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Commodities Briefing 27.Jan 2014

Posted on 27 January 2014 by VRS |  Email |Print

Commodities continue to underperform despite some positive trends in global economy due to extended period of supply gains, according to Barclays Research. Commodities have been underperforming equities and pricing in below levels unwarranted by the uptick in industrial production, manufacturing indices and the business sentiment indicators.
The HSBC China flash Purchasing Managers Index (PMI) data and US Markit PMI has been below consensus but business confidence is set to be positive in January………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Oil prices endured a roller-coaster week, with an upbeat economic growth forecast for the world economy giving way to concerns over Chinese output. Commodity markets traders balanced the IMF’s global growth forecast upgrades against news that manufacturing activity in key commodity consumer China shrank in January for the first time in six months.
“Business surveys … suggest that the eurozone recovery gained momentum in January, while China’s manufacturing slowdown has continued,” noted analysts at consultancy Capital Economics………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Think back to early 2004. Oil cost around $40 per barrel—on the high side compared to the previous few decades but not much out of the ordinary. Gasoline still cost under $2.00 a gallon for most of the country. The evening news was more concerned with wardrobe gaffes by Janet Jackson (too little, at the Super Bowl) and President Bush (too much, on the USS Abraham Lincoln) than with energy prices.
In retrospect, these were the last days of “normal.” Almost everyone in business, the media, and government assumed that the world had plenty of cheap oil………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Oil prices face a number of headwinds as 2014 begins. One is the Federal Reserve tapering its stimulus programs, which has resulted in higher interest rates and a stronger U.S. dollar. Perhaps no bigger threat looms over oil prices than soaring oil production in the United States. The U.S. is on the brink of a true energy renaissance, thanks to huge amounts of resources that are suddenly viable as a result of rapid technological advancements.
The combination of higher interest rates and a domestic supply glut would likely be bearish for oil prices. That’s why investors should consider the possibility of a downside to the oil and gas boom in the United States………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

In a vacuum, cutting off OPEC seems like an easy step to take, especially with North American oil output set to grow over the next several years and consumption declining. But the risk of such a move would likely cause much more harm than good in both the short and long term. After all, oil pricing is global, and OPEC can beat us on price.
Pushing OPEC’s more rogue nations could result in the market getting flooded with oil, driving prices down and burying domestic producers like Ultra Petroleum and Continental Resources Clean Energy Fuels which Pickens co-founded, itself depends on oil being expensive relative to natural gas, so oil collapsing would be devastating to his own net worth………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Hedge funds got more bullish on gold for a fourth straight week before prices capped the longest rally in 16 months on mounting global growth concerns. The net-long position in gold climbed 0.2 percent to 43,353 futures and options in the week ended Jan. 21, U.S. Commodity Futures Trading Commission data show.
Long wagers declined 0.2 percent, while short bets slid 0.4 percent. Net-bullish holdings across 18 U.S.-traded commodities increased 5.6 percent, led by natural gas and copper………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Barrick Gold Corp’s warning this week that its in-the-ground gold reserves will shrink is widely expected to be echoed in the coming weeks by miners around the globe, spelling more asset writedowns for an already beat-up sector.
For the first time in years, miners from Canada to Australia will tell their shareholders that reserves - the future source of production, cash flow and growth - have significantly diminished, hit by bullion’s 28 percent price slide in 2013………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Gold may have lost favour among western investors this past year, but ‘grass roots’ buyers still showed healthy appetites for the precious metal, according to Thomson Reuters GFMS’ latest gold survey.
The data shows that gold fabrication was up 11% in 2013 and bar hoarding was at record highs, as the price decline spurred a ‘frenzy’ of buying across Asian markets and a major geographical shift in gold demand over the second half of 2013………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Contrary to many reports and arguments put forward by gold commentators, the latest analysis by Thomson Reuters GFMS shows global new mined gold output as rising in 2013 – to 2,982 tonnes – an increase of around 4% on the 2012 figure. As the GFMS report suggests this tends to show the gold mining sector’s short term inelasticity to the sharp fall in the gold price.
In our view the rise in global mined gold production is not surprising. Major new gold mining project developments already under way will have come on stream, adding to the global total, while the industry’s rapid conversion to a focus on bringing operating costs down to profitable levels at the lower gold prices now prevailing does not mean, as many seem to suggest, that gold output would actually fall as uneconomic units are closed down……………………………………….Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Big though China is for gold these days, India has remained the elephant shut out of the room. Hence Thursday morning’s pop in London prices. Quickly up $10 per ounce, and then another $10 on top, gold gained after news broke that Sonia Gandhi, leader of India’s Congress Party, apparently wrote to the government, asking to ease its anti-import rules.
Gandhi’s party, the Indian National Congress, is actually in charge, leading New Delhi’s coalition. But Gandhi heads the party, not the government………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

By now, most observers have heard of precious metals price manipulation. As the issue creeps into the mainstream, more and more investors will come to understand it - along with its vast implications.
We’ve covered the mechanisms used to manipulate the metals extensively, but it is important to point out the differences between gold and silver in terms of how they are managed. This is because it provides excellent insight into the relative character of each metal’s unique supply and demand profile………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Categorised as a precious metal, palladium is part of what are popularly referred to as Platinum Group Metals (PGM) with increasing industrial application, mainly in auto-catalysts (for automobiles), electrical, dental and chemical industries.
Jewellery sector demand is limited. Auto-catalysts for cars that run on gasoline require a higher content of palladium (unlike diesel cars that need more platinum for auto-catalyst), and majority of cars sold in the US and major developing countries such as China and India run on gasoline………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

When picking among exchange-traded funds, don’t assume that it’s always best to go with the largest or cheapest fund, said ETF.com chief investment officer Dave Nadig on Sunday.
The biggest ETF for a particular area — meaning the one that’s attracted the most assets from investors — may have achieved that status simply by being the first ETF for that area, Nadig said. But that ETF doesn’t necessarily provide the best performance or best approach………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

When it comes to new product launches, mutual fund houses often behave like sheep. If the fund industry is keen to add assets, why doesn’t it conduct an online poll of investors to see what funds they are really interested in?
One category of funds that our readers have frequently asked for is silver exchange-traded funds (ETFs). Today, the time appears particularly opportune for silver ETFs with a global recovery burnishing the prospects for silver (thanks to rising industrial application during periods of recovery), its rising affordability and the fact that it has no import restrictions. So, why haven’t silver ETFs made their debut yet, even though we have over half a dozen gold funds?……………………………………….Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Investors are punishing commodity-rich countries yet again. As popular developed market funds like iShares MSCI United Kingdom (EWU) prosper, iShares MSCI Canada (EWC) and its heavy energy allocation keep the exchange-traded tracker languishing near 52-week lows.
Similarly, iShares MSCI Frontier Markets 100 (FM) continues attracting buyers, whereas copper king Chile via iShares MSCI Chile (ECH) has seen its fortunes evaporate over the course of three years………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Turnover of 17 commodity bourses fell 59 per cent to Rs. 2.82 lakh crore in the first fortnight of this month, with maximum decline in business seen at MCX, ACE and ICEX.
According to the latest data released by the Forward Markets Commission (FMC), the cumulative turnover of all commodity exchanges fell to Rs. 2.82 lakh crore during the January 1-15 period of this year, from Rs. 6.89 lakh crore in the corresponding period a year ago………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Officials from top emerging market economies, the star performers of recent years, were at pains to reassure the World Economic Forum of their countries’ stability amid turmoil in the currency markets.
With the Argentinean peso plunging 14 per cent in two sessions of panic selling and the Turkish lira hitting all-time lows amid political chaos, the stability of emerging markets sparked concern among the movers of shakers at the Davos ski resort………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

The mighty Aussie dollar was floated 30 years ago as part of the new free-market orthodoxy that swept through the developed world. But now the Reserve Bank thinks free markets have gone too far.
Unfortunately, the currency genie is out of the bottle. It’s not going back and it is getting ever more difficult to control………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

The world’s biggest trading powers committed on Friday to achieving global free trade in environmental goods, though they gave no timeline for a deal they said would boost the fight against climate change.
A joint statement by the United States, the European Union, China, Japan and several other developed economies said the agreement would take effect once a critical mass of members of the World Trade Organisation participate………………………………………..Full Article: Source

Posted on 27 January 2014 by VRS |  Email |Print

Our planet is warming dangerously. And, as the 2013 report by the Intergovernmental Panel on Climate Change makes clear, our carbon-dioxide emissions over the past half-century are extremely likely to be to blame. A more robust approach to global warming is needed if we are to avoid catastrophe. Unlike the recent financial crisis, there is no bailout option for the earth’s climate.
Three years ago, at the United Nations COP 16 climate-change meeting in Cancún, countries agreed to reduce their emissions by 2020 to a point that would prevent the average global temperature from rising more than 2°C above pre-industrial levels. However, UN estimates show that current trends would bring the world only 25 to 50 per cent of the way to this target………………………………………..Full Article: Source

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