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Commodities Briefing 25.Nov 2013

Posted on 25 November 2013 by VRS |  Email |Print

Leading fund managers have little interest in most commodities next year due to worries about demand in top buyer China and slow global growth, but some are targeting platinum group metals due to supply concerns. Participants at the Reuters Global Investment Outlook Summit were downbeat on gold, expecting prices to extend losses or at best stagnate since inflation is an issue only for the long term.
Investment has been flowing out of commodities funds since the global financial crisis reduced demand, in a reversal of the previous boom years when funds piled into commodities to capture sizzling growth in emerging markets, especially China………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Developed markets, including the United States, may be recovering, but the long-suffering commodities segment may not feel the love. “It’s not a build-construct scenario,” said Bhaskar Laxminarayan, chief investment officer in Asia at Bank Pictet and Cie, which has around USD 433 billion under management. Previously, commodities were driven higher by the emerging market growth story, which included huge investments in infrastructure, he said.
While Pictet recommends investing in equities that will benefit from a US domestic demand revival, such as autos and housing, “it’s not as significant as building highways all around the world or putting up factories,” he said. “It’s not enough for a bull-run case for commodities.”……………………………………….Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

China’s planned economic and social reforms should extend the decade-long boom in demand for commodities while at the same time making the demand more price sensitive.
The 60-point reform plan still needs to be fleshed out, but initial indications are that the appetite for resources by the world’s biggest commodity buyer is far from finished………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Commodity traders dream of creating markets that did not exist before, and for some of the world’s largest energy companies and trading houses, liquefied natural gas looks to promise exactly that. For decades the market for LNG – gas supercooled into liquid form so that it can be shipped – was a closed shop.
Needing sufficient revenues to cover the huge upfront cost of developing projects, producers tied customers into long-term contracts, while the pool of buyers was small………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Oil prices fell early Monday in Asia, as a nuclear accord between Iran and six world powers eased geopolitical tensions. The deal may pave the way for more crude oil to reach the global market.
The U.S. and five other world powers struck a historic accord with Iran on Sunday, agreeing to ease part of an economic stranglehold in exchange for steps to cap Tehran’s nuclear program. The accord aims to ensure that the Islamist government doesn’t rush to develop atomic weapons………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Oil prices are likely to drop when futures trading re-opens Sunday evening, analysts say, as the nuclear accord between Iran and six world powers potentially paves the way for more crude oil to reach the global market.
Under the deal, reached Sunday, Iran will stop all production of near-weapons grade nuclear fuel and allow the removal of Tehran’s stockpile of the fissile material, estimated to be nearly enough to produce one nuclear bomb. In exchange, Western powers will ease economic sanctions that U.S. officials estimate will provide between $6 billion and $7 billion in foreign exchange for Tehran over the next six months………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

The price of oil on the Gulf Coast – home to half of U.S. refining capacity — is becoming increasingly tough to predict, a new report from Credit Suisse.
The U.S. oil boom has kept prices in the Midwest at a steep discount to the global market for two years. But with relatively little of that oil finding its way to the Gulf Coast, refineries in Texas and Louisiana were still paying roughly the global rate for a mix of imports and oil produced in the Gulf of Mexico………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

It seems that the world’s largest oil producing cartel has finally realised the threat it faces from the US shale bonanza. In its latest World Oil Outlook, Organization of the Petroleum Exporting Countries (OPEC) has apparently acknowledged that the fracturing technology could sharply chisel the demand for the group’s own oil.
The impact of North American shale boom is the highlight of the annual study. Recall that in its annual oil outlook two years ago, the group paid no heed to the fast developing US shale, categorising it only a ‘marginal’ addition to the global supply………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will raise crude shipments through to early December as demand for heating fuel increases with the onset of winter in the northern hemisphere, according to tanker tracker Oil Movements.
OPEC, which supplies about 40 percent of the world’s oil, will bolster sailings by 400,000 barrels a day, or 1.7 percent, to 23.93 million barrels in the four weeks to Dec. 7, the researcher said today in a report. That compares with 23.53 million in the period to Nov. 9. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Hedge funds got less bullish on gold, cutting their net-long position to a four-month low, before prices capped the biggest weekly retreat since September. Net holdings in futures and options tumbled 20 percent to 44,291 contracts in the week ended Nov. 19, the lowest since July 9, U.S. Commodity Futures Trading Commission data show.
Short bets rose 16 percent to the highest since Aug. 6 and long wagers slid 2.5 percent. Net-bullish wagers across 18 U.S.- traded commodities fell 12 percent as investors became the most bearish on copper since July and cut their silver holdings by the most in five months………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Gold is a fascinating investment. Sceptics in gold missed the run-up of the last 10 years or more. Late believers got in nearly at the peak. However, whenever one got in, Indian investors seem to have been rescued by the Indian rupee.
And unlike stocks, no one believes that gold can go to zero (like some vanishing companies). It is reported that the cost of mining an ounce of gold is close to $1,100, so that kind of sets a floor on gold. Of course, the caveat is that someone out there still likes gold………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

HSBC on Friday lowered its previous platinum price forecasts for 2013 and 2014, saying the metal has been increasingly affected by the plunge in the gold prices. “Based on tighter fundamentals, we believe platinum will increasingly decouple from gold prices in 2014 and trade higher, regardless of movements in gold, HSBC analysts said in a note on Friday.
The bank cut its 2013 platinum price forecast to $1,500 per ounce from $1,580 and to $1,625 from $1,725 in 2014. HSBC maintained its 2013 and 2014 palladium prices at $750 and $825 per ounce………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Recently I wrote an article on the topic of silver manipulation, in which I argue that while there is no definitive proof that the silver price is artificially depressed, there is overwhelming circumstantial evidence pointing to manipulation, and that the manipulation thesis is by far the most reasonable way of explaining a series of otherwise uncanny phenomena including:
Repeated outsized moves in the price of silver (33% in a week, 10% in a few minutes…etc.) to the downside. A whistleblower, claiming that the market is manipulated, who was able to predict downward price movement in the silver price with incredible timing………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Two weeks ago we penned ”Gold bear to end with a bang,” and noted the increasing probability that precious metals could be headed for a plunge to new lows ahead of a final major bottom. Two weeks later we continue to hold that view.
The forthcoming charts present levels at which the more than two year old cyclical bear market could end. At the least, these support levels can provide a point at which short positions and hedges could be liquidated………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Exchange-traded funds have increasingly become a source of significant asset flows in global markets, and none more so than gold. Billions of dollars change hands every day in the gold market and ETFs now makeup a considerable bulk of those transactions.
So much so that the World Gold Council’s recently released Q3 2013 report on Gold Demand Trends cited ETFs and similar products as the largest single contributor to change in total gold demand. According to the report, ETFs accounted for a decrease of 256.4 tonnes of the yellow metal in the third quarter which brought total demand to 868.5 tonnes………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Growth stocks are in the midst of a five-year bull market, but ETF investors don’t seem to have noticed. Growth companies—those with the most aggressive Wall Street forecasts and, accordingly, the priciest stocks—are enjoying their second-longest correction-free stretch of beating value investing since the Great Depression, according to Ed Clissold, a strategist at Ned Davis Research.
Growth-oriented investing never quite recovered its reputation after the burst of the technology bubble. But today, the Russell 1000 Growth Index is sitting on a five-year annualized gain of 22.2%, beating both the Standard & Poor’s 500 and value indexes………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

‘Will the Fed or won’t the Fed’ – the pendulum of uncertainty has kept swing in recent months. Last week was no different. Based on statements by high ranking Fed officials, observers have now begun to believe, tapering of the $ 85-billion a month asset purchase may begin by March 2014.
Of course, employment data would be a crucial driver of the decision to taper; but concerns over the bloating Fed balance sheet have also begun to mount. So, it is going to be tough call either way. On Wednesday, gold in London fell to $1,240 an ounce, just about 5 per cent above the low of $1,180 recorded towards end-June this year………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Iran’s currency jumped more than 3 per cent against the US dollar on Sunday as news of a breakthrough deal to curb Tehran’s nuclear programme raised hopes that the economy would start recovering from international sanctions.
The rial traded at around 29,000 against the dollar in Tehran’s free market, Iranian traders said, up from about 30,000 before the agreement was reached by diplomats in Geneva in the early hours of Sunday………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

In less than a year, Scotland will hold a referendum on whether to remain part of the United Kingdom. Soon after that, it may face an even more consequential decision: what to call its new currency.
Could the pound Scots return after a three-century absence? It’s important not to get too far ahead of events, of course: The pro-independence Scottish National Party favors retaining the pound Sterling, and a lot of voters still haven’t made up their minds………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Developed markets, including Australia, have gained economic momentum and are expected to be the dominant share market performers over the coming year. However, when it comes to equity markets, it is eventually going to be a matter of separating currency devaluation from actual earnings improvement.
The Australian dollar has slipped 1.8 per cent since last Wednesday following Glenn Stevens’ speech declaring the Reserve Bank would consider intervention to move the currency lower………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

The creation of a Carbon Market Policy Committee (CMPC) modelled on the Bank of England’s Monetary Policy Committee (MPC) should form the centrepiece of upcoming reforms to the EU’s emissions trading scheme (ETS), providing a politically independent mechanism for setting the number of carbon allowances in the market in order to drive investment in low carbon infrastructure.
That is the recommendation of a major new report from the IPPR think tank, which argues that effective reforms by the EU would not only help drive low carbon investment in the most cost effective manner, but would also help reinforce the bloc’s position as a leading player in international climate talks………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Spot permits in New Zealand’s emissions trading scheme gained 3.2 per cent this week to close on Friday at NZ$3.25, as firmer demand and dissipating supply put an end to five straight weeks of losses, traders said. The spot New Zealand Units gained 10 cents from last Friday as emitters came in to pick up permits offered at prices 25 per cent lower than two months ago.
“There remains support from buyers in the low 3s as they continue to accrue units for their liabilities,” one trader said………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Tony Abbott’s efforts to repeal Labor’s carbon tax have the backing of voters, with a poll showing 57 per cent of people want it gone now. But in a blow to his plans, more people like the supposedly ”toxic” carbon tax than his proposed replacement policy.
Just 12 per cent of voters believe Mr Abbott’s ”direct action” policy of using taxpayer funds to buy emissions reductions from polluters, and planting trees, is the answer………………………………………..Full Article: Source

Posted on 25 November 2013 by VRS |  Email |Print

Economists are expecting a better 2014 for economic growth, saying with less drag from federal government policy, the economy is poised to continue adding more jobs, spurring higher consumer spending. The economy should also benefit from stronger export growth as demand improves in Europe and Asia , experts said.
The growth is not expected to be dramatic; The PNC Financial Services Group’s economists are projecting real Gross Domestic Product growth of 2.5 percent for the year ahead, up from growth estimates of 1.6 percent for full-year 2013. Real GDP estimates the value of goods and services produced in the U.S. adjusted for inflation………………………………………..Full Article: Source

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