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Commodities Briefing 25.Aug 2014

Posted on 25 August 2014 by VRS |  Email |Print

When asked what the current geopolitical landscape spells for commodities, Jeb Handwerger, editor of Gold Stock Trades says that all the uncertainty in the world right now is fuel for the precious metals and the energy sectors. Looking back on history, Jeb claims that the invasion of Iraq in 2003 proved to be a huge boost for the junior resource companies and precious metals.
Jeb points out that everyone that is in the natural resource sector, are fortunate, because they can take advantage of all of the uncertainty in the world right now. Some of the charts of the junior miners are showing an inverse ‘head and shoulders pattern’, equal to a bottoming pattern, and Jeb believes we are at a potential turning point for the junior mining equities. This could signal a final turn from a secular bear market that has lasted since 2011, to beginning of an uptrend which could last 4 to 7 years………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

It has been a rocky summer for global equity markets with escalating geopolitical risk and some investors fearing the consequences of interest rate rises, the natural resources sector has actually strongly outperformed global equities.
Base metals prices for example have moved higher across the board driven by positive data from China and further signs that their economy continues to stabilise. It has been a positive for commodities that China sentiment is improving on the back of the government’s continued reform measures. In particular, relaxation of restrictions in the China property market has eased pressure on the iron ore price. Platinum and palladium prices have also fared much better in recent weeks, as those markets have remained tight………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

It’s quite the strange duality when you think about it. Undoubtedly, water is the single most important thing on earth. Ok, so maybe it’s the second most important thing (sorry, oxygen) – but you get the idea.
If I go to the store and there’s no bread, I would be shocked, and certainly annoyed, and that’d be about it. But, if I turn on my faucet and nothing comes out, I’m about 15 hours away from turning into Mad Max – and so are you………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Speculators are the least bullish on U.S. crude oil prices in 16 months as refinery maintenance weakens demand at a time when Libya and Iraq are swelling global supplies.
Futures dropped a fifth consecutive week after money managers reduced net-long positions in West Texas Intermediate, the U.S. benchmark grade, by 14 percent in the seven days ended Aug. 19, the Commodity Futures Trading Commission said………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

At first glance, the future may look pretty bright for the large Western integrated oil companies like ExxonMobil, BP, Royal Dutch Shell, and Chevron – collectively known as Big Oil. Oil prices have risen dramatically over the past decade and continue to hover just above $100 per barrel, while US natural gas prices have rebounded nicely since hitting a low of under $2 per Mcf in the spring of 2012.
But despite relatively high commodity prices, there are some very serious threats facing Big Oil companies – challenges that could meaningfully constrain their long-term earnings power, ability to grow their dividends, and share price performance. Let’s take a look at three of the biggest ones………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

In a little over two months, the price of crude oil (Brent) has slipped from $115 a barrel to near $100 a barrel, a 14-month low. This is thanks, in large part, to the perceived change in geopolitical conditions which had pushed up prices in the first place. In mid-June, the rapid advance of the Islamic State of Iraq and Syria (ISIS) had raised the spectre of supply shocks from Iraq, the second largest oil producer among the OPEC nations. This resulted in the price of Brent shooting up from $108 a barrel to $115 a barrel in quick time.
But then, with the realisation that the major oil producing fields and ports in the southern part of Iraq were not at imminent risk of being overrun by the ISIS, prices started moderating………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Brent Crude oil reched 2014 lows last week as light quality crudes swamped the market, according to Barclays. In a weekly report, it said that rapid increase in Libyan production, amid weak demand, has thrown the market off balance. However, OPEC may readjust production prior to the November meeting.
In recent months, Libya’s rebound in production has surprised market participants, rising from 220 kb/d in May to over 550 kb/d in late August. With domestic demand at roughly 150 kb/d, around 400 kb/d is being marketed for export. The flood of Libyan barrels into the global market has pressured other light grades, including WAF and North Sea crudes………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

The average price of a gallon of gasoline in the United States fell by 4 cents in the past two weeks as crude oil prices continued a broad decline, according to the Lundberg survey released on Sunday. Prices fell to an average of $3.48 per gallon for regular grade gasoline, according to the survey conducted Aug. 22. That extends a decline in prices to nine weeks, survey publisher Trilby Lundberg said.
“This is really a reflection of the crude oil market, and crude oil is by far the biggest component in the retail price of gasoline and is the chief determinant as to directional movement in the retail price of gasoline,” said Lundberg………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

A majority of participants in the weekly Kitco News Gold Survey expect gold prices will continue to soften as improving U.S. economic news and the Federal Reserve making broader hints about raising interest rates next year may weigh on values.
Out of 37 participants, 23 responded this week. Of those, eight see higher prices, 12 see lower prices and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Frank Holmes, CEO and CIO of US Global Investors, a company known for its focus on the natural resources sector, says he believes the price of gold should be $1,400 per ounce, according to an interview on Ceo.ca. Holmes mentions several reasons for his bullish stance on the yellow metal, including economic concerns in Europe and China that trigger stimulus.
“We saw, three weeks ago, Germany go to a negative real interest rates. Well, when that happens all of a sudden you start seeing gold rise in euro terms,” Holmes tells interviewer Shannon Nelson………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

If one looks at a longer term chart of the last two years it’s very clear that gold is being capped at certain levels, and those levels are slowly forcing gold lower and lower. Each one of these manipulation zones are being defended successfully and that has some serious connotations going forward.
This all started right after the announcement of QE3. Gold was driven below $1700 and held below that level for 2 months. This got the ball rolling so to speak, it broke an intermediate cycle and started the bear market. Of course we all remember the call by GS to sell gold short followed by the premarket attack on April 12 that took out the stops below $1520 leading to a waterfall decline. That had to be one of the most blatant cases of manipulation in market history………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

The price of rhodium, a metal used in car pollution-control devices, surpassed that of more-widely used platinum for the first time in 31 months as a mine strike in South Africa reduced supply amid rising demand.
The CHART OF THE DAY shows rhodium surging to $1,475 an ounce on Aug. 14, surpassing platinum for the first time since 2011 after overtaking gold, according to price data compiled by Bloomberg. Rhodium was at $1,400 as of Aug. 22, up 57 percent from its nine-year low in December………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Although business is transacted, there are no records and the government can’t levy taxes. This is the character of the underground economy in Korea, where gold is the commodity of choice. Transactions are made through a direct exchange of bullion or by cash, and the total value not subject to taxation is estimated at 300 billion won ($294.8 million) a year.
In an attempt to tap into that source of revenue, the government in March opened the nation’s first gold exchange market. After five months, are there signs of progress toward making the underground market more transparent?……………………………………….Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

In your previous Gold Report interview of Dec. 31, 2013, you predicted 2014 prices of $1,400 per ounce ($1,400/oz) for gold and $25/oz for silver. Do you think that gold and silver can still meet those prices this year?
Those figures referred to the high side of the anticipated trading range for both metals. Today, our prediction for the high side in 2014 is $1,350/oz for gold and $22/oz for silver. In other words, we see silver potentially trading up to $22/oz this year but do not imply in any way that we expect silver to average $22/oz this year………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Traders buy and sell assets everyday. For example, despite ridiculously high P/E ratios and a huge gain over the last 5 years, there are traders who continue to purchase Biotech stocks every single day. On the other hand value investors are different. Their main goal is to buy an asset on cheap, or as the old adage states “buy low, and sell high”.
The problem value investors face is figuring out what cheap is, and when low is low enough to be the bottom (or at least close to it so the drawdown is limited). If you are a value investor today, surely you would be looking to allocate at least a small portion of your portfolio towards the precious metals sector………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Copper is mounting a comeback as investors grow more confident about the global economy. Prices rose 3.3% last week, after a major commodities trading house surprised markets with an upbeat forecast for copper demand in the second half of this year, while data from the U.S. show an economic rebound is gaining traction.
Some investors also believe China, the world’s largest consumer of the metal, may be preparing to launch a second round of economic stimulus, which could further boost copper demand. Copper’s rally has nearly reversed a sharp drop recorded earlier this month, although prices are still down about 7% for the year………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

In May, BNP Paribas changed the benchmark of its broad-basket commodity ETF, namely the S&P GSCI Capped Component 35/20 THEAM Easy ETF, for the sole purpose of complying with ESMA diversification guidelines. The replacement index applies caps on a ‘component’ rather than a ‘commodity’ level, effectively reducing the index’s exposure to the energy sector.
This occurs because an index component such as oil, may include more than one, highly-correlated individual commodity such as Brent Crude, WTI Crude or Gasoil. Therefore a cap at component level restricts the combined weight, rather than individual weights, of commodities………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

With earnings season pretty much over and second-quarter profits priced into the stock market, we thought we’d undertake something of a midyear checkup, looking into top ETF picks positioned to perform well through the remainder of the year.
The ever-present risk of a destabilizing shock notwithstanding, the indicators mostly lend themselves to sustaining the bull market. The U.S. economy is perking up, inflation remains low, and interest-rate policy remains indefinitely accommodating, all of which bode well for stock prices………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Some of the smartest investors are bad role models in their choice of exchange-traded funds, which are often celebrated for their low costs. The deadline for large investment managers to disclose portfolios to the Securities and Exchange Commission recently passed, and investors have pored over their buys and sells. One instructive part of how the big money invests gets ignored, though. A lot of hedge funds, and institutions in general, own some of the most expensive ETFs.
Hedge funds likely have their own reasons for holding certain ETFs when similar ones are cheaper. They need to know they can trade big stakes and still get good prices, so they want ETFs with lots of trading………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

Strong economic data from the US saw gold prices drop sharply last week to hit $1,281/ounce, down 1.8 per cent. The US Commerce Department said that the number of building permits issued in July increased by 8.1 per cent to 1.052 million units from 9,73,000 in June. It also said that the US housing starts soared by over 15 per cent in July, much above the market expectations of an increase of 8.6 per cent.
The FOMC minutes released on Wednesday showed that US officials were optimistic about the recovery in the job market. As this hinted at a sooner than expected increase in interest rates, gold got a thumbs-down from investors………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

The eminent economist Peter Jay has claimed Alex Salmond’s plans for an independent Scotland without its own separate currency amounts to “total madness”. Speaking at an Edinburgh Business School seminar, the former non-executive director of the Bank of England argued that the whole point of being independent was to have a separate currency, so that Scotland could have greater control over economic policy.
Salmond believes that an independent Scotland should share the pound with the rest of the UK in a formal currency union that would see the Bank of England ­remain responsible for monetary policy. A currency union would also see Scotland would have the same exchange rate as the rest of the UK………………………………………..Full Article: Source

Posted on 25 August 2014 by VRS |  Email |Print

China, the world’s biggest emitter of greenhouse gases, said it will allow foreigners to trade carbon permits in Shenzhen, making it the nation’s first emissions exchange to welcome outside investors. The Shenzhen exchange has yet to set the date or finalize other entry procedures for foreign investors. The State Administration of Foreign Exchange has allowed foreign participation in principal, according to a statement today on the website of the China Emissions Exchange.
The southern city of Shenzhen near Hong Kong started carbon trading last year as the first of seven pilot programs in China. The exchanges, constituting the world’s biggest emissions trading system after Europe, may be a precursor to a nationwide system………………………………………..Full Article: Source

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