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Commodities Briefing 24.Feb 2014

Posted on 24 February 2014 by VRS |  Email |Print

Hedge funds plowed into gold and crude oil as prices rallied this week, driving the bullish money wagered by commodity speculators to the highest level since 2011, data showed on Friday. Gasoline, natural gas and soybeans were other commodities that attracted huge buying during the week that ended Feb. 18, according to the data from the Commodity Futures Trading Commission.
The net-long or bullish money held by hedge funds and other speculators across 22 U.S. commodity markets rose to $119.5 billion in the Feb. 18 week from $102 billion during the week to Feb. 11, Reuters calculations of the CFTC data showed………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The economy would benefit from a long-term rise in world commodity prices, driven by the rising middle classes of the world, Goldman Sachs president Gary Cohn said. “You are a commodity-rich nation which is becoming even more richer with all the LNG you are investing in,” said Mr Cohn, who is visiting Australia for the G20 meeting in Sydney.
“You have abundant supply of iron ore, coal and LNG. Not only is Australia a consumer of resources but you are a huge exporter, so you have this double leverage to the commodity cycle.”……………………………………….Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

Commodities pose a difficult question for investment strategy this year. Prices had been falling the last three years, but this year commodity funds and US exchange-traded funds have risen by 2.2 percent on average.
However, SPDR S&P 500 ETF Trust, which reflects US blue chips, fell by 0.91 percent, making investors believe the commodity market is bottoming out. But sovereign fund China Investment Corp announced continued cuts in commodity-related investment………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The coupling of commodities and yields with stocks ended in the middle of last year but created problems for funds that persisted in betting on such correlations for longer. Commodities started to recouple with the stock market in the third quarter of last year and yields followed last month.
Is the new recoupling a sign of a replay of the 2012 good times in the stock market or the result of wishful investor thinking? Does this matter anyway?……………………………………….Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

Hedge funds increased bullish bets on natural gas for the fifth time in six weeks as arctic weather stoked demand for the heating fuel, depleting stockpiles and sending prices to a five-year high.
Money managers’ net-long positions, or wagers on rising prices, jumped 5 percent in the seven days ended Feb. 18, to the highest level since May, U.S. Commodity Futures Trading Commission data show. Bearish bets slid 7.3 percent to the lowest level in more than two years………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The last time I wrote about oil prices I said the outlook in 2014 is for more of the same as far as prices were concerned. The last few weeks consolidates this view though oil prices have been more volatile.
The average price for the Opec basket of crude oils so far this year is $104.71 a barrel as compared to the 2013 average of $105.87 a barrel. The latest price for the basket is about $107 a barrel. Therefore, prices are still expected to be in a range of $100-110 a barrel, an acceptable range to producers and consumers according to a recent interview with Abdullah Salem Al Badri, Opec’s secretary-general………………………………………..Full Article: Source

Posted on 24 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 24 February 2014 by VRS |  Email |Print

The yellow metal is gaining momentum, creating anxiety among gold bears. Gold closed at $1,324 an ounce on Friday, advancing 0.4 per cent for the week. With this, the metal has gained 10 per cent this year, trumping other asset classes such as equity. Among other precious metals, silver was up 1.3 per cent (at $21.79/ounce) and platinum gained marginally (at $1,429/ounce) last week.
Bullion prices were up despite indications from the US Fed’s January meeting minutes that they will continue to taper. The market chose to ignore weak economic readings as it saw them as a fallout of bad weather………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

Arjuna Mahendran, the chief investment officer, Emirates NBD: “My five- to 10-year view on gold is it will probably settle close to $1,100 to $1,150 an ounce. At that time I will start buying. But I won’t buy for the long term at this point.
“At this point I can trade it. I can buy at $1,200 and run up to $1,400 and then sell. I will be buying and selling within that band of $1,200-$1,400, but for the long term I will wait till it falls down to $1,100, which it will once when the Fed really gets into the earnest mode of tapering, which will happen by the middle of the year or so. Then the gold prices will come down to $1,100 to $1,150………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The title of the article is a bit deceiving because since we use the word “bubble”, it suggests that gold’s price is in a bubble and is apt to burst in the future - which we currently do not think is the case.
In fact the only reason why we chose this title is because we wanted to respond to an article that a financial blogger, Mr. John Maxfield, wrote titled creatively enough 2 Reasons the Gold Bubble Burst in 2013 - we thought we would raise the stakes a bit and choose three reasons why gold certainly did not burst in 2013………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The recently released Gold Demand Trends Report 2013 by the World Gold Council states that China surpassed India to become the world’s top consumer of the yellow metal in 2013. However, based on official imports and smuggled gold, India’s consumption is still higher.
According to the report China tops the list with total gold imports of 1066 tons. India’s official gold imports totaled 975 tons during the year. The report also states that nearly 200 tons of gold were smuggled to India during the year. Adding the official and smuggled gold, the total gold consumed by the country would be 1075, which is higher than the gold imports by China………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The Silver market has been running red hot recently, as traders have looked to push up the value of Silver on speculation that the US economy is weakening, and as risk appetite for precious metals comes back into vogue for traders and hedge funds.
Market momentum in the Silver market has been exciting, and liquidity and volatility are certainly very high, leading to opportunities for Silver. With its bullish trend line dominating the charts combined with positive market sentiment, it looks likely that further highs are on the horizon. ……………………………………….Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The world copper market is interestingly poised. It is starting the year 2014 with a small deficit, but is set to end the year in a surplus. The surplus may continue for quite some time, thanks to substantial additions to supply over the coming years.
As a result, demand is unlikely to be constrained by prices while such prices may limit additional capacity. In 2013, there was a combination of strong growth in mine supply, weak growth in scrap supply as well as decline in capacity utilisation in smelters, as a result of which global supplies increased. In 2014, new mine supply should expand more rapidly and smelters are expected to operate at a higher utilisation rate, raising overall output………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

Uranium prices are set to improve significantly in 2014 for a number of reasons. Today, the fundamentals for uranium and nuclear power generation are stronger than ever. More reactors are under construction, planned and proposed than before the Fukushima incident. For uranium prices to appreciate in the foreseeable future, one must look not only at the reactors under construction worldwide, but the ones coming online soon.
China has 28 reactors under construction, yet 5 are ready to be connected to the grid this year. Japan has submitted applications for 17 reactors to be restarted, whereas analysts are expecting at least 6-8 reactors to be granted permission for restart in 2014. Both China and Japan are set to add vast amounts of demand back into the uranium market………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

UK Gold Exports in 2013 were nearly double the volume of exchange-traded fund liquidation, new research shows. Compared with only 160 tonnes in 2012, exports of physical gold bullion totaled 1,739 tonnes last year according to data reported by the UK’s HMRC tax authority to the European Union’s Eurostat agency.
More than 5 times visible UK gold imports, according to a report from Macquarie Bank analyst Matthew Turner, and equal to 60% of annual world gold mining output, that was nearly twice the outflow of gold from ETF gold trusts, which typically vault metal in London to back their shares………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

The rapidly growing economic relationship between Australia and South Korea will be augmented by a $5 billion three-year currency swap deal announced yesterday by the Bank of Korea and the country’s finance ministry.
This follows the release last week of details of the free trade agreement concluded in December, which is expected to add $653 billion ($728bn) a year to the Australian economy………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

UBS AG, trying to reprise its success in limiting fines in a probe of interest-rate rigging, is seeking immunity in the U.S. and European Union as part of the global investigation of currency markets, two people with knowledge of the case said.
UBS saved itself billions of euros in fines in December by disclosing to the EU its role in manipulating the London Interbank offered rate. Now, the bank aims to be the first to report its own conduct in currency markets to European and American regulators, said the people, who requested anonymity because the matter isn’t public………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

Australia’s conservative government on Monday scrapped plans for the auction of 60 million carbon permits before mid-year, in line with its intention to roll back the previous Labor administration’s proposed emissions trading scheme.
The auctions had been designed to allow big emitters to hedge their future exposure under Labor’s plan to launch the trading scheme in July 2015. The new government is expected to repeal the carbon pricing scheme in July when the balance of power shifts in Australia’s Senate………………………………………..Full Article: Source

Posted on 24 February 2014 by VRS |  Email |Print

Finance chiefs from the 20 largest economies agreed Sunday to implement policies that will boost world GDP by more than $2 trillion over the coming five years. Australian Treasurer Joe Hockey, who hosted the Group of 20 meeting in Sydney, said the commitment from the G-20 finance ministers and central bankers was “unprecedented.”
The world economy has sputtered since the 2008 financial crisis and global recession that followed. Progress in returning economic growth to pre-crisis levels has been hampered by austerity policies in Europe, high unemployment in the U.S. and a cooling of China’s torrid expansion………………………………………..Full Article: Source

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