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Commodities Briefing 21.Feb 2014

Posted on 21 February 2014 by VRS |  Email |Print

Scotiabank’s Commodity Price Index rallied back by 3.3% month-over-month (m/m) in January, after dropping sharply in late 2013. “Commodity prices are in the process of bottoming,” said Patricia Mohr, Scotiabank’s Vice President of Economics and Commodity Market Specialist.
“Prospects for a pick-up in the U.S. economy in 2014 and a slow recovery in Europe — in the context of a Chinese economy still growing by more than 7% — point to reasonable demand growth going forward, offsetting the challenges faced by some emerging markets in dealing with capital outflows linked to U.S. Fed tapering.”……………………………………….Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Seen one way, economic recovery in Europe and America is good for the Organisation of the Petroleum Exporting Countries (OPEC). Oil stocks in industrialised countries are at their lowest for five years; the latest monthly report from the International Energy Agency (IEA), a club of oil-consuming countries, anxiously urges producers to keep pumping to replenish them.
But the longer-term future for OPEC, which produces about a third of the world’s daily consumption of 90m barrels of crude oil, is another matter. Often described as a cartel, it is better seen as an anti-glut group. When demand is weak, its members can curb production to prevent the price plummeting. But when demand is healthy, its ability to curb new producers is limited. And new producers abound………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

As the US economy continues to grow, experts say it will rely less on the world’s major oil exporters in Africa and the Middle East, regions largely sustained by U.S. imports.
According to the International Energy Agency, the economy will grow by 2.8 percent in 2014, higher than the 2.6 percent it previously forecasted. The International Monetary Fund predicts the global economy will grow in the same direction by 3.7 percent………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Commodities remained in a holding pattern on Thursday ahead of a raft of economic data due out on Thursday, alongside a smattering of Fed speakers and, of course, the release of the minutes of the FOMC’s last policy meeting, which were due out in the evening.
West Texas crude futures were up by 17 cents to the $103.31/barrel level on the NYMEX. Three month LME copper futures slipped a tad, by 0.19% towards $7,181/metric tonne………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Gold Price forecasts are being raised by some analysts but remain highly cautious after the metal began 2014 “going against” their bearish consensus. “Gold has started to shed its stigma, if slowly,” says Dr.Edel Tully, precious metals strategist at Swiss investment and London bullion bank UBS.
Becoming “either the favourite asset to short or ignore completely” in 2013, she says, there is now a shift on sentiment towards gold investment amongst larger money managers………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

The golden bloodbath of 2013 has given way to a modest recovery for the precious metal, as the price of gold has risen nearly 10% since the beginning of the new year.
But is this turnaround the beginning of another years-long run-up in the price of gold or just a temporary blip? In a new research paper, analyst Claude Ebb looks at the price of gold as it relates to gold mining stocks to find an answer. He points out that, historically, the price of gold and gold miners’ stocks have been closely linked………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Investment funds sold off a staggering $40 billion worth of gold in 2013, swamping global demand for gold bars, jewelry and coins, as a more optimistic world economic outlook encouraged a switch into riskier assets.
But the rout in gold prices — they dove almost 30 percent last year — would have been much worse without burgeoning consumer demand in some countries, particularly in China, according to CNNMoney. During 2013, China eclipsed India as the world’s biggest market for gold………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

The delay in clearing the gold procurement requests by the Directorate General of Foreign Trade (DGFT) has led to supply crunch in India. As per reports, nominated agencies too were seen delaying supply to bulk consumers thus heightening the fall in gold supply to jewellery exporters.
The Reserve Bank of India (RBI) had come up with 80:20 rule in August last year which linked exports to gold imports, making it mandatory for gold importers to supply at least 20% of their imports to exporters………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Silver is rallying sharply this month, up about 14% in the last three weeks and blowing out of its old range. After it closed at $21.85, I’m confident we’ll see silver test $27 or even $30 by the end of this year.
And that will make a huge difference for undervalued silver producers. There are three reasons silver is going higher, and some ways you can make money as it rallies………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Silver prices have rallied 12% in February but, according to French bank, Natixis, the rally is likely to be short-lived. It explains that, over the past year, much of the focus within financial markets has been on the Federal Reserve’s tapering plans, with interested parties worrying that “that a lack of liquidity would squeeze more precarious borrowers, in particular developing countries”
But, while tapering has begun, monetary conditions remain extremely lax. And, it points out, US bond yields have fallen since the beginning of the year, while the dollar has been weakening since the beginning the month………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Switzerland sent more than 80 percent of its gold and silver bullion and coin exports to Asia last month, the Swiss Federal Customs Administration said. It imported most from the U.K.
Hong Kong was the top destination at 44 percent on a value basis, with India at 14 percent, the Bern-based customs agency said in its first breakdown of the gold trade data since 1980. Singapore accounted for 8.6 percent of exports, the United Arab Emirates 7.9 percent and China 6.3 percent………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Iridium, the rarest of the seven precious metals traded internationally, is showing signs of life as economic growth fuels demand for the commodity used in spark plugs and light-emitting diodes for televisions.
After plunging 62 percent last year, the biggest slump since 2002, iridium rose 21 percent since the end of December to a three-month high of $485 an ounce yesterday, Johnson Matthey Plc data show. Prices remain 55 percent below a 2011 record………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Merger and acquisition activity in the metals sector plunged 30 per cent in 2013 to an eight-year low, as slow global growth, falling prices and production overcapacity made it hard for buyers and sellers to agree on valuations.
As the commodities markets slumped last year, just 357 M&A metals deals were completed, compared to 507 in 2012, according to a report by PwC………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Copper inventory levels on the London Metal Exchange fell below 300,000 metric tons last week, the first time since December 2012, and cancelled warrants remain close to highs of 60%, but this stock tightness does not seem to be reflected in prices, says David Wilson, analyst at Citi.
Wilson says LME three-month prices are trading at around $7,200 a metric ton, versus mid-December 2012 prices of over $8,050………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

As consumer goods companies dominate circular economy conversations, miners and metals companies need to step up. What do you think of when you imagine a truly sustainable global economy? For most people the detail is sketchy but two things are clear: greenhouse gas emissions will be lower and the intensity with which we use virgin raw materials reduced.
Although it still seems the majority of global debate is fixated on energy, questions of resource sustainability are rapidly gaining rightful prominence………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

After a devastating year for bullion, gold exchange traded funds are slowly regaining some lost ground as greater safe-haven demand and increased Asia consumption help bolster prices.
The SPDR Gold Shares is up 8.7% year-to-date. After a 28% decline over 2013, gold prices are up 9.6% so far this year, trading around $1,318 per ounce………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

A lot was said in 2013 about the end of the commodities super cycle, and yet, so far this year, commodities markets have been rallying across the board.This despite generalized weakness in emerging economies—those markets largely known for their natural resources.
That’s because several commodities markets are currently faced with supply/demand imbalances, many linked to an unusually cold winter in the northern hemisphere………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Though broad commodities started 2014 on a strong note, they appear to be losing steam of late. Commodities like natural gas, gold, silver, cocoa and coffee have been on a tear posting incredible gains from a year-to-date look, while others like wheat, tin, aluminum and copper have seen extreme weakness.
This is largely thanks to supply/demand imbalances and global developments. Macro fundamentals in developing nations have been out of investors’ favor of late thanks to emerging market weakness and signs of a slowdown in the world’s second largest economy that have raised concerns over global economic growth………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

JP Morgan is paving the way for a roll out of a suite of active exchange-traded funds this year as it plans the launch of a so-called “smart beta” offering for its US investors. A spokeswoman for JP Morgan confirmed the firm was seeking regulatory approval for active products, the first of which will be the smart beta ETF.
She said “The fund will invest in larger cap and mid cap stocks from developed countries and track an index that uses a multi-factor screening process.”……………………………………….Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

JPMorgan Chase & Co’s commodity revenues fell 12 percent last year, the bank said in a filing on Thursday, shedding new light on the unit as the bank prepares to sell its physical trading arm to Swiss-based trader Mercuria.
The drop in commodity revenues at JPMorgan is the second in two years, and follows tighter restrictions across Wall Street on banks trading with their own money and growing scrutiny of their role in the natural resources supply chain………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Investors looking for more evidence that a years-long correlation between commodity prices and financial markets is well and truly dead have found it this year in two of the industry’s more remote corners.
Fueled by extreme weather conditions in both hemispheres, benchmark U.S. natural gas and coffee futures prices have surged about 50 percent this year, after languishing out of favor for years………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Multi Commodity Exchange of India (MCX), which is promoted by Financial Technologies (India) (FTIL), intends to sell its holding in entities like Dubai Gold & Commodities Exchange (DGCX), MCX Stock Exchange (MCX-SX) and MCX-SX Clearing Corporation.
“MCX intends to divest its shareholding in a few ventures… the organisation needs investment/merchant bankers to strategically advise on the sale of these shares,” said an advertisement issued by the commodity futures bourse………………………………………..Full Article: Source

Posted on 21 February 2014 by VRS |  Email |Print

Supporters are drawn to its decentralized platform. Detractors call it a bubble prone to be exploited by criminals. Israel said it was considering regulation of Bitcoin and warned citizens that using such decentralized virtual currencies was risky.
As a virtual currency, Bitcoin is passed between two parties digitally and can be traded on exchanges for real-world currencies. Its value fluctuates according to user demand but it is not backed by any government or central bank………………………………………..Full Article: Source

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