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Commodities Briefing 05.Dec 2013

Posted on 05 December 2013 by VRS |  Email |Print

Skeptical investors who concluded a few years ago that the decadelong commodities rally was running out of steam have been vindicated, and the timely bets they placed on falling prices have often paid off. But in a handful of cases, investors learned a painful lesson: You can be right about the big picture, but little things can still erode your returns.
The big picture has been broadly negative for commodity prices since early 2011. The Dow Jones-UBS Commodity Index, which tracks futures contracts for nearly two dozen raw materials, is down 11% this year through November. Barring a rebound, the index will drop for the third straight year for the first time since its launch in 1998………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Commodities look set to underperform developed market equities for the third consecutive year in 2013, following ten years of outperformance. Slowing China growth, US Fed tapering jitters and rising supply expectations have been the main factors weighing on prices.
However, ETF Securities, a leading provider of exchange-traded commodities (ETCs) with almost $19 billion in assets under management, argues that 2014 will be a turnaround year for this laggard asset class. Nicholas Brooks, Head of Research and Investment Strategy at ETF Securities, believes that China’s adjustment from 10%-12% GDP growth rates to more sustainable 7%-8% growth rates is now largely factored into market prices………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Opec, the cartel of Middle Eastern, Latin American and African oil producers is meeting in Vienna today and this time they won’t be toasting the rising price of oil.
Commodity traders are whispering about a big drop in the price of oil over the next twelve months due to a range of factors from the emergence of American shale power to the potential softening of sanctions on Iran………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Members of the Organization of the Petroleum Exporting Countries agreed on Wednesday to leave their combined daily quota for petroleum production at 30 million barrels, a decision that was expected to keep prices at their current steady and relatively high levels.
Even though some analysts foresee challenges shaping up for the oil producers next year, OPEC officials, meeting in Vienna, saw no reason to make changes now, given the many uncertainties about the outlook for supply and demand………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries kept its production ceiling unchanged Wednesday despite the threat of rising supply that could weigh on prices.
For the better part of a year, members of OPEC, a cartel of some of the world’s biggest oil producers, has been studying the possible market effects of increasing North American output. But now, the threat of surging supply from OPEC members themselves looms………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

OPEC’s latest meeting at its Vienna headquarters welcomed back a lost member, Iran, and decided to maintain the status quo for another six months. Production will not be increased to allow Iran to regain its former quota and second producer position, currently held by Iraq. The agreement caused a dollar-a-barrel fall in the price of Brent crude.
“I’m sure that all OPEC members show wisdom and when member countries, after limitation, return to the market they understand (that) they should open the doors for him and not fight with him,” said Iranian Oil Minister Bijan Namdar Zangeneh………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Tension between Iran and Saudi Arabia over Tehran’s plans to raise oil output spilled into the open on Wednesday as Opec rolled over its production target in the belief a wall of supply will fail to materialise next year.
The oil producers’ cartel controls around a third of the global oil market and, as the only source of spare capacity, exerts a big influence over prices………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Until recently, there were concerns the world would run out of oil and gas - but the development of hydraulic fracking has diminished those fears. The US is producing more oil that it imports and this is seriously denting oil-producing countries’ export earnings.
For many years, the OPEC cartel was able to manipulate prices through their grip on supply - however, many forecasts now suggest that in Europe the price of Brent crude may soon fall below $100 a barrel………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Gold posted the biggest jump in seven weeks as the dollar pared gains and commodity prices advanced, led by crude oil, renewing demand for an inflation hedge.
The Bloomberg U.S. Dollar index traded little changed after rising as much as 0.3 percent against a basket of currencies. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose as much as 0.6 percent, the third straight advance, and crude oil in New York climbed to a five-week high………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

The prices of gold and silver surged higher Wednesday afternoon because … well, why? The dollar is down on the day. Gold’s price tends to benefit when that happens. But beyond that there’s a dearth of explanations except, well, It’s time.
Dow Jones Newswires’ headline is “DJ Gold Rockets Up $20 As Bearish Traders Grow Nervous.” It’s a cousin of the old “Stocks fell because of selling pressure.” It’s never wrong, it’s not very satisfying, and it’s utterly believable after a 27% YTD selloff………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

UBS Investment Research has trimmed its silver price forecasts for next year from $25 previously to $20.50 an ounce while it cut its gold price forecast from $1325 to $1,200 an ounce. Swiss bank also cut its average silver price forecast for 2015 from $24 previously to $21per ounce and they left the 2015 and more distant gold forecasts unchanged from previous calls.
“The struggle for gold not only rests with the predominant selling interest amongst investors currently, but with limited positive catalysts looking forward; gold is unlikely to regain its former appeal,” said UBS Analyst Joni Teves and Strategist Edel Tully………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

This is an early warning. I’m going to be talking about gold (again) this week, so those amongst you who just kinda wish I wouldn’t do that may be excused. There. Now it’s just us.
On November 1, 1961, an agreement was reached between the United States and seven European countries to cooperate in achieving a shared, and very clearly, stated aim………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Three or four years ago, as the global economy began the long haul out of a major recession, it seemed that those who follow financial news couldn’t escape articles waxing lyrical about the predictive powers of copper. The price of the metal was rising and that, we were told, showed that those in the know saw rising industrial demand and therefore an end to the dark days.
Doctor Copper was hailed as the ultimate diagnostician. So, as the recovery has continued, albeit slowly, it would be logical to expect the copper price to have continued rising, right?……………………………………….Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

The Hong Kong bourse plans to build up its commodity business by co-listing global benchmarks in metals and other products and matching them with key contracts traded on China’s exchanges, its CEO said.
By hosting both Chinese and global benchmark contracts, the Hong Kong Exchanges and Clearing Ltd (HKEx) aims to tap opportunities from arbitrage trade and the growing acceptance of China’s renminbi currency internationally………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Former Federal Reserve Chairman Alan Greenspan said Bitcoin is a bubble after it surged 89-fold in a year and that the virtual money isn’t currency.
“It’s a bubble,” Greenspan, 87, said in a Bloomberg Television interview from Washington. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”……………………………………….Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

A weaker Australian dollar is unlikely to provide much of an economic buffer against price falls in commodities, which as an asset class are set to be the worst performing for the second year running – hurt by excess supply and slower growth in China.
In the year so far, commodities as an asset class have returned negative 10.68 per cent to investors, compared with a positive 21.31 per cent return in equities, 1.87 per cent in currencies, 0.41 per cent for bonds and minus 5.74 per cent for emerging markets, say figures provided by Deutsche Bank………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

The Gulf Monetary Council has dismissed media reports of four GCC countries launching a common currency. The Gulf Monetary Council has denied media reports concerning the finalisation of the launch of a single currency for the Gulf countries.
Earlier this week, media reports claimed that four GCC countries will announce a common currency by the end of this year. The currency would reportedly be pegged to the dollar, the report said without revealing its sources………………………………………..Full Article: Source

Posted on 05 December 2013 by VRS |  Email |Print

Nine north-eastern US states running a regional carbon market say the Obama Administration needs to make emissions trading a cornerstone of its efforts to address pollution and climate change.
A submission from the Regional Greenhouse Gas Initiative, known as RGGI, calls on the government to “empower states to develop market-based greenhouse gas (GHG) emission reduction programs”, arguing this is the most cost-effective and efficient way of making a transition to a low carbon power sector………………………………………..Full Article: Source

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