstances under which this might happen are not what anyone, particularly in the USA, should wish for, however much of a gold bug you may be.
But before writing Sinclair off as delusional in his views, one should be aware that he has made similarly over-the-top sounding calls on gold in the past – and been proven correct! That’s a little scary………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

In the first 10 months of this year, the U.S. Mint sold 39.2 million ounces of silver in coins. In the same period last year, the Mint only sold 28.94 million ounces of silver in coins. A general negativity by investors surrounding silver this year has not stopped people from buying silver coins.
In fact, demand is up 35% so far in 2013. (Source: U.S. Mint web site, last accessed November 1, 2013.) Meanwhile, if I look at the chart of the gold-to-silver ratio—which shows how much silver is needed to buy one ounce of gold bullion—silver prices look undervalued………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

World silver spot prices are determined by a once sacred, but now inept, process. While the evolution of futures contract for the modern age helped facilitate the industrial revolution, it has now been completely usurped and abused. This is especially the case in gold and silver, even to the point where confidence in this market threatens to turn the world financial system upside down.
The Heart of Darkness: For now, world price discovery for precious metals resides at the COMEX, owned by the for-profit CME Group. It is here where the spot price is determined and the heart of technical analysis is controlled………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

With some of the most useful rare earths feared to be depleted within the next 50 years, scientists are racing against time to develop technologies to maximise their full potential as well as what could remain of them. Scientists are now specifically trying to establish a method to recycle rare earths from wastewater.
A group of Chinese researchers led by Zhang Lin, in a study published in the journal ACS Applied Materials & Interfaces, said if successful, the process “could help alleviate economic and environmental pressures facing the REE industry.”……………………………………….Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

An already rocky year for commodities exchange traded funds could get even more tumultuous as the charts for some commodities are weakening.
The $6.1 billion PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC) is down 7.3% this year, which does not sound compared to the bear market losses for gold, silver and several soft commodities. However, DBC is facing a potentially ominous technical situation of its own………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Cotton prices fell to the lowest level since January as investors and traders fretted that China is gearing up to release cotton from its stockpile, a move that would quickly ripple through the global cotton market.
Traders say they expect the state-owned company that controls China’s cotton reserve to sell some of its roughly 10 million-ton hoard by the end of the year. Chinese textile mills that spin raw cotton into yarn would be the likely buyers, curbing their need to import from farmers in the U.S., China’s top supplier………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

At least six authorities across the globe – the European Commission, Switzerland’s markets regulator Finma and the country’s competition authority Weko, the UK’s Financial Services Authority, the Department of Justice in the US and the Hong Kong Monetary Authority – are investigating whether traders in some of the world’s biggest banks colluded to manipulate benchmark rates in the foreign exchange market.
Here is how the investigations have gathered pace: The UK markets regulator launches a preliminary investigation after receiving complaints banks traded ahead of customer orders and attempted to manipulate benchmarks………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Bitcoin has an inherent flaw that could allow a powerful few to wrest control of the now-decentralized currency. All it would take is a group of cheaters.
That’s according to a research paper released Monday by Cornell University post-doctoral fellow Ittay Eyal and Professor Emin Gün Sirer………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

China, the world’s biggest emitter of greenhouse gases, could cut the cost of achieving its emissions target by a fifth by moving away from provincial targets to a nationwide emissions trading market, according to reports across the weekend.
The central government has pledged to reduce the nation’s carbon emissions per unit of GDP by 17 per cent by 2015 compared to 2010 levels, and has distributed targets to each province ranging from 10 to 19.5 per cent………………………………………..Full Article: Source

Posted on 05 November 2013 by VRS |  Email |Print

Carbon taxes and emissions-trading schemes are “the most cost-effective means” of cutting carbon and should take precedence in government efforts to tackle climate change, the Organization for Economic Co-operation and Development said on Monday.
An assessment of climate change policies in 15 countries including Australia, China, France and Germany found the highest costs of carbon dioxide abatement are associated with subsidies for biofuels and feed-in tariffs that guarantee higher prices paid for power from renewable sources, the OECD said………………………………………..Full Article: Source

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