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Commodities Briefing 05.Sep 2014

Posted on 05 September 2014 by VRS |  Email |Print

Banks, harried by regulators and short of capital, are fleeing the commodities business. Deutsche Bank, Morgan Stanley and UBS either shuttered or shrank their commodities operations last year; this year Barclays, Credit Suisse and JPMorgan Chase have scaled back. But even as they retreat, commodity-trading houses, most of which began life as simple middlemen, are getting ever more deeply involved in the extraction, shipping and refining of raw materials.
The buyer of JPMorgan Chase’s physical commodities unit, for instance, was Mercuria, a ten-year-old firm based in Switzerland that started out trading oil but now owns (or has joint ventures with) oil-exploration companies, oil-terminal and pipeline operators, coal and iron-ore mines and biofuel refineries………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Non-life insurers are betting highly on the Forward Markets Commission (FMC)’s proposed norms relating to commodities trade. According to the norms, warehouse service providers (WSPs) will have to provide full insurance covers to deliverable commodities on futures exchanges.
In draft guidelines issued on August 26, the FMC said WSPs seeking accreditation with the National Multi Commodity Exchange would have to fully cover the value of goods at exchange-approved warehouses for risks such as fires, floods, cyclones, earthquakes, burglaries, thefts, etc………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Considering all the talk about global warming, peak oil, carbon divestment, and renewable energy, you’d think that oil consumption in the United States would be on a downward path. By now, we should certainly be witnessing real progress toward a post-petroleum economy. As it happens, the opposite is occurring. U.S. oil consumption is on an upward trajectory, climbing by 400,000 barrels per day in 2013 alone — and, if current trends persist, it should rise again both this year and next.
In other words, oil is back. Big time. Signs of its resurgence abound. Despite what you may think, Americans, on average, are driving more miles every day, not fewer, filling ever more fuel tanks with ever more gasoline, and evidently feeling ever less bad about it………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

The EU is preparing to bar Russia’s state-controlled oil companies from raising funds on European capital markets, a significant expansion of the bloc’s economic sanctions that would hit some of the country’s largest energy groups, including Rosneft.
The ban, contained in legislation approved by the European Commission and obtained by the Financial Times, would also be applied to Russian defence companies and would add to a similar restriction adopted in July on Russian banks seeking to raise cash in Europe………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Sometimes dubbed the Billionaire Bettor who always gets things right, Andy Hall has come out swinging. Bloomberg, September 3, reports Hall as saying US shale oil (and even shale gas) “are a dud” and will play down and out much faster than most people think. Hall says there is no way that either US or world Oil prices can erode down to around $75 a barrel.
He says barrel prices will be closer to $150 within five years, by at latest 2019. Hall is buying long-dated oil futures contracts to as far out as 2019 on that basis. His nearly “long only” strategy is as simple as that. Early this year, Hall could buy futures contracts for December 2019 delivery of WTI oil at a barrel price of $76………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

The operator of the London gold price benchmark said on Thursday it formally started the process to find a new administrator for the century-old mechanism that will halt the telephone call that four institutions enter twice a day in favour of an electronic solution.
The London Gold Market Fixing Ltd (LGMFL), along with the London Bullion Market Association (LBMA), said in a statement that the choice will be announced in October, and implementation will be complete by the end of 2014………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Gold prices are hovering near a two-month low, but some analysts say there is still value in the companies that mine the precious metal. Gold for December delivery, the currently most-traded active contract, on Wednesday rose by US$5.50, or 0.4%, to US$1,270 an ounce as of 4 p.m. on the New York Mercantile Exchange.
The metal’s stagnant price has raised questions about the financial health of gold miners, which require gold to remain at a certain price to profitably mine it. But CIBC World Markets said some gold companies offer attractive value even at current prices………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery on Thursday continued to drift lower, trading at a near 3-month low. In afternoon trade gold was changing hands for $1,266.00 an ounce, down more than $4 an ounce compared to yesterday’s closing price.
The latest retreat in the price pares the metal’s gains for the year to under 5%. The 2014 low for gold is $1,244 reached June 2, but many analysts believe the gold price has much further to fall………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Gold pays no income, so it’s a losing bet if the returns from cash or equities are strong. Gold is often described as a safe haven investment but its recent price collapse shows that it can also be highly dangerous. The gold price soared in the wake of the credit crunch, when the global financial system teetered on the edge of collapse, to top $1,900 an ounce three years ago.
Some investors predicted it could hit $3,000 or $4,000, but the price dropped 28% last year as the global economy showed signs of recovery. With the price hovering at around $1,300, anybody who bought at the top of the market will have learned to their cost that gold does not always glister………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Whenever a geopolitical crisis rears its head—such as the one slowly unfolding between Russia and Ukraine—Wall Street can be quick to tie gold’s daily moves to any belligerent or peaceful headlines. Many turn to bullion in times of turmoil, viewing gold as a safe haven asset that rises when situations gets scary.
But according to gold experts, that betrays a basic misunderstanding of how the gold market works. “I don’t think the geopoliticals are doing anything for gold. And the only time they do is if they destabilize the equity market,” said Edward Meir, senior commodity consultant with INTL FCStone………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Australian gold production totaled 9.1 million ounces in 2013-2014, up 9% from 2012-2013 output and worth some A$12.5 billion at the current spot price, said Melbourne-based Surbiton Associates. Production for the June 2014 quarter was also up as Australia’s gold output totaled 71 tonnes (2.3 million oz) compared to 67 tonnes in the June 2013 quarter.
“Don’t be fooled by the good news of higher gold output,” said Dr. Sandra Close, Surbiton Associates’ director. “While some new operations have opened, others have closed, so the majority of the rise is due to an overall increase in ore grades as the industry responds to harder times.”……………………………………….Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Although it’s been relatively quiet due to the holiday season, Palladium has been the winner this week, while for GoldMoney customers, Silver has also outshone its glittering yellow cousin. Dealing Manager at the online precious metals trader, Kelly-Ann Kearsey, said: “Activity has been as you’d expect for this time of year, although it’s picked up on last week and we’ve still got more buyers than sellers. Among our customers we’ve seen some significant silver purchases, which have gone into the eastern vaults, most particularly Hong Kong, but muted interest for gold.”
Geo-political concerns are undoubtedly one of the major influencers on the market at the moment. Despite the strength of the dollar the concerns have supported the gold price at the 1300 level………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

INTL FCStone said that it sees a gradual grind lower in copper during September, with potential for other London Metal Exchange base metals to soften as well. The LME base metals group has been withstanding the weakening macro picture out of China quite impressively, but INTL FCStone is not sure how much longer it will be able to shrug off the poor numbers.
INTL FCStone thinks zinc and copper are likely the most vulnerable, and although aluminum looks very solid on the charts, it is also getting quite overextended in light of the fact that production growth, particularly from China, continues to outpace domestic demand………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Gold bullion and related exchange traded funds are under pressure as a stronger U.S. dollar makes purchases more expensive and demand dips overseas. The SPDR Gold Shares has declined 1.8% over the past month but is still up 5.2% year-to-date.
COMEX gold futures are currently trading around $1,266.8 per ounce. Bullion prices have been dipping as the U.S. dollar index rises to a near 14-month high, with the euro currency crossing below the psychological $1.3 level Thursday. Gold becomes more expensive for foreign investors as the USD strengthens………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

As we enter the last trimester of the year it looks to me like the stock markets might be setting up for a fall rally. The main reason is that many markets have spent a lot of time consolidating in 2014. It’s more likely those consolidations lead to a resumption of the trend higher before they put in a major top.
Biotech is one of these markets for instance. I think healthcare and biotech stocks might be setup for big gains going into the fall and winter. The iShares Nasdaq Biotech (NASDAQ:IBB) ETF has completed a large cup and handle consolidation pattern in 2014 and looks set to explode higher if a fall rally kicks off………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

So far this year we have witnessed a downward trend in iron prices while the prices of non-ferrous metals such as aluminum and copper regained lost ground and have been on the rise since. This is in stark contrast to the 2013 scenario, when iron ore prices enjoyed a bullish run unlike other base metals, thanks to heightened demand from steel end-consumers, particularly in the Chinese construction sector.
Let us have a look at what led to the disparity in circumstances: Iron: The commodity has lost 33% of its value so far this year impacted by myriad reasons like excessive inventory, abundant supply of iron as mining companies increased their output, as well as tight credit and slow economic growth in China………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Precious metals have always been a solid investment choice, especially in times of economic uncertainty. They also offer superior protection against inflation, which cannot be said of almost all other reasonably liquid assets.
Consequently, they outperform other sectors during a market downturn, as they have demonstrated in the recent past. Since they hold well diversified portfolios and are professionally managed, precious metals funds offer the most stable option for investments in this sector………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

Reddit’s r/Bitcoin is a popular forum where BTC enthusiasts shared news links and anti-establishment jokes. The site was so influential among the community that a recent book about Bitcoin called The Anatomy of a Money-like Informational Commodity discussed the viability of using the number of registered members of the forum as a way to gauge the market sentiment.
One of the most upvoted post on the channel yesterday is one entitled Worst Night of My Life, in which a Bitociner recounted how his family responded after they discovered that his parents’ house broken into with the safe stolen by the burglars………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

European carbon prices fell for a third consecutive day on Thursday, hitting a three-week low on selling by industrials and speculators and as the European Central Bank cut interest rates to combat flagging growth in the euro zone.
Front-year EU Allowance futures, trading on ICE, stood at 6.15 euros/tonne by 1403 GMT, after slipping to an intraday low of 6.09 euros moments earlier - a drop of 25 cents or 3.9 per cent from Wednesday’s settlement………………………………………..Full Article: Source

Posted on 05 September 2014 by VRS |  Email |Print

China will launch its eagerly awaited national Emissions Trading Scheme (ETS) in 2016, an official anticipated to Reuters last Sunday. Once implemented, this market for carbon permit trading will become the biggest in the world, helping the largest greenhouse emitting nation to axe pollution.
China is already experimenting with seven regional carbon market pilots, which were announced in 2011 and operative over the last two years. Each pilot covers a large city - Beijing, Tianjin, Shanghai and Shenzhen - or a province - Chongqing, Guangdong, and Hubei. Together the projects have accounted for almost 4 million tons of carbon emission quotas so far, according to the National Development and Reform Commission, making China the world’s second largest carbon trading market following the European Union’s EU-ETS………………………………………..Full Article: Source

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