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Commodities Briefing 04.Feb 2014

Posted on 04 February 2014 by VRS |  Email |Print

A month into 2014, the winning position in the commodities market is to be frozen with fear—literally. Last year was, on average, another one to forget for investors in raw materials: The Dow Jones-Commodity index fell 10% against a 24% increase in the MSCI World Index of stocks. But those trends reversed in January. The MSCI index finished the month down 3.7%, while the DJ-UBS index eked out a slight gain.
But as rallies go, this one is at best a two-horse race. It is fortunate for investors in the DJ-UBS that its biggest component, weighing in at nearly 14.5%, is U.S. natural gas. Near-term gas futures returned about 18% in January amid America’s big freeze………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Commodities have turned outperformers so far in 2014 compared to equities and other assets but this may be good news for some but painful for investors who have been switching exporsure out of commodities into other assets especially equities, according to a weekly report by Barclays.
The S&P500 is down 3% in the year-to-date, whilst both the DJUBSCI and the CRB index are both in modest positive territory and the S&PGSCI is down lees than one percent. Emerging market equities are weak with BRIC-40 having declined 8%. These nations account for 50% of commodity demand and hence this outperformance in commodities looks very robust in comparison, Barclays added………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Long-term U.S. oil prices have slumped to record discounts versus Europe’s benchmark Brent, with some contracts dropping below $80 in a dramatic downturn that may intensify producers’ calls to ease a crude export ban.
Oil for delivery in December 2016 has tumbled $3.50 a barrel in the first two weeks of the year, trading at just $79.45 on Friday afternoon, its lowest price since 2009. That is an unusually abrupt move for longer-dated contracts that are typically much less volatile than prompt crude. For most of last year, the contract traded in a narrow range on either side of $84 a barrel………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

This year could be another time for testing the abilities of oil producers led by Saudi Arabia on how to manage the volatile market. High on the list of challenges is the growing supply not only from outside OPEC but also from non-conventional sources such as shale and sand oil coupled with timid economic recovery.
And accordingly oil prices are expected to hedge lower than last year putting more pressure on finances of oil exporting countries. A Reuters’ market survey by the end of December expects that the price of a Brent barrel, one of the main benchmarks, will average $104 in 2014 against $108.70 in 2013………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

OPEC’s (Organization of the Petroleum Exporting Countries) oil production reached an average of 29.94 million barrels per day in January, Reuters reported. January’s expansion in oil output was a contrast to December’s production of 29.63 million bpd - the lowest since May 2011 for OPEC when the average was 28.90 million bpd.
Oil output from Iran gained 50,000 bpd to reach 2.75 million bpd in January. Previously, OPEC said it could handle a rise in oil supply from Iran if sanctions that restrict oil output are loosened, The Wall Street Journal reported………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

OPEC’s oil output has risen in January from December’s 2-1/2-year low, due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran, a Reuters survey found on Friday.
Output from the Organization of the Petroleum Exporting Countries averaged 29.94 million barrels per day (bpd), up from a revised 29.63 million bpd in December, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Standard & Poor’s has lowered its gold price assumption by almost 10% for 2014-2016, but raised its price assumption for zinc by 10%-20% during the same period.
“By contrast, we are not changing our assumptions for copper, nickel or iron ore,” said S&P analysts. “We expect favorable prices for copper and iron ore to persist over our forecast period, but our flat-to lower long-term assumptions incorporate the risk of incremental capacity over the next 18-24 months.”……………………………………….Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Straight away let’s acknowledge two things: 1) Gold has made a handsome start to the year, closing out January +3.4%, trading above the new year’s eve low by as much as +8.4%, and having now recorded its fifth consecutive weekly “higher-high” price; 2) Gold at least technically looks poised to pull back, and as one study herein suggests, perhaps give back all of the young year’s gains.
How’s that for an opening, eh? Notably over the last two weeks we’ve seen Gold zoom along the runway and then climb high into the sky, indeed ascending up through 1279 yesterday (Friday) before gliding lower to settle the week at 1246. Again by the technicals, Gold may get a bit fraught near-term by turbulence before powering onto higher levels. Here we go………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

The demand for gold bullion is increasing. Each day there’s more evidence that suggests this phenomenon will continue. We see consumers buying gold bullion across the global economy. As a result, mints are working in overdrive mode to meet this demand and gold storage facilities are looking to add more vaults.
The Brinks Company (NYSE/BCO), UBS AG (NYSE/UBS), and Deutsche Bank Aktiengesellschaft (NYSE/DB) are opening new vaults in Asia. What’s their reasoning for taking this step? The demand for gold, especially from China, has increased………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Commodity traders are moving back into safe-haven gold exchange traded funds and away from industrial metals on concerns of slowing economic growth in the emerging markets and amid the global sell-off in equities.
The SPDR Gold Shares, iShares Gold Trust and the ETFS Physical Swiss Gold Shares have all gained a little over 3% year-to-date. In comparison, the MSCI Emerging Markets Index is down 6.6% so far this year while the S&P 500 is down 3.5%………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Kitco News speaks with iiTrader’s Bill Baruch about gold’s rally on Monday as ISM Manufacturing Data was released. Gold futures jumped by more than $20 an ounce and the stock market dropped following the release of disappointing data by the Institute of Supply Management.
“Looking over at the equity market, not only has volatility pick up this morning, it picked up all year,” Baruch says. “Gold is becoming a safe-haven as investors flock to the metal.” Baruch also comments on the looming debt ceiling issue, which is expected to reach headlines later this week. “I’m not too concerned for the debt ceiling this Friday, what I’m really looking at is jobs data,” he says………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Gold mining funds got a ray of sunshine last month although a single boost to returns is too fleeting to call a turnaround just yet. In January seven of the top 10 performing funds on the firm’s platform were gold equity funds.
The top performer was £6.5m Junior Gold with a 21.88 per cent monthly rise, followed by £3.6m WAY Charteris Gold posting 15.11 per cent and £1bn BlackRock Gold & General with 10.04 per cent………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

It’s not just the paranoia of Fed-bashing, “hard money” zealots: Inflation really does pose a threat this year. After the yellow metal’s brutal pounding in 2013, gold bugs are starting to feel vindicated. New data suggest that the inflation beast is stirring from its long slumber, which means the classic inflation hedge of gold could be on the verge of a comeback.
Inflation expectations, as measured by the difference between yields on 10-year nominal Treasury notes and Treasury Inflation Protected Securities (TIPS), rose last month to 2.28 percent from a low of 2.10 in the preceding month. The increase represented an eight-month high………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Last year was a bad one for metals – and the companies that mine them. The price of iron ore fell by more than 15%, while copper fell from above $8,000 per tonne to around $7,400.
It’s hardly surprising. The backdrop for commodities looks grim. Weak economic data has raised fears of a Chinese slowdown, while the US Federal Reserve’s ‘taper’ has seen money flee out of commodities. That’s sent prices lower again this month………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

“The mining and metal sector is entering 2014 with a more positive outlook: confidence in the global economy is improving, companies have taken action to deleverage balance sheets and the industry-wide focus on productivity and efficiency should begin to yield results,” says consultancy EY.
In their report, EY mining analysts advised “…we expect the gradual strengthening of mining and metals equity valuations to continue and the increased availability of capital.” Nevertheless, the analysts cautioned, “As supply and demand struggle to return to post-supercycle equilibrium, we expect further price volatility to occur for at least the next two years. This will see caution prevail: any uplift in M&A activity and improvement of capital raising conditions will be gradual and will require innovation in pricing to tame volatility.”……………………………………….Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Following a brutal 2013 in which the major physically-backed gold exchange traded funds plunged 28.3% with two of those funds ranking among the 10 worst ETFs for annual outflows, bullion has started 2014 on much firmer footing. Last month, the yellow metal posted its best performance in five months, one of the few asset classes to start 2014 on an upbeat note.
“Gold ended the first month of 2014as one of the best performing assets, gaining of 3.9% over the month. The S&P 500 declined 3.5%, the US dollar rallied and emerging markets equities as the Fed began tapering its bond purchasing program,”……………………………………….Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Canadian investors have some tough decisions to make this RRSP season. Coming off a banner year for stocks, unsettled markets have renewed the case for caution. U.S. equity momentum has stalled, the loonie has dropped to a nearly five-year low, and capital is draining out of emerging markets.
The return of such volatility will have many investors hunting for safe, defensive options. Exchange-traded funds generally offer lower costs, but with so many to choose from, we asked some investment professionals for their top ETF picks for the conservative investor………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

After a disastrous 2013, mining stocks bounced back from their lows at the start of 2014 and are trending higher. Commodity prices, in particular gold and silver, have risen sharply this year, as concerns on global economic growth and Fed tapering plans once again increased the safe haven appeal.
This is especially true given signs of slowdown in China and depressed emerging markets. Trading in emerging markets has been rough of late on growing political and financial instability in many nations as well as sliding currencies. Further, falling equity markets are bolstering the demand for metals……………………………………….Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Ukraine’s central bank may be giving up its defence of the country’s currency peg in order to conserve foreign exchange reserves depleted by debt repayments.
Since a big devaluation in 2009, policy makers had kept the hryvnia relatively stable against the dollar, but with Russia threatening to delay financial aid until it sees a new government formed, that policy is coming under increasing strain………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Egypt’s central bank has taken extraordinary steps to prop up its currency and curb a black market in foreign exchange - but in back alleys and money changing shops around the country, illicit dealing continues to thrive.
This stubborn survival shows the limits of the economic recovery since Islamist President Mohamed Mursi was ousted last July, despite inflows of billions of dollars in aid from governments in the Gulf………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Latin American currencies fell, sending an index tracking the region’s foreign-exchange rates to the lowest since 2003, as manufacturing gauges declined in China and the U.S., the region’s biggest trading partners.
The Bloomberg JP Morgan Latin America Currency Index, which tracks the region’s six most-traded currencies including Brazil’s real and Mexico’s peso, fell 1 percent to 89.39 as of 3 p.m. in New York, the lowest closing level since March 2003. Colombia’s peso sank 1.5 percent, while Mexico’s currency fell 1.3 percent………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule.
In other words, if you mine Bitcoins for your own account, you’re not under regulations for money transmitters. The second ruling offers some insight as to whether companies investing in Bitcoin are considered money transmitters:……………………………………….Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

Supply of United Nations carbon offsets may rise after February as owners of offsets rush to sell them before their eligibility ends in the European Union’s market in March 2015, according to Bloomberg New Energy Finance.
The executive board of the UN’s Clean Development Mechanism, the offset market regulator, will issue 5.9 million metric tons of Certified Emission Reductions this month, the lowest monthly total since July 2010, according to UN data compiled by Bloomberg. That’s a drop of 36 percent from the same month last year and 91 percent less than the record 63 million tons supplied last March………………………………………..Full Article: Source

Posted on 04 February 2014 by VRS |  Email |Print

While Obama talks of putting America on the path to a clean, green future, we’re flooding world markets with cheap, high carbon fuels. The greening of American energy is both real and profound. Since President Obama took office, the nation’s solar capacity has increased more than tenfold. Wind power has more than doubled, to 60,000 megawatts – enough to power nearly 20 million homes.
Thanks to aggressive new fuel-efficiency standards, the nation’s drivers are burning nearly 5 billion fewer gallons of gasoline a year than in 2008. The boom in cheap natural gas, meanwhile, has disrupted the coal industry. Coal-power generation, though still the nation’s top source of electricity, is off nearly 20 percent since 2008………………………………………..Full Article: Source

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