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Commodities Briefing 03.Jun 2014

Posted on 03 June 2014 by VRS |  Email |Print

Investors pulled $4 billion from U.S. commodity exchange-traded products in the first five months of the year, extending last year’s negative trend even as the pace of the redemptions from gold slowed, Thomson Reuters’ Lipper data showed on Monday.
In 2013, more than $33 billion left commodity exchange-traded funds, notes and mutual funds for the first annual net outflow in 12 years, according to Lipper, a division of Thomson Reuters that tracks nearly 180 U.S. exchange-traded commodity funds and products………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

In the past couple of years, commodities have not been a good place to put your money. However, longer term, they have been outperforming stocks. Since the turn of the century, there are many commodities that have increased several multiples in price:
Oil has risen from $20 per barrel to more than $100 per barrel. Corn has risen from $2 per bushel to nearly $5 per bushel. Gold has risen from $250 per ounce to $1,250 per ounce. Copper has risen from less than $1 per pound to more than $3 per pound. This strong performance is due to a couple of factors. The first is rising demand, particularly from emerging market countries with economies that are growing rapidly………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

All too often, Jim Cramer hears that stocks have become commoditized. That is, they trade as a unit, just like corn and wheat. Cramer just doesn’t understand that kind of thinking. “This kind of analysis diminishes the value of so much of what happens at companies. It is ridiculous to think that they are commodity-like,” he said on Monday’s “Mad Money.”
And rather than view stocks only in terms of the Dow Jones industrial average or S&P 500, Cramer advocates viewing each and every stock individually as well, with a company’s unique characteristics always at the forefront of all investment decisions………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

More than $48 trillion must be invested by 2035 to meet global energy needs as current technologies go offline and demand rises in emerging nations, the International Energy Agency (IEA) said in a report launched in London on Tuesday.
The special report warns that the expansion of the global gas market, thanks largely to the improvements in unconventional extraction methods, will not reduce prices significantly due to high transportation and infrastructure costs………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

A top energy watchdog said the world will need more Middle Eastern oil in the next decade, as the current U.S. boom wanes. But the International Energy Agency warned that Persian Gulf producers may still fail to fill the gap, risking higher oil prices.
In its first update to the agency’s energy investment outlook in more than a decade, the IEA—which represents some of the world’s largest consumer nations—said it sees “growth in oil demand [becoming] steadily more reliant on investment in the Middle East.”……………………………………….Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

Ahead of IW’s Fund Management Summit, to be held on 23-24 September 2014 in London, here is a preview of the event, with thoughts from one of our speakers. Tim Guinness is chief investment officer of Guinness Asset Management. In his speech to delegates at the Fund Management Summit, he will discuss the energy revolution, fracking and shale gas.
Guinness runs a $239m Global Energy Fund, a $9.9m Alternative Energy fund, and a Sustainable Energy EIS………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

Brent futures rose towards $110 a barrel on Monday as data showing China’s factory activity expanded at its quickest pace in five months in May revived hopes of healthy demand growth from the world’s second-biggest oil consumer.
The strong data reinforces views that China is regaining momentum in the second quarter and adds to a recent string of positive indicators from the US that suggests an improvement in the global economic outlook. The upbeat numbers from the world’s second largest economy also helped push up the broader market, including Asia shares and base metals………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries (OPEC) crude production climbed in May for the first time in three months, led by gains in Angola and Saudi Arabia, a Bloomberg survey showed.
Output from the 12-member OPEC countries rose by 75,000 barrels a day to an average 29.988 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 50,000 barrels a day higher to 29.913 million because of changes to the Saudi Arabian and United Arab Emirates estimates………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

Prime MinisterNouri al- Maliki has made a come back winning the most number of seats in Iraq’s parliamentary elections. Barclays in a weekly report notd tht the Iraqi situation is critical to global oil markets, with Libyan production set to be offline for a significant period and the full return of Iran’s sanctions-restricted barrels looking unlikely in the near term. The Iraqi situation is critical to global oil markets, with Libyan production set to be offline for a significant period and the full return of Iran’s sanctions-restricted barrels looking unlikely in the near term.
OPEC’s ability to manage its overall production levels, consistent with demand and other sources of supply, hinges on Iraq’s output. Wood Mackenzie recently forecast Kurdistan’s exports to grow by 500 kb/d to 725 kb/d by 2020,”provided there are no constraints.”……………………………………….Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

China and India are perhaps the two key markets for gold and this puts the precious metal in an interesting position over the next few weeks. Emerging markets have been firmly in focus as growth concerns continue to weigh on gold and other commodities. Initially the assumption was a slowdown in China would lead to aggressive stimulus measures, which would ultimately benefit gold.
However, inflation is dropping off along with growth prospects, and with China being the largest importer of the metal, the recent slowdown has seen gold significantly on the back foot. In fact there had been a couple of things keeping gold afloat including the Fed’s huge QE program, Japan’s stimulus program and the Russia/Ukraine tension………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The yellow metal has a mystique. But when all is said and done, it is just another commodity. Let me put my prejudices on the table: I loathe gold. Not as jewelry but as an investment. In fact, I loathe all commodities. The main reason is that many years ago I fell under the spell of an exceptionally smart and likable economist named Julian Simon.
In 1980, Simon proposed a wager with Stanford biologist Paul Ehrlich, author of The Population Bomb, a popular book that asserted that because of global population growth, demand for natural resources would soon outstrip supply………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

A sharp price drop prompted large speculators to cut their net-long positions in gold futures and options on the Comex division of the New York Mercantile Exchange to the smallest levels since late January.
These fund managers had been winnowing down their bullish holdings for most of May, as seen in the weekly commitments of traders report from the Commodity Futures Trading Commission, but the latest data shows large speculators are seeking to lift their gross short positions. The data is as of May 27………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The silver price, which at £11.205 (US$18.76) is less than half of its high of $48 an ounce set in 2011, could be set for a rebound according to industry players. A research report out today from ETF Securities, a London-based investment firm focused on exchange-traded funds and commodities, argues that with industrial demand increasing, supply falling and inventories declining, the gold price stable and price volatility at a decade low, conditions are building for a silver price rally.
The report also cites the fact that in the first quarter of 2014 Chinese demand showed a 22% year-on-year increase in silver imports, the largest quarterly gain since the second quarter of 2010. In addition, demand from China was up 17% year-on-year………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

There’s been increasing uncertainty in base metals markets lately. Zinc may be headed for under-supply as key mines globally shut down. Copper demand in China has been somewhat erratic of late. And data last week suggest that yet another metal may also be seeing some big changes.
Aluminum. Black China Blog reports that aluminum premiums in Japan have been surging of late. With buyers here being asked to pay premiums of up to $410 per tonne for the third quarter of the year. That’s a significant rise from the previous quarter. Representing a 9% increase………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

BlackRock, the world’s biggest asset manager, slashed the prices of some of its exchange traded funds (ETFs) on Monday to compete in a European price war as the products become increasingly popular with retail investors in the region.
BlackRock, which manages over $4.4 trillion in assets, launched a package of 14 ETFs in Europe on Monday, cutting the price of six in the range by as much as 58 percent………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

With over 1,600 exchange-traded funds to choose from, investors can essentially tap into any corner of the investable universe. Perhaps one of the most popular markets has been ETFs that offer exposure to equities outside of the U.S.. Not only do these funds add great diversification benefits, but they are significantly less expensive than mutual fund options.
When it comes to adding global exposure, it is important for investors to realize how currency exposure can seriously impact bottom line returns. Most international equity ETFs effectively establish a long position in the local currency and a short position in the U.S. dollar. When the value of the dollar is declining, that exposure can work in favor of U.S. investors, as exchange rate fluctuations enhance their returns………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

Bitcoin is a fascinating and ingenious technology, but most promoters are mindful of neither the monetary nor the tax issues. For all practical purposes IRS regulations issued in March preclude bitcoins from being used as an alternative currency.
The IRS treats bitcoins as property. The result is that bitcoin transactions trigger a taxable event. Buyers incur a tax liability for the difference in dollars between what they paid for a bitcoin when they acquired it and the dollar value attributed to the bitcoin when they spend it. Sellers of course are subject to a tax based on the dollar value of the bitcoins they receive for a good or service………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The Russian ruble has officially become the only valid currency in Crimea, with the Ukrainian hryvnia being given the status of a foreign currency. The move is another step toward closer integration with Russia.
From June 1 all settlements and payouts in the peninsula, including salaries, pensions and social benefits will be done in Russian rubles, Vedomosti says citing the Central Bank of Russia (CBR)………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The volume of cotton traded internationally is expected to decline by 8% to 8.1 million tons in 2014/15, driven by reduced shipments to China from a record of 5.3 million tons in 2011/12 to an anticipated 2.1 million tons 2014/15.
While the increased volume of trade benefited many exporting countries and farmers, it did not reflect improved demand for cotton. In 2011/12 when imports increased by 26% to 9.8 million tons, world consumption decreased by 7% to 22.8 million tons……………………………………….Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The Obama administration took its most forceful step yet on climate change with an EPA proposal to curb greenhouse gases from existing power plants. The most likely impact from the rules, if they survive legal challenges, will be an accelerated shift to natural gas and more energy efficiency measures in coal-heavy states.
EPA director Gina McCarthy on Monday unveiled the Clean Power Plan to reduce carbon dioxide emissions from power generation 30 percent by 2030 compared to 2005. The EPA expects to finalize the rules in one year and give states one year to submit an initial compliance plan. Final plans would be approved by 2017 or 2018 if it’s a multistate approach………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

The Green Party’s carbon tax policy is hitting turbulence just two days after getting airborne with the Labour Party opposed it and Maori interests fearing it will cost them money. The Greens plan to campaign for the election on phasing out the Emissions Trading Scheme, and instead taxing industrial polluters $25 a tonne on their carbon emissions.
The party said the ETS was not deterring greenhouse gas emissions as intended and a carbon charge was a simple and transparent tax on pollution. Labour, the Greens’ prospective coalition partner, introduced emissions trading in the first place, and its finance spokesperson David Parker wants the scheme retained………………………………………..Full Article: Source

Posted on 03 June 2014 by VRS |  Email |Print

A new global study shows the US has extended its lead as the country with the most positive sentiment from offshore investors, while Australia has slipped in the rankings.
The closely watched analysis of investor sentiment, from consulting firm AT Kearney, saw Australia dip to eighth spot after being leapfrogged by both the United Kingdom and Germany………………………………………..Full Article: Source

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