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Commodities Briefing 19.Jun 2014

Posted on 19 June 2014 by VRS |  Email |Print

Advisers are increasingly willing to recommend natural resources and commodities funds to their clients, according to a survey by Baring Asset Management. Nearly two in five (38 per cent) of intermediaries suggested they would recommend an increase in their exposure to the sectors, up from a quarter in the previous Barometer survey and the highest for nearly three years.
The research found one in six (16 per cent) were ‘very favourable’ towards natural resources/commodities from just 6 per cent in the previous Barometer. More than half (53 per cent) said they were currently ‘favourable’ towards global resources and commodities…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

S&P Dow Jones is planning to launch a new commodities index now that its licensing deal with UBS for the Dow Jones-UBS Commodity Index and its family of subindexes will be history at the end of the month.
The new index will offer investors an alternative to the broadly used UBS-linked benchmark, currently underlying strategies like the $1.6 billion iPath Dow Jones-UBS Commodity Total Return ETN. The planned Dow Jones Commodities Index will be an equal-weighted, broadly diversified commodity index, an S&P Dow Jones official told ETF.com. More specific details such as methodology and an actual launch date weren’t disclosed…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Investment managers are learning to embrace failure. They have been wrong on two critical calls this year, on bond yields and on oil. As a result, the best friend of hedge fund managers, momentum, has for the time being deserted them. The issue now is to guard against the growing possibility of a true oil price spike.
The first call investors got wrong was on US Treasury yields. They were almost universally expected to rise gently from 3 per cent; instead, they have fallen to as low as 2.5 per cent. That led to drama within the market in spring as investors exited from cyclical sectors that do well when the economy is expanding (and hence bond yields are rising)…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

The ISIS rebels have carved out an impressive swath of territory in northern Iraq. This has enormous implications and risks to the world’s oil supplies. Months before the ISIS rebels began their threatening move into Iraq’s southern regions, the International Energy Agency was imploring OEPC to produce and export an additional 1.2 million barrels per day (mbd) more oil by the end of 2014.
The sad fact is that out of 12 OPEC members, eight of them are collectively in decline. When summed together Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela were producing just over 14.5 million barrels per day in early 2005; but are now producing just 11.25 mbd…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries could meet ahead of schedule if the continuing crisis in Iraq disrupts the country’s exports of crude oil, officials from Gulf states that are members of the cartel said Wednesday.
At the end of its latest meeting last week, OPEC said it would keep its production ceiling for 2014 at 30 million barrels of oil a day and would next meet on Nov. 27. But that plan could change if the oil supply from Iraq is disrupted. Iraqi oil exports currently run at around 2.5 million barrels of oil a day…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

In less than a week, al Qaeda splinter group Islamic State of Iraq and Syria (ISIS) has seized several key cities in the north and center of Iraq, the world’s seventh-largest oil-producing country, causing Iraq’s largest oil refinery to shut down Tuesday and bumping up international oil prices as traders fear the escalating violence could inhibit oil production.
Energy industry watchdogs have expected Iraq to expand its oil production considerably in the next decade, which would help keep global oil prices stable and meet rising global oil demand, particularly in China…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

The Federation of Indian Export Organisations (FIEO) on Wednesday said the unabated turmoil in Iraq may lead to a spike in oil prices by $15 to 20 a barrel in the next couple of months, adding to inflation woes and jacking up India’s oil import bill.
India imports about 25 million tonnes of oil from Iraq each year. Militants pressing a major offensive in Iraq attacked Iraq’s biggest oil refinery on Wednesday, pushing up Brent for August settlement to about $113.60 a barrel on the London-based ICE Futures Europe exchange…………………………………..Full Article: Source

Posted on 19 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 19 June 2014 by VRS |  Email |Print

Gold volatility slumped to a 44-month low before the Federal Reserve concludes a two-day policy meeting. The 60-day historical volatility dropped to 11.4, the lowest since Oct. 18, 2010, according to data compiled by Bloomberg. Gold futures traded in a range of $45 an ounce this month, compared with $74 in May.
The value of exchange-traded funds backed by gold has contracted by $2.57 billion this quarter, and open interest in Comex futures fell to a five-year low in April. The precious metal’s appeal as an alternative investment faded as U.S. equities surged to a record and the Fed cut monetary stimulus…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

The 117-year-old London Silver Fix is nearly dead. Is its younger but more illustrious sister going the same way? That was the question being asked in the gold sector on Wednesday. In a move that caught some off guard – not least the London Bullion Market Association, whose members oversee the benchmark price – the World Gold Council said it had convened a forum to discuss the future of the 95-year-old gold fix.
The meeting, which is expected to involve everyone from mining companies to exchange traded funds, will explore “modernisation” of the benchmark, which was “imperative to maintain trust across the industry”, the WGC said…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Since spot gold and silver are traded 24 hours a day, the daily fix provides a snapshot of prices that industry participants can use to price central-bank assets, the value of exchange-traded funds tied to bullion and physical gold and silver deals.
Now, the prices of silver and gold are set daily in London by way of conference calls among banks—four for gold and three for silver. During the calls, the banks exchange bids and offers for the specific metal on behalf of themselves and their clients, and the price is declared ‘fixed’ when supply and demand is equal at a certain price…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Not quite as secretive and mysterious as Chinese mine production, but certainly not as forthcoming as other countries, Russia’s vast lands hold some large mines and deposits ranking it as the third largest gold producer.
The Olimpiada mine has been producing gold since 1996 and is still a staple of Polyus Gold International’s country-leading gold production portfolio…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

While gold has been climbing higher recently as investors seek safety due to the deteriorating conditions in northern Iraq, the ‘white metals’ as they are called have been searing hot.
Palladium is near five-year highs after tailing off a smidge, and platinum’s been on fire the past few months. The prescient Jonathan Hoenig of the Capitalist Pig Hedge Fund was on Breakout two months ago, banging the table telling viewers to buy these metals. In the attached video, he says the trade’s still on and you still have time to play it…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Earth’s most abundant mineral lies deep in the planet’s interior, sealed off from human eyes. Now, scientists for the first time have gotten a glimpse of the material in nature, enclosed inside a 4.5-billion-year-old meteorite. The result: They have characterized and named the elusive mineral.
The new official name, bridgmanite, was approved for the mineral formerly known by its chemical components and crystal structure — silicate-perovskite. The magnesium-silicate mineral was named after Percy Bridgman, a 1946 Nobel Prize-winning physicist, according to the American Geophysical Union blog…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

After being drubbed since peaking in mid-March, gold miners exchange traded funds are rebounding with some members of the group ranking among June’s top-performing ETFs.
Just look at the Market Vectors Junior Gold Miners ETF, the second-largest gold miners ETF. Entering Wednesday, GDXJ was sporting a June gain of 14.3%. Its large-cap counterpart, the Market Vectors Gold Miners ETF, the largest gold miners ETF by assets, entered the day with a June gain of almost 8%…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

After a lackluster 2013, gold is performing remarkably well this year. Most of the gains can be attributed to weak equity markets, momentum sell-off, uneven economic growth, firming dollar and the Ukraine crisis. Now, escalating violence in Iraq is boosting the appeal for the safe haven across the board.
In fact, the gold bullion climbed 6% in the year-to-date time frame and is easily outperforming the broad markets when compared to the 4.8% gain for the S&P 500, 3.5% for Nasdaq, 1.2% gain for Dow Jones and 0.08% for FTSE. This trend is likely to continue this year given rising demand and geopolitical tensions…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Thanks to the turmoil in one of the world’s largest oil producers, Iraq, oil prices are rising over the past one week. Brent crude price rose nearly 4% last week to the 10-month high and is currently trading at over $113 per barrel while West Texas Intermediate crude oil is hovering at above $106 per barrel. This has duly turned investors focus to the commodity and the impact of this on the energy sector.
The instability in Iraq was intensified last week when the Sunni Islamist militants, led by the Islamic State of Iraq and the Levant, captured three major northern Iraqi cities - Mosul - the country’s second-largest city, Tikrit, and Baiji - Iraq’s biggest oil refinery, thereby solidifying their grip on the north. The rebels are now moving south to the capital city of Baghdad for seizure…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

London will be the base for the first clearing bank outside Asia for the Chinese currency, supporting Britain’s push to be the leading western centre for offshore renminbi trading. People’s Bank of China (PBC), the country’s central bank, has appointed China Construction Bank as the UK’s first clearing bank for renminbi.
China, the world’s second-biggest economy, is promoting the use of its currency in international trade and is expected to further liberalise the renminbi in the next few years. London is competing with New York, Paris and other financial centres to be the top offshore renminbi centre outside Asia…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Katla straightens a dark blue shirt on a hanger and smiles encouragingly at a customer who’s tentatively trying on a summer jacket. “It’s crazy,” she sighs. “We opened this shop just a week ago and we had to do it without a single loan from a bank - no one will lend you money here after the bank crash.”
Katla’s clothes shop, Oxney, is a boutique in central Reykjavik and she’s clearly proud of the beautiful, original collection she’s created by blending Icelandic and French designs. But she’s worried about the future of her business…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

Switzerland, Singapore and Hong Kong, which have actively kept their currencies low since the global financial crisis, could have achieved the same outcome with less currency intervention and declining current account surpluses if they had followed easier fiscal and monetary policies. The global economy would have benefited too.
For the major advanced economies and the world as a whole, insuffi cient aggregate demand—that is, too little spending—impeded recovery from the Great Recession of 2008–09. By manipulating their currencies to boost their net exports, many countries made a bad situation worse for their trading partners, which saw demand shifted away. Th e world needs policies that increase total demand rather than policies that fi ght over the allocation of the existing amount of demand…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

China launches its seventh and final pilot carbon market in the sprawling city of Chongqing on Thursday, but plans to set up a national trading scheme within three years remain shrouded in uncertainty in the world’s top emitter of greenhouse gases.
China has pledged that by 2020 it will reduce its carbon intensity - the amount of CO2 produced per unit of economic growth - by 40-45 percent from 2005 levels. It has also promised to set up market mechanisms to help meet its targets…………………………………..Full Article: Source

Posted on 19 June 2014 by VRS |  Email |Print

The European Union needs an ambitious emissions-reduction goal, targets for energy-efficiency and renewables as well as tools to foster investment under its planned 2030 policies, an advisory panel to 14 ministers said.
EU leaders need to agree on the framework for the next decade by October, sticking to the deadline agreed earlier this year, the panel said in a report obtained by Bloomberg News. The panel includes experts from the International Energy Agency, the European Investment Bank, the European Bank for Reconstruction and Development and the Organization for Economic Cooperation and Development…………………………………..Full Article: Source

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