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Commodities Briefing 04.Jul 2014

Posted on 04 July 2014 by VRS |  Email |Print

Morgan Stanley has bought Deutsche Bank’s bulk commodities trading book dealing in coal, iron ore and freight forward contracts to expand in commodities derivatives, a source familiar with the matter said on Thursday.
The deal marks an apparent return to iron ore for the Wall Street bank, which exited the market by last year, and an expansion in coal and freight. The acquisition will broaden Morgan Stanley’s customer base, making it the counterparty for structuredtransactions with a wide range of end-users………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

The recent turmoil in Iraq led many forecasters to predict that oil and gasoline could be headed for a substantial price increase. Jay Leno once joked, “Gas prices continue to rise. At the gas station near my house they have a slot for your credit card and one right next to it for your 401(k).”
The price of oil can be very volatile. Oil prices have a history of price spikes that are associated with geopolitical unrest. In 1979, the price of crude doubled to $38 per barrel. Using an inflation adjustment based on CPI data from 1946-2014 that equates to over $115 per barrel in today’s dollars. Oil spiked again in 1990 during the Gulf War. In June 2008 oil reached an all-time high when it averaged an inflation-adjusted price just over $135 per barrel for the entire month………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

Commodity traders make good villains. They are rich because they are secretive, well informed and ruthless. The beans, metals and grains that they trade affect every part of modern life. Consumers can blame them for high prices, farmers and miners for low ones. Politicians worry that they distort and rig the markets they operate in.
Outsiders know surprisingly little about this world, and Kate Kelly, a reporter with CNBC, has done a good job of shedding light on some of the personalities who dominate it. Her book, “The Secret Club that Runs the World”, starts with a “cast of characters” including the well known—Mick Davis of Xstrata and his nemesis, Ivan Glasenberg of Glencore—and others less famous, such as Pierre Andurand of BlueGold Capital Management, who appears to have been a principal source for the book. ……………………………………….Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

The price of oil dropped below $104 a barrel Thursday as the risk of supply disruptions in Iraq continued to recede and two key export terminals in Libya were expected to reopen soon.
By early afternoon in Europe, benchmark U.S. crude for August delivery was down 68 cents to $103.80 a barrel in electronic trading on the New York Mercantile Exchange, its sixth day of declines. On Wednesday, the contract fell 86 cents to $104.48. Brent crude, a benchmark for international oils, was down 61 cents to $110.63 a barrel on the ICE Futures exchange in London………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

America’s increasing reliance on hydraulic fracturing to recover energy trapped in shale will soon lead Texas to generate more oil than Iraq, OPEC’s No. 2 producer.
Texas produced just over 3 million barrels a day in April for the first time in nearly four decades, according to a new report by the U.S. Energy Information Administration (EIA). That accounted for 36 percent of the United States’ total production for the month — 8.4 billion barrels per day………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

News out of Iraq has helped drive oil prices higher in recent weeks. One of the predictable results has been a slew of articles about how rising oil prices could thwart a U.S. economic resurgence. While that might be partially and temporarily true in the very short run, the reality is that the U.S. will have relatively stable energy prices for the foreseeable future.
In general, most of the articles miss the real reasons behind slow economic growth and are just breathy attempts to get pageviews. The main reason for the rangebound energy prices in America — which I discussed here — is the rapid pace of energy-related technology the past decade. ……………………………………….Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

US forecaster Bo Polny has predicted that the price of an ounce of gold will hit US$2000 by the year end, rising to $10,000 by the end of 2020-21. Polny found fame by predicting the top for the gold price at $1900 and the bottom at $1180. He is apparently a student of WD Gann, the legendary futures trader who became a self-made millionaire.
Polny reasons that gold is in a 21-year bull cycle, with three 7-year mini-cycles within that. According to Polny we’re entering the third cycle now. The interview was conducted by Kitco News and can be viewed below………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

The first half of the year was great for gold, which rose by about 10 percent from January through June. While analysts were nearly unanimously bearish in January, there have been a couple of individuals outside of the gold community who have turned bullish, but the vast majority of mainstream analysts are bearish or neutral. They see a lack of interest in gold as the economy improves and stock prices continue to rise. When stocks rise people feel good, and there is no reason for them to hold gold.
And these people may be right in the near term even if they are mistaken in the long term. The gold price is near a critical resistance point at around $1,350 per ounce, and the price is trending downward if you take the August 2013 peak and connect it to the March peak………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

Gold stocks are poised for an upswing. Just recently, the European Central Bank (ECB) announced a new policy to promote lending and, ultimately, inflation in the Eurozone. The move sent investors flocking to precious metals like gold and silver.
That’s because precious metals tend to move in tandem with inflation. As the value of a currency decreases - which is an effect of inflation - the price of precious metals increases. A declining value of a currency means that it takes more of that currency to purchase an ounce of the metal………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

One of the problems facing the potential gold investor who may see the longer term future of the precious metal as being decidedly positive, is when to actually step in and buy bullion, bullion related securities or gold stocks. Respected New York gold analyst, Jeff Nichols, feels that the time may well be now.
Nichols recommends holding a proportion (perhaps 5-10%) of one’s investment portfolio in physical gold, thus providing a variety of benefits – portfolio appreciation, diversification, reduced portfolio volatility, risk reduction, inflation protection, and more. Given that Nichols describes himself as not being a ‘gold-bug’ he does reckon to be ‘super-bullish’ on gold’s longer term prospects………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

Price discovery in all commodities is an electronic paper affair. While the macro-economy and the geopolitical provide a distant framework, they do not wield significant direct influence. The “discovery issue” occurs across the board, but is nowhere more evident than in the precious metals futures markets and, most notably, silver.
A look under the hood at the most recent rally confirms that we are nowhere close to the point of return to equilibrium price. The set up for precious metals has been in place for years. In silver, the trading structure has been this way for decades………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

Exchange-traded fund inflows shot up to $123.9 billion in the first half of the year, a rise of 25% compared with the same period in 2013, after a strong performance in the second quarter, according to data compiled by BlackRock.
Inflows of $90.6 billion in the three months to June were the highest for a quarter since 2009, helped by renewed interest in emerging markets. June was the best month year-to-date, with inflows of $36.3 billion………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

It all seems to be going so well for Colombia: its national football team has reached the quarter finals of the World Cup for the first time, the economy grew by a startling 6.4 per cent in the first quarter, while unemployment hit a new low last week at 8.8 per cent, and economists say confidence is riding high.
But officials appear to be worrying once again about one of the hazards of economic success: the appreciation of the peso………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

China has permitted banks to freely set their own exchange rates for the renminbi against the dollar in over-the-counter transactions — another step toward freeing the exchange rate from government control.
Banks were previously required to price the exchange rate that they offered clients within 3 percent in either direction of the Chinese central bank’s midpoint on a given day………………………………………..Full Article: Source

Posted on 04 July 2014 by VRS |  Email |Print

Atmospheric carbon dioxide has now reached its highest level in the past 800,000 yrs. US space agency NASA launched Orbiting Carbon Observatory-2 (OCO-2) spacecraft Wednesday from California into the night skies to study global warming, NASA TV showed.
The United Launch Alliance Delta 2 rocket carrying the OCO-2 spacecraft, the first dedicated NASA mission to monitor atmospheric carbon dioxide (CO2) on global scales, blast off at 2:56 a PDT (0956 GMT) Wednesday from Space Launch Complex 2 at Vandenberg Air Force Base in California. Engineers successfully established communication with the Orbiting Carbon Observatory-2, NASA said in a statement………………………………………..Full Article: Source

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