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Commodities Briefing 08.Jul 2014

Posted on 08 July 2014 by VRS |  Email |Print

Gold producers and consumers are resistant to a wholesale redesign of the existing price setting benchmark known as the “fix” despite increasing regulatory glare, a discussion held by the World Gold Council found on Monday.
The debate hosted by the gold mining industry group was attended by 34 delegates from investment funds, refiners, exchanges, and other industry bodies. The four banks that currently set the globally used gold benchmark twice a day via a conference call - Barclays Plc , HSBC, Bank of Nova Scotia and Societe Generale - were not present, but the WGC said it had had meetings with them separately……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

With 24-hour electronic trading, the 100-year-old gold fix has become an anachronism. Does the system of fixing the daily price of gold in London really need fixing, or should it be allowed to fade into the annals of history?
Traders and market participants will gather today in London to debate the question which has hung over the City’s precious metals market ever since it emerged earlier this year that major abuses of the 100-year-old process known as the “London gold fix” had taken place……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Other industry groups such as miners may join process of setting crucial benchmark following allegations that process is open to rigging. Banks could lose sole responsibility for setting the gold price benchmark under new rules proposed by the industry.
Other parties such as miners and refiners may enter the London gold fix, which has been controlled by banks for almost a century but has come under scrutiny following allegations that the system is open to manipulation. At a summit held by the World Gold Council (WGC) on Monday, regulators, banks and investors convened to discuss options for the fix, the gold price benchmark that influences trading in the precious metal……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Commodity has gained almost 10 per cent since 2013 thanks to demand for jewellery. Following a prolonged period of miserable returns, gold investors are finally clawing back some losses, with the precious metal currently the top performing asset class of 2014.
Since the start of the year, bullion has rallied by 9.3 per cent, well ahead of its nearest challengers, the S&P 500 and the STOXX 600 indices, which have notched up respective gains of 6.2 and 5.5 per cent in dollar terms, according to JPMorgan Asset Management……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

The supply of gold is largely static from one period to the next. Gold mines are large and plentiful, but almost the entirety of what they produce is dross. As technology improves, ore with ever-lowering concentrations of gold becomes economically feasible. Ore that contains as little as one part of gold per 300,000 is worth mining.
Discard all the billions of tons of worthless ground rock, and it’s been estimated that all the gold ever mined would fit on a football field, piled less than 10 feet high. The gold mined each year adds less than the thickness of a coat of paint to the total……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Germany’s plan to bring back the nation’s gold reserves to Frankfurt by 2020 has fizzled, and instead has for now decided to leave $635 billion of gold in US vaults. Home to the world’s second largest gold reserves, worth $141 billion, Germany only keeps about one third of its gold ‘at home’, the rest is abroad.
45 percent is in the US Federal Reserve in New York, 13 percent in London, 11 percent in Paris, and only 31 percent in the Bundesbank in Frankfurt. “The Americans are taking good care of our gold, we have no reasons for mistrust,” Nobert Barthle, the German Parliament Budget spokesman, told RT……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Platinum prices hit a 10-month high last week boosted by supply worries despite an end to the five-month strike in South Africa’s platinum belt. Palladium was trading at close to its highest level since early 2001.
Spot platinum was at its strongest since September at $1,511 an ounce in the pm fix on July 2 on London’s Platinum and Palladium Market although had inched down to $1,503 in the pm fix on July 4. On Nymex, the platinum contract for October delivery settled $32.10 higher at $1,515 an ounce before easing back to close at $1,507.70 on July 3……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Much to the relief of aluminium producers, the white metal has outperformed other non-ferrous metals in price gains, except nickel, which managed to advance 40 per cent after Indonesia put a ban on minerals exports in January.
The three-month aluminium price, which in some intraday trades at London Metal Exchange (LME) breached the psychologically important $1,900 a tonne, has risen to its highest since August 2013. The undoing of aluminium for a long time has been excess capacity outside China and its use leading to the build up of stocks of over 5 million tonnes (mt) at LME warehouses……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Cuts to China’s iron ore production will be less than forecasts, with increased output at some lower cost inland mines offsetting closures at smaller coastal mines, according to Goldman Sachs Group Inc. (GS)
Output may decline 10 percent over the two years to 2015, trimming production by 40 million tons, Goldman Sachs Australia Pty’s Global Investment Research Executive Director Christian Lelong said in an interview in Sydney on July 4. That compares with a JP Morgan Chase & Co. forecast that predicts China will need to cut about 64 million tons in 2014 and a further 85 million tons by 2017 to keep the market balanced……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

There has been a stronger tone in a number of base and precious metals lately, says Mike Zarembski, senior commodities analyst with optionsXpress. “Don’t look now but one of the least loved commodity sectors by trader and analysts to start 2014— precious metals – (is) starting to display rather bullish price moves,” he says.
Palladium has led the charge on tight supplies and improving auto sales, he says. “However, some of the biggest surprises are in the performance of gold and silver of late,” he says. “Here, analysts note that gold ETF (exchange-traded-fund) purchases have increased and now stand at their highest levels since mid- April, as buyers are starting to turn once again towards gold as a diversification from equities and bonds due to rising global tensions especially in the Middle East, as well as, a potential hedge against rising inflation……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

In the past, most operational technology (OT) networks were isolated (air gaped) from the internet and office networks and operated independently, using proprietary hardware, software and communications protocols.
However, in recent years, demand for business insight, requirements for remote network access and the spread of hardware and software from traditional IT (e.g. TCP/IP networking, Windows based platforms) caused many oil and gas companies to integrate control systems and their enterprise IT systems……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Iraq is one of the world’s top oil exporters, so you would think that a recent attack by militants on its largest oil refinery amid a deteriorating security situation in the country would prompt global fears of oil shortages and spark a spike in prices.
Instead, ​prices are about where they were a year ago, although they have been creeping up in recent months. Why no panic? Iraq’s vast crude supplies are safe for the time being because the bulk of its oil production — about 2.5 million barrels a day — takes place in the south, far from the current insurgency, analysts say……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Iraq is one of the world’s top oil exporters, so you would think that a recent attack by militants on its largest oil refinery amid a deteriorating security situation in the country would prompt global fears of oil shortages and spark a spike in prices.
Instead, ​prices are about where they were a year ago, although they have been creeping up in recent months. Why no panic? Iraq’s vast crude supplies are safe for the time being because the bulk of its oil production—about 2.5 million barrels a day—takes place in the south, far from the current insurgency, analysts say……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

OPEC member and gas exporter Algeria is in advanced talks for a first deal to start oil and gas exploration in Tanzania, boosting its ambitions to expand in east Africa, Algerian and Tanzanian energy ministers said on Monday.
“We want to use the Algeria’s experience to explore for oil and gas in several areas in Tanzania,” Tanzanian Energy Minister Sospeter Muhongo after talks with his Algerian counterpart Youcef Yousfi, according to Algerian state news agency APS……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

ETFs and ETPs listed globally gathered US$34.8 Bn in net new assets in June and US$126.6 Bn YTD, which outpaces the previous high of US$106.4 Bn at this point set in 2012. Net flows combined with positive market performance during H1 2014 pushed assets in the global ETF/ETP industry to a new record high of US$2.64 Tn invested in 5,359 ETFs/ETPs, with 10,401 listings, from 219 providers listed on 59 exchanges, according to preliminary data from ETFGI’s end H1 2014 Global ETF and ETP industry insights report.
The ETF/ETP industry in most countries and regions reached new record highs in assets at the end of Q2 2014, including: in the United States US$1.86 Tn; in Europe US$470 Bn; in Asia Pacific ex Japan US$ 96.7 Bn; in Japan US$90.1 Bn; in Canada US$65.7 Bn and in the Middle East and Africa US$43.5 Bn……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Watching ETF flow trends as an indicator of demand for stocks and bonds. It’s an ugly truth about the stock market that past performance is not an indicator of future trends. June was up, but it doesn’t say anything about July. There’s been attempts for years to look at other indicators. In the last few years, a mini-industry has grown up around mining data on ETF flows.
Recently, Deutsche Bank (DB) began publishing reports around a new methodology it calls a Tactical Asset Allocation Relative Strength Signal (TAARSS–a mouthful, I know) that is based on an analysis of ETF flow trends……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

Global macro hedge funds are showing signs of life after weathering a difficult period. These funds, which bet on movements in instruments as diverse as bonds, equities, currencies and commodities, are famous for large returns and big directional trades by the likes of billionaire George Soros. In recent years, the funds’ returns have been hurt by the difficulty of predicting the moves of politicians and lawmakers.
The early signs this year weren’t especially encouraging. Bets that the dollar would continue its rise against the yen and that U.S. Treasury yields would move higher—both trades that worked last year—proved wrong……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

S&PDJI moves DJ-UBS commodity index to equal weighting; Nasdaq partners with ETRE Financial for Reit indexes; Six launches new sustainability index; Stoxx licenses minimum variance to Japan’s Resona Bank.
S&P Dow Jones Indices has launched a broad-based commodity index, the Dow Jones Commodity Index (DJCI), hot on the heels of the expiration of its licensing agreement for the DJ-UBS Commodity Index (DJ-UBS). The DJCI includes 23 of the commodities included in the world production-weighted S&P GSCI, but it weights each of the three major sectors - energy, metals, agriculture and livestock - equally. Individual commodities are weighted by relative liquidity based on the five-year average total dollar value traded……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

The U.S. Treasury is expected to put pressure on China over recent weakness in its currency during high-level meetings in Beijing this week. Before leaving for the Beijing talks, Treasury Secretary Jacob Lew expressed concern over China’s foreign-exchange intervention. Lew said China seemed to follow a path of “two steps forward and part of a step back” on the exchange rate. Although the yuan has appreciated by 14% since 2010, it “still needs to appreciate more, it is undervalued,” Lew said.
Nicholas Borst, an economist with the Peterson Institute for International Economics, said that the U.S. wants to send “an early warning shot” at China in order to put a floor under depreciation. While some of the weakness of the yuan appears to be market driven, some is “policy-driven,” Borst added……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

While Brussels winds down for the summer and preoccupies itself with finding new commissioners, there will be some very busy people left working on a climate policy conundrum that needs to be solved by autumn. We’ll be hearing quite a bit about it, so here at the Brussels Blog we’ve decided to give it a name: The Polish Puzzle.
By October, the EU needs to agree a target for reducing greenhouse gases by 2030. This is one of the most critical numbers for the determining the course of European industry over the next 15 years, so it is not a decision to be taken lightly. The commission has proposed a cut of 40 per cent from 1990 levels……………………………………..Full Article: Source

Posted on 08 July 2014 by VRS |  Email |Print

The Abbott Government is on the cusp of fulfilling its election promise to axe the carbon tax. In another sign of just how capricious the new Senate could be, the Palmer United Party had a change of heart last night and voted with the Government to bring forward debate on the repeal bills.
The tax looks set to be gone within days and Government Ministers claim the uncertain nature of negotiations in the new Upper House shows its budget measures shouldn’t be written off……………………………………..Full Article: Source

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