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Commodities Briefing 11.Feb 2011

Posted on 11 February 2011 by VRS |  Email |Print

Tom Albanese From Telegraph: Rio Tinto has performed a most remarkable turnaround. The miner entered the financial crisis choked with $40bn of debt after its top of the market acquisition of Alcan. At the beginning of 2009 that figure was still $39bn. A year later it was down to $18.9bn, and as we enter 2011 it’s down to $4.3bn.
A $15bn rights issue and disposals worth a further $11bn have helped address Rio’s debt problem. But for every giant hole in the ground it digs, the copper, coal and iron ore hauled out are creating a rising mountain of cash for Rio thanks to record commodity prices……………………………………….Full Article: Source

Posted on 11 February 2011 by VRS |  Email |Print

From Dow Jones: The increased activity of the speculative community in commodities has a strong impact on price volatility, the chief executive of Rio Tinto PLC (RIO) said Thursday.
Speaking on a conference call to analysts, Tom Albanese said just as there has at times been a “mad rush” to get into commodity markets through investment vehicles like exchange-traded funds, there will more than likely be a corresponding rush to get out……………………………………….Full Article: Source

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From Citywire.co.uk: Emerging economies’ demand for natural resources is growing at such a rapid pace that commodity prices are likely to become increasingly volatile and vulnerable to ‘shocks,’ Barclays Capital has warned.
Amrita Sen, commodities analyst at the investment bank, made the comments after world food prices hit record highs and a slew of mining companies reported bumper profits on growing demand from markets in Asia……………………………………….Full Article: Source

Posted on 11 February 2011 by VRS |  Email |Print

From Wallstcheatsheet.com: The mainstream press loves to talk about emerging market demand as a cause of inflation, rising prices and the bull market in commodities. Did emerging markets suddenly begin demanding food, energy and metals in 2001? What about five and ten years earlier? Its a rhetorical question. The conventional wisdom is wrong.
Inflation is driven by low interest rates and lax credit conditions. Severe inflation is driven by the inability to finance or grow out of debt……………………………………….Full Article: Source

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From Reuters: The Bank of Canada warned on Thursday against hasty reform of commodity markets, carving out its position for a G20 meeting in France where officials will discuss curbs on commodity speculators.
John Murray, a deputy governor at the central bank, said before tightening regulations world leaders should first determine how much of commodity price moves are caused by speculative trading and whether there is a market failure or serious economic harm……………………………………….Full Article: Source

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From Reuters: Traders in physical commodity markets from grains to oil to sugar and gas are worried that a U.S. government push to regulate opaque over-the-counter trading will disrupt their business.
At issue is scrutiny by the Commodity Futures Trading Commission on trading by cash merchants of contracts for things like grain barges or oil tank cars, as “paper” commodities……………………………………….Full Article: Source

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From Indiatimes.com: Commodity markets are routinely regarded as fundamental economic institutions and the long-standing and quite varied ethnic and linguistic perspectives on traders are often overlooked.
In market yards, one often encounters enquiries about one’s community and the place of origin after the initial introduction. Further, on exploring the softer dimensions of trade, one can observe a subtle ‘in-group’ favouritism. It seems to point towards a tacit understanding or norms about how to treat members from the same community……………………………………….Full Article: Source

Posted on 11 February 2011 by VRS |  Email |Print

From Seekingalpha.com: Rogers said: What you have to do is you have to find things that will protect your assets real assets: Silver, rice, natural gas; something that will hold its value in an inflationary time … I do it two ways: I own gold and silver coins in my hand in my house in my box; I also own gold and silver futures that’s another way to do it.
Bernanke, he does not understand finance, economics and currencies; all he understands is printing money and now we have giving him the printing presses he has run those printing presses as fast as he can………………………………………Full Article: Source

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From Commodity Online: Legendary investor, economist and commodities analyst Marc Faber says that prices of precious metals, especially gold and silver, could fall, but investors need not worry because the dip in the prices of these commodities will be shot term.
In his February outlook on commodities, Faber who is better known as the editor and publisher of the Gloom Boom and Doom report said that commodities have reached the parabola stage……………………………………….Full Article: Source

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From Mineweb.co.za: While inflation risks remain benign in most of the developed world, what happens in the developing world and, in particular China is going to be crucial for commodities prices and gold in particular.
But what happens in China is critical. The rise of consumers in that country, as well as costs like wages will be transformative, Hale says. This poses tests for commodity markets. But in the long there is a demand for gold and other commodities that is, for now, unstoppable……………………………………….Full Article: Source

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From Hardassetsinvestor.com: What’s good for the goose is good for the gander. That old maxim was at the heart of a reader’s comment on last week’s feature, “Options Offer Clues To Gold’s Direction.”
If you saw last week’s piece, you’ll recall its premise: Compression in the CBOE Gold ETF Volatility Index pointed to an eventual breakout. The odds of an accompanying upside price trajectory in the SPDR Gold Shares Trust were then compared with those of a decline……………………………………….Full Article: Source

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From Resourceinvestor.com: Diamonds were hard-hit by the global economic dislocations of 2008-2009, along with other asset-class commodities including gold, but the industry is now in a recovery phase that looks poised to accelerate.
Diamonds are a relatively small asset class (along with other types of precious stones, jewelry and fine art), but they rank higher than other asset classes in terms of portability. Further, diamonds are more liquid than some asset classes, notably real estate and fine art, although not nearly to the same degree as large traditional asset classes such as equities, bonds and exchange-traded commodities……………………………………….Full Article: Source

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From Theglobeandmail.com: With political tensions in Egypt roiling global crude markets, OPEC producers are unwilling to boost supplies until bulging global inventories are reduced, a tough stance that will provide little relief from prices that have hit two-year highs.
The Organization of Petroleum Exporting Countries has already increased production marginally – mainly from Iraq – but a former official of Saudi Arabia’s state-owned oil company Saudi Aramco, says the cartel is reluctant to responding too aggressively to higher prices fearing more production would swell already bulging inventories……………………………………….Full Article: Source

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From Omanobserver.om: The Opec oil cartel raised yesterday its 2011 global oil demand growth estimate in view of cold winter weather and a “sturdy” economic outlook, particularly for the United States and China.
The Organisation of Petroleum Exporting Countries said it was pencilling in world oil demand growth of 1.4 million barrels per day (bpd), or 1.62 per cent, to 87.74 million bpd for this year, compared with 1.23 per cent previously……………………………………….Full Article: Source

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From AFP: The global recovery will drive oil prices dangerously higher this year, possibly to the level where they could push the economy in a marked slowdown, the IEA warned Thursday.
The prospect of rising inflation, driven by oil and other higher commodity prices, coupled with political instability in the Middle East was an added concern, it said……………………………………….Full Article: Source

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From WSJ: The likely sale of New York Stock Exchange parent NYSE Euronext to Deutsche Börse of Frankfurt, Germany, is playing as a blow to America’s capitalist pride, and understandably so. It’s painful at first blush to imagine ownership of the famous symbol of American financial markets transferred out of New York City.
Yet the merger is itself a story of inevitable capitalist change and how no country or institution can take its dominance for granted……………………………………….Full Article: Source

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From Seekingalpha.com: The United States Commodity Index Fund (USCI) has now been trading for half a year, and I thought I would take a look at how it’s been doing. The United States Commodity Index Fund tracks the SummerHaven Dynamic Commodity Index (SDCI).
This index attempts to manage both spot returns and roll returns by selecting which commodities it has exposure to and also the tenor of the futures……………………………………….Full Article: Source

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From Reuters: A bipartisan group of 101 U.S. lawmakers in the House of Representatives launched a new bid on Thursday to pass legislation aimed at pressuring China to let its yuan currency rise in value.
The same proposals cleared the House last year but died in the Senate. If approved this time, they would clear the way for the Commerce Department to treat currencies deemed to be undervalued as an illegal subsidy under U.S. trade law……………………………………….Full Article: Source

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From Guardian: The UK government has made more than €1bn (£844m) selling carbon permits to polluting businesses, and could make billions more each year for the next decade, research published on Thursday shows. But despite pressure from the European Union, none of the revenue raised is being directed towards green projects.
On Thursday, the UK netted around €63m from its latest auction of permits, the first since trading was halted for two weeks after hackers stole around €40m by exploiting flaws in the carbon trading system……………………………………….Full Article: Source

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From Reuters: Britain’s revenues from auctioning European Union carbon permits could swell to over 64 billion euros ($88.94 billion) from 2013 to 2020, a report said.
On Thursday the government sold 4.4 million EU emissions permits in one of its regular auctions. Since it began auctions in November 2008, it has raised over 1 billion euros……………………………………….Full Article: Source

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From AFP: South Korea may not set up a carbon credit system by 2013 as planned because it needs more time to create a viable formula for reducing emissions without hurting growth, a top official said Thursday.
“There is a need to carefully examine what kind of side effects a carbon trading system will have and see if it can be effective in reducing emissions levels,” Knowledge Economy Minister Choi Joong-Kyung told reporters……………………………………….Full Article: Source

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