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Commodities Briefing 07.Mar 2014

Posted on 07 March 2014 by VRS |  Email |Print

The S&P may have had its best day of the year on Tuesday, but within the world of U.S. stocks, not all sectors are created equal. Some sectors, like technology, have outpaced the market, boasting a near-60% year-over-year return.
Due to a dependency on the prices of underlying commodities like iron and coal and gold, meanwhile, sectors like energy have failed to keep up with the S&P’s year-over-year 22% return. Yet while some analysts foresee the commodities bear market dragging on for the next decade or more, the prediction should not be reason to despair………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Earlier this week, President Obama unveiled his budget proposal for the year beginning October 1. The proposed 2015 budget totals $3.9 trillion, including certain tax increases, as well as budget cuts and increases across nearly all departments. A closer look at the breakdown of Obama’s budget reveals several key factors commodity traders and investors should be aware of — particularly for the energy and agriculture industries.
In the President’s message, Obama stated “We also know that one of the biggest factors in bringing more jobs back is our commitment to American energy… The Budget advances this strategy by ensuring the safe and responsible production of natural gas and cleaner electricity generation from fossil fuels.” In regard to agriculture, however, the President’s outlined budget is significantly smaller than last year………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Chinese demand for metals and minerals remains robust, although the pace of uptake is moving towards a plateau as the country enters a more mature economic phase, delegates at the Prospectors and Developers Association of Canada were told.
“There is a very clear correlation between Chinese gross domestic product [GDP] growth and commodity prices,” BCA Research chief strategist of the China Investment Strategy Yan Wang said. “When Chinese growth accelerates that’s good news for commodity prices, and when Chinese growth slows that’s bad news for commodity prices.”……………………………………….Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will reduce crude exports this month as refiners in Asia prepare for seasonal maintenance, according to tanker-tracker Oil Movements.
OPEC, responsible for 40 percent of global oil supplies, will decrease shipments by 400,000 barrels a day, or 1.6 percent, to 24.2 million barrels in the four weeks to March 22, Oil Movements said in an e-mailed note. The figures exclude two of OPEC’s 12 members, Angola and Ecuador. Exports had climbed from January through early March on winter demand in the northern hemisphere and stockpile-building in China, according to the consultant………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

BP PLC said Thursday that regulators in Asia have joined European and U.S. agencies investigating potential manipulation of oil prices.
The U.K. oil company said in its annual report that in June 2013, the Japanese Fair Trade Commission sent an “initial request for information” from BP, and that the Korea Fair Trade Commission “initiated an investigation” in December. In January this year, BP said, the U.S. Commodity Futures Trading Commission also requested documents………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Oil prices are likely to fall to around $90 a barrel as global supply rises and demand falls back thanks to a shift to more natural gas usage and increased fuel efficiency, the chief executive of Italian oil and gas major Eni SpA Paolo Scaroni said Thursday.
New oil fields coming onstream in Brazil, the Barents Sea off Norway and onshore in the U.S. will lift the world’s oil supply, Mr. Scaroni said. Concurrently, the U.S. shale boom has lifted demand for natural gas, while Europeans would likely shift from using coal and oil to cleaner-burning gas to meet carbon dioxide emissions targets. Gas demand would also prove high in Asia as the region’s economies expand, Mr. Scaroni said………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

“One hundred dollars per barrel is becoming the new $20, in our business.” With that pithy analysis, John Watson, chief executive of Chevron, summed up the oil industry’s plight.
As companies pursue the ever more challenging oil reserves that they need to increase or merely sustain their production, their costs have risen to the point that the most expensive projects, such as deepwater developments or liquefied natural gas plants, need an oil price of at least $100 a barrel to be commercially viable………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

For many years, there was broad agreement that the gold industry’s cost reporting was an embarrassment and an utter joke. Gold miners have worked hard to shed that reputation in the past year and a half. And they certainly made progress with the introduction of all-in sustaining costs.
But the question remains: Are investors now being told what it really costs to produce an ounce of gold? According to experts, that is debatable………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Five banks at the center of London’s gold trade have been sued in New York for manipulating prices, in the latest accusation of fraudulent collusion in the global finance hub.
A class-action suit was filed by US gold futures and options trader Kevin Maher against Bank of Nova Scotia, Barclays Bank, Deutsche Bank, HSBC, and Societe Generale, all involved in setting the London Gold Fix, a twice-daily benchmark price used as a reference for trade in gold and gold derivatives………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

One of my more controversial views in finance is that gold will one day be viewed as a mere commodity and not a form of money. My reasoning for this view is simple - I think the era of money as a physical item is long behind us and that the future of money rests with electronic forms of money that serve primarily as a record of account and medium of exchange.
That means the need for physical gold as a form of money will likely cease to exist or at least be reduced substantially in the future………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Gold Price trading in London kept bullion prices in a 2-day range between $1330 and $1340 per ounce Thursday morning, while Ukraine’s Crimea crisis continued to dominate headlines ahead of tomorrow’s much-awaited US jobs data.
Trading some 1.5% below Monday’s new 4-month high, the gold price fell for Euro investors, dipping beneath €970 as the single currency rose after ECB chief Mario Draghi reaffirmed a commitment to ultra-low rates. Members of parliament in the Crimea today voted to put joining Russia to a referendum on March 16th – a move that Reuters called a “dramatic escalation”……………………………………….Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Since last August, the Indian government placed a stranglehold on gold imports into the country by requiring that 20% of all gold imported be exported as jewellery. This forced the amount of gold imported to drop to 30% of former levels until October of last year.
Then the amount imported rose to 38 tonnes a month and has been at that level since then. The amount of gold that was expected to be imported for the year was north of 1,200 tonnes. It only achieved an imported total of 825 tonnes, around 400 tonnes less than expected………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Tension between Russia and Ukraine are high, sending precious metals significantly higher as a safe haven bid. The question of whether this has the potential of becoming World War III or if the conflict is just a mere diplomatic disagreement are now the two polar opposites pulling on precious metals’ prices as the significant rally Monday was countered with a sizable pullback Tuesday.
The trend in precious metals prices since December suggest the market is taking the conflict seriously, but how much more upside should metal owners expect?……………………………………….Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Flows into ETFs and ETPs listed globally rebounded in February gathering net inflows of US $29.0 billion which, when combined with the positive market performance in the month, pushed assets in the global ETF/ETP industry to a new record high of US $2.44 trillion, according to preliminary findings from ETFGI’s February Global ETF and ETP industry insights report.
The Global ETF/ETP industry has 5,183 ETFs/ETPs, with 10,210 listings, from 219 providers on 59 exchanges. “Positive comments from the Fed indicating that the US economy continues to brighten, the S&P 500 ending February with a record close of 1859 and signs of a wider global recovery in equities seems to have caused investors to come out of their winter hibernation after the winter storms and put net inflows of US $29.0 billion into ETFs/ETPs in February,” according to Deborah Fuhr, Managing Partner at ETFGI………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

There is no better insurance policy for your portfolio than precious metals. I buy them as stores of value and pray the price trends down. Why? Because most likely everything else I own would trend up.
For example, even as gold lost around 20% of its value in the first three quarters of 2013, the S&P 500 rose by a similar amount. So I repeat: I do not buy precious metals to profit from a rise in price or to sell to someone else. If they should soar in price due to the destruction of the fiat dollar (likely), I not only will be glad I own every ounce that I now own, but will also wish I had bought a whole lot more………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Though ETFs have been gaining immense popularity in recent years courtesy of their cost effectiveness, transparency, flexibility and tax efficiency, there are still a few misconceptions about the liquidity of the products. Generally, investors seek to trade in liquid ETFs that can easily be purchased and sold on the market without affecting their market price.
Volume, or the number of shares traded in a particular period, is definitely the most important consideration for determining the liquidity of a particular fund. Higher number of shares trading in a particular fund provides easy access to move in and out of that product, keeping bid/ask spreads tight………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

U.S. private equity group Carlyle said assets at its commodities hedge fund Vermillion fell by more than half in the nine months to December, suggesting investor redemptions at the fund after some negative returns.
New York-based Vermillion Asset Management was managing about $2 billion in March 2013 but that fell to around $900 million by December, Carlyle said in regulatory filings to the U.S. Securities Exchange and Commission………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Four incoming pieces of legislation from Brussels will increase regulation on investing in commodities and securities, replicating the movement of commodity prices, the FCA has warned.
In an eight-page document, Regulating the Commodity Markets: a Guide to the Role of the FCA, the City watchdog claimed that the European Markets Infrastructure Regulation (EMIR), MiFID II, the Market Abuse Regulation (MAR) and new benchmarks from the European Commission could create a stricter environment for trading and investing in commodities………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Carbon Trade Exchange Australia (CTX) on Thursday announces the appointment of Baden Wright as Chief Executive Officer. Baden has a wealth of expertise in the Information Communications Technology (ICT) industry, with over 20 years’ experience across Banking & Finance, Telecommunications, Manufacturing, Airlines, Power Utilities and Government.
He is an experienced executive with a superior understanding of technology and business concepts from inception through to market implementation………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Timothy Massad, President Barack Obama’s nominee to head the Commodity Futures Trading Commission, told lawmakers he would “make it a priority” to finalize a rule aimed at curbing speculation by Wall Street traders in certain commodity contracts.
At his confirmation hearing before the Senate Agriculture Committee, Mr. Massad gave assurances the CFTC would pass a “position limits” rule, which was included in the 2010 Dodd-Frank law. He also deflected CFTC responsibility for overseeing investments by Wall Street banks in physical commodities such as oil and aluminum, saying the issue is “largely outside the jurisdiction of the CFTC.”……………………………………….Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

“Lumpy, unpredictable, potentially large”: that was how Tim Geithner, then head of the New York Federal Reserve, described the need for dollars in emerging economies in the dark days of October 2008, according to transcripts of a Fed meeting released last month. To help smooth out those lumps, the Fed offered to “swap” currencies with four favoured central banks, as far off as South Korea and Singapore.
They could exchange their own money for dollars at the prevailing exchange rate (on condition that they later swap them back again at the same rate). Why did the Fed decide to reach so far beyond its shores? It worried that stress in a financially connected emerging economy could eventually hurt America. But Mr Geithner also hinted at another motive. “The privilege of being the reserve currency of the world comes with some burdens,” he said………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

It’ll take more than a unfolding currency-trading scandal to shake the dominance of the world’s biggest currency dealers. The top five currency-trading banks have actually increased their share of the market during this slow-motion train wreck, according to new research from Greenwich Associates.
Those firms—Deutsche Bank, UBS, Citigroup, Barclays and JP Morgan Chase—now hold a commanding 52.9% share, up from the 47.9% they held back in 2011………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Radical central bank policies in the US and Japan have buffeted Asian currencies in the past 12 months, wiping 15 per cent off the Indian rupee, 10 per cent off the yen and a fifth off the Indonesian rupiah. But they have also created some unlikely winners and losers, from Indonesian cattle farmers to Japanese bath house owners.
The widening of South Korea’s kimchi deficit – which sees the country import more of its national dish than it sells abroad – and the growing queues at Japanese theme parks are both manifestations of Abenomics, the pro-growth policies championed by Shinzo Abe, Japan’s prime minister, that began with easy money and a devaluation in the yen………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Committee says government and Bank of England must not be complacent about the risks of overvaluing fossil fuel companies. Stock markets are inflating a “carbon bubble” by overvaluing companies that produce fossil fuels and greenhouse gases, and this poses a serious threat to the economy, an influential committee of UK MPs has warned.
The idea of a carbon bubble – meaning that the true costs of carbon dioxide in intensifying climate change are not taken into account in a company’s stock market valuation – has been gaining currency in recent years, but this is the first time that MPs have addressed the question head-on………………………………………..Full Article: Source

Posted on 07 March 2014 by VRS |  Email |Print

Germany said an overhaul of the European Union’s carbon market to automatically tighten supply should begin at the latest in 2016, five years earlier than proposed by the bloc’s regulatory arm.
The 28 EU nations began talks last month on the plan to introduce a stability reserve mechanism for the $72 billion emissions trading system. The draft measure, designed to introduce automatic supply curbs or injections from 2021 to avoid imbalances, requires qualified-majority support from member states and majority backing from the European Parliament to be amended and take effect………………………………………..Full Article: Source

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