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Commodities Briefing 18.Jun 2014

Posted on 18 June 2014 by VRS |  Email |Print

Fears that the euro zone could be sliding into deflation might be short lived, if commodity prices continue to rise as they have done so far this year.
That’s because, by European Central Bank President Mario Draghi‘s reckoning, some 80% of the decline in euro zone inflation since 2011 can be accounted for by falling commodity prices. But with commodity prices picking up, that deflationary pressure should start to fade………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

In any escalation of political tension Oil and Gold are the two key commodities to watch. For oil, the breakout and surge higher was largely driven by events in Iraq coupled with supply issues at Cushing, both of which combined to help power the WTI contract up to the $107 per barrel price point as evidenced by last Thursday’s wide spread up candle.
This move higher was associated with high volume, thereby validating and confirming this bullish picture. Both Friday’s and Monday’s price action was identical, in that both trading sessions closed with small shooting star candles on above average volume, suggesting that like equities, markets are pausing and waiting for further news and developments………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

The combination of fundamental underlying demand, low valuations, relatively high yields and a renewed management focus on shareholder returns is poised to send commodity stocks surging.
That claim could have been made at just about any point over the past two years, as indeed it has been repeatedly. But if the sector is primed for a bull run, investors may as well own anything – active or passive. If not, though, the prolonged bear phase has revealed those managers who have been able not only to protect but actually to add value during the slump………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Last decade there emerged a new avenue for retail investors and traders to participate: this was the new modified electronic platform of commodity derivatives. For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities emerged as an alternative tool and one of the best option across the globe.
Till some years ago, this wouldn’t have made sense. For retail investors, they could have done very little to actually invest in commodities beyond gold and silver however the emergence of state of the art technology and methodologies it became possible to think beyond traditional asset class and invest or manage the risk in various other commodities like chana, oilseeds, crude oil and copper etc. in the futures market………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

The Islamist insurgency in Iraq is putting at risk a predicted increase in the amount of crude oil that can be produced by Opec countries. Opec had expected as much as 60 per cent of its predicted growth in capacity to have come from Iraq over the coming five years, a report from the International Energy Agency said.
The IEA had predicted that, following the US withdrawal of troops from Iraq, the country, which is already Opec’s second largest producer of crude oil, would be able to boost its production capacity by an additional 1.28 million barrels per day by 2019………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

The sectarian strife in Iraq has put growth of Opec crude oil production capacity over the next five years at risk, according to the International Energy Agency, highlighting the importance of the country to the global energy market. Roughly 60 per cent of the growth in the oil-producing cartel’s production capacity up until 2019 was expected to come from Iraq.
“Given Iraq’s precarious political and security situation, the forecast [for Opec output capacity growth of 2.08m barrels a day for 2013-19] is laden with downside risk,” the watchdog backed by wealthy nations said in its medium-term oil market report released on Tuesday………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

The balance of power in the global oil industry will shift over the next five years, as North America becomes more prominent, with OPEC’s influence set to wane. The International Energy Agency’s five-year oil market outlook predicts that North America’s net exports will “surge” by the end of the decade, driven by the “unconventional oil revolution”.
The IEA predicts this trend to spread beyond North America, with oil extracted from oil sands and shale rock (’tight oil’) to come online in Russia and Argentina, as well as Kazakhstan and Mexico………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Forget the Dow. Now’s the time for investors to keep their eyes glued to the price of oil. Renewed violence in Iraq, and fear of an all-out civil war there, is to blame. The fear of an oil price shock has been etched into the minds of investors ever since the Arab oil embargo in 1973-74, when oil prices quadrupled and the U.S. economy sank into a recession and the stock market suffered a brutal bear market.
So, it’s no surprise that the latest conflict in Iraq, which just happens to produce nearly 3 million barrels of oil per day, 80% of which is exported, has put Wall Street once again on oil-price watch………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Global demand for oil and gas — Russia’s key exports and the lynchpin of its foundering economy — is growing, and Russia is well placed to capitalize on it, according to a BP review on world energy unveiled Monday.
Presenting the report at the 21st World Petroleum Congress held in Moscow, Bob Dudley, CEO of British oil company BP, said Russia was at the top of the world energy market. “In 2013, Russia was the world’s largest producer of oil and gas combined and the largest energy exporter,” Dudley said………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

A five-year-long link between crude oil and gold has come apart as the economic recovery boosts energy consumption and lowers the metal’s appeal as a haven, encouraging investors to buy oil and sell gold.
The 120-day correlation between West Texas Intermediate crude and gold futures slipped into negative territory this year for the first time since July 2009, according to data compiled by Bloomberg. The relationship tightened, though remained negative, last week as military tension in Iraq boosted prices for both commodities………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

The recent rally in crude oil due to geopolitical tensions may not have caused a bull run as technical indictors point to bearishness in the market, according to Nadia Simmons, Forex and Oil Trading strategist at Sunshine Profits.
Simmons said that although crude oil rose to a nine month high, the overall situation hasn’t changed as it is still below strong resistance zone created by the long term declining line and two important Fibonacci retracement levels………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Investors who favor gold have provided many reasons for gold’s nearly 30 percent decline in 2013 and overall demolition since it hit $1,934 in September 2011. But on CNBC’s “Futures Now,” noted investor Marc Faber provided an especially interesting one.
Investors are shunning gold “because the media doesn’t like gold,” Faber said by phone Tuesday from Thailand. “Nobody at CNBC owns gold. Nobody at Bloomberg owns gold. Gold is being constantly talked down by the media, and Fed officials, and economists, who also don’t own any gold. They’re all stocked up in equities.”……………………………………….Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Gold was trading in a tight range on Wednesday as a firmer dollar and outflows from bullion funds sapped demand, with many investors waiting for the Federal Reserve to conclude its two-day policy meeting before placing big bets on the metal.
Spot gold was little changed at $1,270.94 an ounce by 0028 GMT, after ending flat in the previous session. The metal hit a three-week high of $1,284.85 on Monday due to violence in Iraq, but prices have since fallen back………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Gold as an investment is one of the most difficult assets to forecast, predict and understand. Being a commodity, its price can vary rapidly due to events beyond anyone’s control. So why then does gold belong in your portfolio?
Investors use gold as an investment for a variety of reasons. Some investors use gold as a hedge against inflation, others as a hedge against a declining dollar and some as a safe haven during periods of political and economic turmoil. In my opinion, gold is a great portfolio hedge against a significant market recession as seen in 2002 and 2008………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

As gold prices remain soft, gold miners’ shares find themselves on shaky ground. However, it looks like for some of them, the worst could be over. IAMGOLD , Eldorado Gold , and Kinross Gold were under serious pressure last year, but so far this year their shares have stood firm. Does this mean that these miners have reached their bottoms?
IAMGOLD: relying on the price of gold: Despite cost-cutting efforts, IAMGOLD remains a relatively high-cost producer. The company’s all-in sustaining costs (AISC) dropped from $1,290 per ounce of gold in the first quarter of 2013 to $1,198 in the first quarter of 2014, but remain close to the current gold price. This year, IAMGOLD targets AISC of $1,150-$1,250 per ounce of gold………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Platinum group metals recovered from early weakness to finish modestly higher. “Prices may have (initially) eased in continued reaction to a reaffirmation that South Africa’s three main platinum producers and the AMCU (Association of Mineworkers and Construction Union) have agreed on a broad wage offer to end the long-running strike,” says HSBC.
“PGMs made a comeback on scattered buying as the Impala spokesman said details such as the timeframe and additional benefits are still outstanding, but that the ‘big picture’ on wages had been agreed.” The bank cites a Reuters report saying the union will call a mass meeting this week to decide on the latest company offers. “But this may be a formality as last week thousands of workers and AMCU shop stewards……………………………………….Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Investing in physical platinum through an exchange-traded fund (ETF) could be a better medium-term investment than buying shares in embattled platinum mining companies.
Following an announcement by local platinum producers Impala Platinum (Implats), Anglo American Platinum (Amplats) and Lonmin that they have reached an “in principle” undertaking with the Association of Mineworkers and Construction Union (Amcu), hopes have been high that the end of the five-month strike could be in sight………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Bank of Montreal’s exchange-traded funds business, the second-largest in Canada, will double its assets to about C$30 billion ($28 billion) in five years as their lower fees draws an aging population, said Rajiv Silgardo, co-chief executive officer at BMO Global Asset Management Inc.
“ETFs as a product still have lots of room to grow,” Silgardo said in an interview in Bloomberg’s Toronto bureau………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

Commodity ETFs are Exchange-traded funds that invest in physical commodities such as agricultural goods, energy resources and precious metals. The ETFs are great investment vehicles for investors who need to hedge risk or want to gain exposure in physical goods. They are economical to buy and cheap to maintain over the long run.
A commodity ETF can have exposure in a group of commodities or sometimes just a single commodity. Most commodity ETFs invest in futures contracts, but they do not use leverage. This prevents the fund from running into a negative balance situation………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

This was how Luo Ping, a senior official at the China Banking Regulatory Commission, vented his frustration at the US in 2009. He and others in China believed that, as the US Federal Reserve printed money to resuscitate American demand, the value of China’s US Treasury bond holdings would plunge along with the dollar.
“Once you start issuing $US1 trillion to $US2 trillion . . . we know the dollar is going to depreciate, so we hate you guys, but there is nothing much we can do,” he told a New York audience………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

The ruble weakened for a third day as Russia’s central bank said it will scale back how much it intervenes in the currency market. Bonds fell.
The ruble depreciated 0.3 percent to 40.3501 against the Bank of Russia’s target basket of dollars and euros by 6 p.m. in Moscow, when the central bank stops its market operations. The yield on local-currency debt maturing February 2027 rose three basis points to 8.75 percent, the highest level this month………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

More than a quarter of all companies covered by Beijing’s municipal carbon laws ignored a key reporting deadline, local media reported Friday, with some powerful companies questioning the local government trading body’s authority to regulate them.
Beijing’s carbon trading market, one of six set up in China to rein in rapidly growing greenhouse gas emissions, caps carbon dioxide from nearly 500 local enterprises. Most of them must hand over permits to the government to cover for their emissions, while some must only report their CO2 levels………………………………………..Full Article: Source

Posted on 18 June 2014 by VRS |  Email |Print

A joint statement brings together the UK’s broad science base and experience with China’s scale and ability to innovate. Much has been written about the nuclear agreements signed at the UK-China summit. Given the boost to low-carbon electricity, to energy security and to jobs, the Chinese interest in taking forward investment at Hinkley Point C, the UK’s first nuclear station in a generation – is hugely welcome.
But equally important is that both China and the UK recognise that climate change is one of the greatest global challenges we face. For the first time ever, the UK and China have released a joint statement, committing our governments to work even more closely together on a response to climate change………………………………………..Full Article: Source

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