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Commodities Briefing 01.Sep 2014

Posted on 01 September 2014 by VRS |  Email |Print

As the year 2014 got underway, it looked as if commodities in general, and energy, in particular, were headed for a boom year. And with an accelerating economic recovery, U.S. Treasury interest yields surprisingly dropping to post-recession lows, along with deteriorating geopolitical turbulence, the first quarter did not disappoint.
In fact, the newly-christened Bloomberg Commodity Index (renamed from DJ-UBS Index) reached the best quarter since the beginning of the 2008 recession. In doing so, it far surpassed the stock market’s S&P 500 performance during the first quarter 2014. But by the middle of May, a remarkable reversal set in, and has followed with a downdraft that brought the Bloomberg Industrial commodities down from the first quarter’s 21% growth peak to a negative 10% drop into the early part of August, with no rebound in sight………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Investors have long known that adding a dash of commodities to their portfolios can be beneficial to their wealth. The only problem has been implementing this strategy. It’s difficult to know which commodities are a good bet, and broad commodities-focused indexes are inadequate. Investors also worry that futures prices don’t always track the spot market.
But veteran economist David Ranson, at Cambria, Calif.-based HC Wainwright & Co. Economics, might have a solution to all these potential problems: investing in just four commodities………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Australia is rich in commodities, including fossil fuel and uranium reserves. It is one of the few countries belonging to the Organization for Economic Cooperation and Development (OECD) that is a significant net energy exporter, sending nearly 70 percent of its total energy production (excluding energy imports) overseas, according to data from Australia’s Bureau of Resource and Energy Economics (BREE).
However, Australia retains a surplus of all its energy commodities except oil. Australia’s dependence on oil imports has increased to fill the growing gap between domestic consumption and production………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

OPEC crude oil production increased to a one-year high in August, led by surging output in Nigeria, a Bloomberg survey showed. Production by the 12-member Organization of Petroleum Exporting Countries rose by 891,000 barrels a day to 31.033 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 80,000 barrels a day lower to 30.142 million because of changes to the Nigerian and Iranian estimates.
Nigeria, Saudi Arabia and Angola led gains as new deposits came online, security improved and field maintenance programs ended. Iran and Venezuela were the only members to record production declines………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Hedge funds increased bullish positions on crude oil for the first time in more than a month, benefiting from a rally before the Labor Day holiday weekend.
Money managers increased net-long positions in U.S. benchmark West Texas Intermediate oil by 0.6 percent in the seven days ended Aug. 26, boosting bullish wagers from a 16-month low, Commodity Futures Trading Commission data showed. WTI climbed 2.5 percent last week, the first gain since July………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

A new report from the US Energy Information Administration highlights the extraordinary rise in US liquid fuel production over the past few years and how it has helped off-set unplanned supply disruptions which are running at the highest level since the Iraq-Kuwait war some 24 years ago.
The report has done a very good job in clearly describing what we already knew, namely that oil markets since 2011 have become less price sensitive to actual and potential supply disruptions. Especially to those numerous geopolitical events that has taken place since the Arab spring and the overthrow of Libya’s Muammar Gaddaffi in 2011………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

For those following the world oil production situation, it has been clear for some time that the only factor keeping global crude output from moving lower is the continuing increase in U.S. shale oil production, mostly from Texas and North Dakota. Needless to say, once the fabled “peak” comes oil and gasoline prices are certain to move higher, triggering a series of economic events – most of which will not be good for the global economy.
Thus the key question is just how many more months or years production of U.S. shale oil (more accurately call light tight oil) will continue to grow. Many have answers to this question ranging from the “next year or so” on out the middle or end of the next decade………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

The U.S. energy markets tumbled this summer due to a bearish combination of unusually mild weather, the strengthening U.S. dollar, and rising supplies. West Texas crude oil dropped by approximately 14 percent and Henry Hub natural gas fell just over 20 percent.
In the past couple of weeks, both crude oil and natural gas have stabilized and broken above key technical resistance levels – a possible sign of a change of trend………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

After gold’s rally in the first half of the year beat gains for commodities, equities and Treasuries, bullion is back to being out of favor with investors. Hedge funds cut their bullish gold bets for the fourth week in five, sending holdings to a two-month low, U.S. government data show. Open interest in New York futures is the smallest in five years, and assets in global exchange-traded products backed by the metal in August posted the biggest monthly drop since May.
Gold prices fell 2.6 percent since June, heading the first quarterly loss this year, as signs of faster U.S. economic growth bolstered the case for the Federal Reserve to raise interest rates, cutting demand for an inflation hedge. Holdings through ETPs slumped for the fourth time in five months as escalating violence from Ukraine to the Middle East wasn’t enough to revive buying………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Africa’s biggest fund manager favors South African platinum equities over those of gold, betting against the price performance of the metals and the share performance of the companies that mine them..
The Pretoria, South Africa-based Public Investment Corp., which manages the equivalent of $1.5 billion, is the biggest or second-largest shareholder in South Africa’s four biggest gold producers and two largest platinum miners, according to data compiled by Bloomberg………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Positive seasonal factors are now in effect for precious metals and this should help push prices higher in the period ahead. A stronger dollar continues to limit gold and silver price gains, however, a dovish Federal Reserve could cause the dollar rally to reverse course. Safe haven demand remains strong and this too could boost demand precious metals this fall.
Gold and silver prices rose together for the first time in seven weeks, but the metals stayed within well-defined ranges during quiet, end-of-summer trading, setting the stage for positive seasonal factors and possibly rising prices in the period ahead. The strengthening dollar continues to be a major impediment to higher metal prices and dollar bearish developments are sorely needed for any sustained gold rally this fall………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

After a long bull move gold is at a crossroads. Depending on who you talk to, the 15-year bull market in gold has ended or is taking a breather preparing for its next leg up. The massive inflation predicted from the enormous liquidity poured into the system by central banks around the world has not arrived so gold has pulled back from its 2011 high. Gold is the most followed and globally traded commodity. But not just by retail investors watching late night TV. While there is no more gold standard, governments maintain a reserve quantity of gold.
Although gold has industrial applications, gold is a monetary asset and its prime driver is investment demand. We take a look at the top reported official gold holdings of individual countries (as of June 2014) based on information from the World Gold Council………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

The purpose of a taboo is to avoid destruction. Those who do not respect the taboos of a culture endanger the cultural identity. Therefore, disregarding the taboos produces self-destruction and/or destruction.
Many of you read Jeff Clark’s (of Casey Research) recent piece outlining the reasons why silver prices will likely move higher. It was a great piece from an organization with great reach. But it missed the unmentionable elephant in the room. Here is a summary in all its bullish glory………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

The ETF industry has a new favorite product: “Quality” ETFs, which focus on stocks that should hold up better in a downturn. How to tell them apart. “Quality stock investing” is the latest marketing meme in ETFs. But for some investors, it’s a joke: How do you define “quality”?
“Quality is the stuff I own, and crap is the stuff I don’t own,” quips Doug Sandler who, as co-manager of the RiverFront Moderate Growth Income fund, owns one of the 18 quality ETFs, most of which have launched in the past three years. “When you hear managers say ‘it was a low-quality rally,’ it means all the stuff they didn’t own worked. It’s a nebulous term.”……………………………………….Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

The markets managed to finally hurdle the psychologically significant 2,000 mark in the S&P 500 Index this week. The broad large-cap index remained largely flat, however, after Monday’s strong leap forward.
As a result, traders are digesting both technical data and geopolitical headlines to divine any clues about the next move in stocks. The following ETFs represent a sample of the best and worst performing funds over the last five trading sessions………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

The end of class action lawsuits in the United States against the London Metal Exchange will open the way for a long-promised reform of the aluminium warehousing issue and allow the bourse to focus on its expansion in Asia, according to brokers.
An LME spokeswoman told the South China Morning Post the London-based commodities exchange was pleased to have been granted immunity from the aluminium class action lawsuits and would continue to carry out its warehouse reform plans………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Ecuador is planning to create what it calls the world’s first digital currency issued by a central bank which some analysts believe could be a first step toward abandoning the country’s existing currency the US dollar.
The electronic money which Central Bank officials say they expect will start circulating in December does not have a name and officials would not disclose technical details though they said it would not be a crypto-currency like Bitcoin. The amount of the new currency created would depend on demand………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

More than 40% of people from across Britain do not believe there should be a currency union if Scotland becomes independent, according to a poll. The Springboard UK poll for the Sunday Express carried out in England, Wales and Scotland found 44% of those asked the question “If Scotland votes for independence should there be a currency union?” replied with “No”.
A total of 22% welcomed sharing the pound while the remainder said they were not sure. However, the figures for Scotland revealed 60% of those polled were in support of a currency union, 21% were opposed and 19% did not know………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

China plans to roll out its national market for carbon permit trading in 2016, an official said Sunday, adding that the government is close to finalising rules for what will be the world’s biggest emissions trading scheme.
The world’s biggest-emitting nation, accounting for nearly 30 percent of global greenhouse gas emissions, plans to use the market to slow its rapid growth in climate-changing emissions. China has pledged to reduce the amount of carbon it emits per unit of GDP to 40-45 percent below 2005 levels by 2020………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

Thomson Reuters predicts without emissions trading scheme reform and 2030 climate targets EU Allowances may remain at €14. EU carbon prices are set to more than treble to an average of around €23 a tonne during the 2020s, according to a new analysis.
A new Thomson Reuters report on EU energy and climate policy published last week forecasts that stricter regulations driven by reform of the bloc’s emissions trading system (ETS) will force up the price of permits known as EU Allowances (EUAs) from around €6/t today………………………………………..Full Article: Source

Posted on 01 September 2014 by VRS |  Email |Print

As the global economic recovery is continuing at varying speeds equities remain the most attractive asset class mid-term, a report by Bank J. Safra Sarasin said. The US leads the global cycle with growth significantly higher than in Euroland.
Euroland is hampered by high debt levels, ongoing economic imbalances, adverse geopolitical headwinds like the crisis in Ukraine and the urgent need for structural reforms, the report said.Inflation remains low globally, preventing a premature increase of policy rates and a bond market crash. The spectre of deflation is particularly strong in Euroland and needs to be addressed by demand and supply side policies………………………………………..Full Article: Source

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