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Commodities Briefing 20.Jan 2014

Posted on 20 January 2014 by VRS |  Email |Print

In the first fortnight this year, gold has demonstrated surprising resilience. Prices have rebounded from the low $1200s of the year-end. Will the trend continue or is it a temporary blip in an otherwise falling market?
With global economic growth showing signs of revival under lead of the US, will investors turn more positive towards base metals? China is the mover and shaker of the global commodity market. If China sneezes, the market catches cold………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Expectations are growing that 2014 will be the year that commodities will return to the winners’ cycle, after having seen the likes of corn, silver, gold, nickel and platinum all falling into bear markets in 2013, with 23 commodities finishing last year in the red.
Most commodity traders and analysts alike believe this year should see the investment funds returning to the commodities space after two years of fund flows moving out of commodities into equities and other high returning asset classes………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

OPEC has lowered its oil output further and is pumping less than this year’s global need for its crude, the exporter group said, underlining the toll that outages in Libya and elsewhere are taking on production.
The monthly report from the Organization of the Petroleum Exporting Countries kept unchanged its global supply and demand forecasts, which point to a smaller market share for OPEC in 2014 due to increasing supply from non-OPEC countries………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

The year 2014 could pose a milestone for the U.S. oil industry. In its latest annual World Energy Outlook, the International Energy Agency predicted that the U.S. would become the world’s largest producer of oil by 2015, thus surpassing Russia and Saudi Arabia.
Comparably, the U.S. Energy Information Administration estimates that the U.S. will produce 9.6 million barrels of oil per day by 2016. In less than a decade, the shale revolution in the U.S. has reversed a four decade-old trend of increasing oil imports to become a major exporter by the end of this decade………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

With US shale production booming, Saudi Arabia might be on the brink of losing its position as the world’s second biggest oil producer. But apparently, the Saudi Kingdom isn’t all that concerned.
After a recent meeting with the US energy secretary in Riyadh, Saudi Oil Minister Ali al-Naimi said his country “welcomes this new source of energy that helps fulfil the growing world demand for energy, and helps stabilise oil markets,” AFP reported………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

The energy sector broadly outperformed in Wednesday trade, led higher by a substantial rally in WTI crude oil futures, which spiked 1.90% during the session.
WTI was higher early yesterday on short covering ahead of the inventory report, but the rally expanded after the release of a better-than-expected Empire State manufacturing survey. Strength in the survey boosted industrial commodities, while also sending the dollar higher………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Hedge funds raised bullish gold wagers to the highest in eight weeks as signs of stronger Chinese demand drove prices to the longest rally since August. Goldman Sachs Group Inc. says the gains will be short-lived.
The net-long position in gold climbed 7.6 percent to 43,277 futures and options in the week ended Jan. 14, U.S. Commodity Futures Trading Commission data show. Long wagers rose 4.7 percent, outpacing the 2.9 percent gain in short bets. Net-bullish holdings across 18 U.S.-traded commodities advanced 2.6 percent, led by cattle, silver and soybeans………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Most analysts have taken a dim view of gold, with most predicting prices lower than today’s price of around US$1,240 an ounce. But my view is that they’ve got it wrong… just like they did last year.
Heading into 2013, gold had fallen slightly from US$1,800 to around US$1,675, an ounce. Most analysts were forecasting prices higher, with some expecting the price the rise above US$2,000 an ounce. (At the time, some commentators, perhaps looking to put their name up in lights, were suggesting US$5,000 an ounce wasn’t far away)………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

What will it take to turn the gold market around? One would think it would be obvious that fundamentals are not the answer, while so many believe that fundamentals rule. We are reminded of the fundamentalists, especially “value investors” whose financial world was literally turned upside down when the stock market crashed in 2008.
While “value” and “fundamentals” were considered the economic bedrock of the stock market, it turns out that everything is really steeped in perception, for they changed dramatically………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Investors’ interest in silver is starting to rebound after last year’s carnage. As capital prepares to return to this beaten-down asset, many investors are wondering how to game silver price action. Gold is the key. The white metal closely mirrors and amplifies the price action in the yellow one.
Gold is not only silver’s primary driver, but its overwhelmingly dominant one. Gold is critical for timing silver buying and selling. The more years you spend trading precious metals, the more self-evident this truth becomes………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Seasoned and long term investors are familiar with the effects of price suppression. Very few traders can manage the complex positioning required to profit from egregious interference. And the consensus is that it will go on forever, because it has. This very consensus is perhaps the most bullish reason that it simply will not.
Belief Systems: Because it’s gone on for so long, it will therefore continue. In reality, emergency measures are still in effect. The Fed’s recent tapering was mainly symbolical when the intervention is viewed en masse………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Did gold make a New Year’s resolution? If it happened to set its sights on 2014 being better than 2013, then that might not be too hard to accomplish. For gold bugs, 2013 was abysmal. Gold bullion prices ended the year down about 28%—the biggest annual drop in more than 30 years.
Gold bullion prices experienced an unprecedented run-up after the tragic events of September 11, 2001 and soared higher in 2008 as the global economy teetered on the brink of a recession. Investors’ justifiable fears of economic turmoil and inflation sent them running to gold bullion and gold mining stocks to hedge against this economic uncertainty. Between September 2001 and September 2011, gold prices soared more than 560%………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

What should gold investors expect from the Chinese New Year at the end of this month? First, expect lots of press coverage of housewives buying gold hand over fist to mark the start of the year of the horse.
Expect to learn that China is (drum-roll please) the world’s No.1 consumer, but not why (thank the 2013 collapse of Indian imports due to government rules). The lunar New Year marks an auspicious time to buy gold, you’ll be told. It also marks a retail frenzy, pictures from Shanghai and Shenzen shopping malls will show………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Deutsche Bank, Germany´s biggest lender, said on Friday it is pulling out of the process for the daily fixing of gold and silver prices.”Deutsche Bank is withdrawing its participation in the gold and silver benchmark setting process following the significant scaling back of our commodities business,” the bank said in a statement.
But it insisted: “We remain fully committed to our precious metals business.” The price of gold and silver are fixed daily in London, serving as a benchmark for the precious metals markets………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Global growth is likely to pick up in response to stronger growth in advanced economies. Euro-zone growth could improve because of (a) reduced pace of fiscal tightening and (b) stronger exports, but weak domestic demand and a fragile banking system could increase deflation risks that could force the European Central Bank (ECB) to turn further accommodative.
The US economy could grow above the trend over 2014-15, in response to the fading fiscal drag and improvement in private demand allowing the Fed to wind-down the third round of quantitative easing (QE3) by end-2014 and begin raising rates in 2015………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Afer a weak year for commodities when a net $36 bn was withdrawn from commodity investments-the largest total ever, 2014 promises to be a better year with several promising signs of a pick-up in investor interest recently, according to Barclays Research.
The withdrawals in commodity investments were mainly on account of liquidation of gold exchange traded funds (ETFs). After adjusting for gold etf outflows, commodity investments witnessed inflow of $2 bn. Moreover, several institutional investors made decisions last year to exit the sector but are not due to do so until early this year………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

In the first two articles of this three-part series on 2014 ETF income investing, I touched on my thoughts for fixed-income and dividend paying equities in the New Year. I generally divide my strategic income portfolio into three sleeves that include bonds, dividend paying equities, and alternative investments.
This piece will focus on how to incorporate alternative strategies such as preferred stocks, master limited partnerships, and REITs into your income game plan………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Resource scarcity, climate change and loss of soil fertility create uncertainty endangering investment in agriculture. Efforts to rid the world of hunger face immense challenges as farmers deal with resource scarcity, climate change and loss of soil fertility, agriculture ministers from 65 countries said.
Economic and financial crisis and excessive price swings create uncertainty that endangers investment in agriculture, the policy makers gathered in Berlin wrote in a joint statement published by the German agriculture ministry………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Longer-term investors have already started to position their portfolios to capture higher yields they hope will eventually come from rising demand for beans in emerging markets, especially China.
Coffee prices slumped late last year to a seven-year low on a supply glut but investors should focus on the long-term outlook for the commodity as the emerging trend for cafe latte replacing green tea among Chinese consumers picks up………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

From Reuters over the weekend, a guide to the top 5 currency bets this coming year. Nothing of much surprise in the list. Here are five top bets that hedge funds are pursuing for 2014: 1. Long USD/JPY:
“The whole driver (this year) is going to be yen. If you’re only a USD guy and you’re … only in euro/dollar, you’re going to get a whole lot of nothing,” said Aaron Smith, managing director at currency hedge fund firm Pecora Capital, who said the yen was his heaviest weighted currency pair………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Hedge funds think 2014 could be the year their currency bets finally pay off, after getting burned last year on trades ranging from the Australian dollar to the greenback.
The influence of central banks and competition among nations to weaken their currencies to boost economic growth made 2013 a year to forget for many funds. The average macro currency fund was up just 0.42 per cent in the 11 months to November, according to Hedge Fund Research………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

The European Commission has resisted calls for a carbon “central bank” to revive Europe’s moribund emissions trading system but is poised to unveil a less ambitious plan to fix flaws in a market that has foundered since the global financial crisis slashed prices.
Europe’s cap-and-trade system is the world’s largest – covering more than 11,000 power stations and factories, which have to buy extra allowances if they want to increase carbon output above their limits………………………………………..Full Article: Source

Posted on 20 January 2014 by VRS |  Email |Print

Carbon permits in the US northeast’s Regional Greenhouse Gas Initiative (RGGI) pushed higher this week, closing 3 per cent above their settlement price a week ago at $US3.60 a tonne on Thursday due to a tightening of the program’s emissions cap.
The nine states that make up the power-sector cap-and-trade program made good on their pledge to reduce the program’s cap by 45 per cent to 91 million tons this year, a move announced last year that was designed to revive the languishing market………………………………………..Full Article: Source

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