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Commodities Briefing 07.Nov 2013

Posted on 07 November 2013 by VRS |  Email |Print

The most unsettling thing about commodities investments—their inherent risk—is also their best feature as an alternative investment strategy, financial advisors say. Because the performance of commodities does not correlate with that of equities or fixed income, allocating a small percentage of a portfolio to natural resources can actually lower the overall risk in the long term, said Patrick Robert, co-founder and CEO of PKR Investments, a financial consulting firm.
“For people who want [their portfolios] to be diversified, if they’re not hitting a home run right out of the gate [with equities], commodities can act as a hedge,” said Robert, who is also a certified financial planner………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Gold’s 2013 implosion is old news. But did you notice the slump in oil and natural gas prices? The most heavily traded oil futures contract is below $95 Wednesday, clinging to a year-to-date gain of 1.69% heading into the session.
Oil prices had vaulted to $110 at one point this year. Natural gas’ early-year surge is now a 2013 gain of 3.4% after recently snapping a six-day losing streak — the commodity has slumped 21% since an April high. Copper is down 10% on the year; silver, 28%………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

China’s main commodities imports likely eased from record levels last month due to a week-long holiday in October, but shipments of crude oil, copper and iron ore are still expected to post strong annual growth as economic recovery gathers pace.
Import demand for crude oil, copper and soybeans is seen staying elevated through the rest of the year, as an invigorated manufacturing sector boosts consumption by refineries, smelters and crushers, traders and analysts said………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

OPEC has yet to decide on requirements for selecting a new secretary general to replace Abdalla El-Badri, whose extended term ends this year, according to three people familiar with OPEC policy.
The organization’s board of governors ended a meeting today in Vienna without agreeing on the selection criteria, the people said, asking not to be identified because discussions among the 12 member nations are private………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

One of several factors contributing to the sharp drop in global oil prices in recent months has been optimism about a deal over Iran’s nuclear capabilities. Despite Tehran’s denials, fears the country is developing nuclear weapons has kept the international benchmark price for crude oil above $100 a barrel for nearly three years.
A new round of talks over Iran’s nuclear program begins in Geneva on Thursday. Iran’s top negotiator has said it is possible that there could be a preliminary deal as early as this week, which could have a dramatic impact on oil prices—and U.S. consumers………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

The possible lifting of sanctions against Iran as early as next year - setting the stage for the return of the country’s oil exports - may spark a “price war” within OPEC as rival producers try to compete with heavily discounted crude offered by Tehran.
International sanctions aimed at curbing Iran’s nuclear program have more than halved the country’s oil exports to about 1 million barrels a day since the beginning of 2012. But a recent thaw in relations with the West under a more moderate leadership led by President Hassan Rouhani who took office in August has raised expectations that the embargo may be rolled back………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

It is a taste of things to come. As the benchmark US oil price has slumped over the past month, so has the cost of crude in the Gulf of Mexico, one of the largest refining hubs in the world.
The sharp price moves are testament to the impact of the US shale revolution, which has sent new supplies of crude from oilfields in North Dakota and Texas to the coasts of the US - with far-reaching effects on international oil markets………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Why can’t OPEC get a good night’s sleep? Because North America is experiencing an energy revolution that can’t be slowed. The cartel:
For decades OPEC has been able to control global energy markets by manipulating production levels to keep prices elevated. During the 1970’s, OPEC was able to choke off America’s oil supply and slow down our economy. Now states like North Dakota, Texas, and others are trying to put an end to America’s dependence on OPEC………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

As I already noted in several articles, WTI grade oil at less than $100 a barrel is something of a revolution and an open incitation for Wall street’s “heavy lift brigade” to plunge protect and lift prices back up to what they think is the right level. The leading member of the heavy lift brigade, Goldman Sachs, has until relatively recently bragged that WTI could reach $125 a barrel by Dec 31st or early in the new year.
Their oil pricing mythology is at best only lightly flavored with supply-demand-stocks fundamentals. Their interest in, even knowledge of energy-economics is close to zero, therefore it is useless to ask why there is such a fantastic energy price premium for oil………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

There remains a strong case to own gold based on fundamentals. Central banks continue to flood markets with liquidity and uncertainty continues to prevail worldwide. Yet the technicals tell a different story, one that suggests the yellow metal’s best days are probably over in terms of prices.
Geopolitical uncertainty remains acute across the world. The rise of China, the decline of the West, the Eurozone crisis and turmoil in the Middle East are a fertile backdrop for the gold bugs. Now add in a big dose of central bank profligacy and there is a recipe for an epic run up in gold prices………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Rising costs and falling prices may prompt South Africa’s largest platinum mines to stare down a union threat to halt 70 percent of global production over pay demands, pushing the industry toward a prolonged strike.
The Association of Mineworkers and Construction Union, the largest at the platinum mines, has rejected pay offers exceeding South Africa’s 6 percent inflation rate. An AMCU-led strike would halt operations at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc, which together employ about 150,000 workers and contractors on the world’s richest deposits of the precious metal………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Buying a commodity ETF might not sound exciting, but it could be a smart move for your portfolio. While investors try to diversify, they often split their nest eggs between stocks and bonds, and overlook commodities. Luckily, a commodity ETF is an easy way to fix that.
That’s not to say you should dump everything into, say, a big gold investment. But it does mean you might be better off if you use a little piece of the pie to invest in gold. Or maybe you should consider investing in silver. Really, a host of commodities have plenty of portfolio appeal………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Utility services play a vital role in a nation’s economic progress as cheap and abundant supply of power keeps the wheels of development rolling. With development comes the need for more power, as cities expand, and the use of new gadgets increases. However, everything comes for a price. Greenhouse gas emitted by large utilities cause immense damage to the environment.
Utilities have been under the scanner for a long time. However, the climate action plan from President Obama earlier this year, followed by the U.S. Environmental Protection Agency’s (EPA) proposal for granting permission for setting up new power plants are putting immense pressure on power producing units………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Recognising that investors should not put all their eggs in one basket, a Chinese commodities exchange is offering a novel futures contract to hedge against risk. The Dalian Commodity Exchange, China’s main market for agricultural product trading, said it will begin trading chicken egg futures on Friday.
Futures are an agreement to deliver or take delivery of a commodity or financial instrument at a set date and price. “As China’s first livestock futures product and fresh agricultural product, the introduction of egg futures has profound meaning for the industry and development of the futures market,” the exchange said in a statement on Wednesday………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

The falling price of commodities such as coal and iron ore has been a thorn in the side of many miners during the past few years. However, most miners have been able to mitigate these declines by ramping up output.
What this means is that while the price of iron or coal is falling, export and mining volumes of the commodity are rising. Indeed, during the past five years the volume of iron ore exported from Australia has only gone up despite falling prices………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Total global commodity assets under management (AUM) fell $10 billion to $343 billion in September from August, Barclays Capital said in a research note on Wednesday. Price declines offset a small net inflow of assets in September, Barclays said.
“Nevertheless, in terms of attracting fresh investments, third quarter was the best quarter for commodities since fourth quarter of 2012.”……………………………………….Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

It hasn’t been a happy year so far for currency focused hedge funds. They’ve eked out their first positive monthly return in October since March, but only just. The stage still looks set for it to be a drab year for this asset class. Why? The funds have failed to predict some key trends like sterling’s rally and the euro’s rise against the dollar to $1.38.
The Parker Global Currency Managers Index, which tracks the performance of funds specializing in the asset class, rose 0.66% in October. That’s the best return the index has seen since January and is a promising sign for foreign-exchange funds, which invest in the $5.3 trillion a day global foreign-exchange market, placing bets on the rise or fall of a particular currency against another………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Bitcoin contains a hitherto unnoticed flaw which threatens to upset the balance of the $1.5 billion economy built on the virtual currency.
Ittay Eyal and Emin Gun Sirer, of Cornell University in New York have discovered the “devastating” potential for Bitcoin “mining” – the process by which Bitcoins are generated – to be manipulated……………………………………….Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Insolvency service winds up companies that sold older people worthless certificates for millions of pounds in total. More than a dozen companies that “preyed on older people” through carbon credit scams – selling them as if they were shares or bonds, when they were worthless in that form – have been closed by the industry’s regulator.
Nineteen firms that attracted investments of nearly £24m from more than 1,500 people by offering “worthless” carbon credits – or certified emission reductions (CERs) – were wound up by the Insolvency Service in the last 15 months………………………………………..Full Article: Source

Posted on 07 November 2013 by VRS |  Email |Print

Carbon emission trading will soon start in Shanghai, the Shanghai Municipal Development and Reform Commission, the city’s economic planning body, announced on Tuesday.
The announcement said the Shanghai Environment and Energy Exchange sent out notices for opening accounts in early October and some enterprises have already opened trading accounts with the exchange………………………………………..Full Article: Source

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