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Commodities Briefing 09.Aug 2011

Posted on 09 August 2011 by VRS |  Email |Print

Commodities, like the broader financial markets, are in something of a spin. Gold is galloping higher at a rate last seen in October 2008, gaining over $70 a troy ounce from Friday’s low, while copper, oil and aluminum are trying to find a footing after the biggest pan-asset class sell-off since the collapse of Lehman Brothers pummeled them lower.
The trigger for the latest weakness is Friday’s downgrade of the U.S. credit rating from AAA to AA+ by ratings agency S&P……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Gold rally may take the yellow metal to $1912 by the end of 2011. If you consider percentage increases on the opening price of each year for the past 2 years, the 2012 opening price would be around the $1912 mark.
John Taylor (Chairman- FX Concepts LLC, manages $8 billion) has also predicted Gold to hit $1900 mark by October. Taylor also predicts that once the recession hits, the prices may tumble to $1,100 per ounce amid broad-based liquidation and strength in the U.S. dollar………………………………………Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Gold could surge to US$2,500 per ounce or higher by the end of 2011, according to J.P. Morgan commodity analysts Colin Fenton and Jonah Waxman.
Before Standard & Poor’s downgraded the United States’ debt rating, they thought spot gold could average US$1,800 by year-end. Now that view looks too conservative, the analysts told clients……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

If we take Michael Kahn’s reading of the tea leaves that the S&P 500 could be targeting around the 1040 level before finding more support, where does that leave precious metals?
After all, if we’re facing a scenario of another 7% drop-off in blue chip stocks, shouldn’t that translate into good tidings for gold and silver investors?………………………………………Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

In recent months, investors have flocked to gold, helping to drive up its price to record highs. Some market watchers have attributed the gold rally merely to investors seeking a short-term inflation hedge or a perceived “safe-haven” investment in the face of a slowing global economy, ongoing global sovereign debt problems and Friday’s downgrade of US debt.
Gold prices, however, have been on the rise for a decade and I believe there are a few key reasons why……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

The last time that general equities were this cheap relative to gold or silver was 1991 and 1987 respectively. Unfortunately, it’s not merely confined to general equities.
Precious metal miners have also plunged to very low valuation levels in recent weeks as they have treaded water even whilst metals prices have been on a tear, and money has been sluicing into exchange traded funds at an unprecedented rate. A basket of senior gold stocks has seen intraday multiples crash to ranges we last saw in the aftermath of the Lehman bankruptcy……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Investment demand for gold has picked up in India with prices of the precious metal rising 15% in a month to touch a new high, but sales of scrap gold are expected to start as households may look to cash in on their family jewelry.
Spot gold hit a record high of $1,715.29/oz in Asian trading Monday, enjoying a rush of safe-haven demand after Standard & Poor’s downgraded the U.S. government’s debt rating……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

The new normal could be $75/oz. silver. In this exclusive interview with The Gold Report, David Morgan, editor of The Morgan Report, maps out a path for silver that could sink as low as $5/ounce (oz.) during the summer pullback and then bounce up to $75/oz. to establish a new base level.
A consistent Silver Institute Production Cost Standard could help investors make smarter decisions during the coming upswing……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Zinc fell to the lowest level since November on the London Metal Exchange as commodities and equities tumbled after Standard & Poor’s cut the U.S. credit rating, spurring concern about demand.
Zinc paced declines in the Standard & Poor’s GSCI Spot Index of 24 commodities, which fell as much as 2.8 percent. The U.S. economy is heading into a “double-dip” recession, Nouriel Roubini, the co-founder and chairman of New York-based Roubini Global Economics LLC ………………………………………Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

The metals have remained under pressure this morning following a sharp deterioration in the macroeconomic backdrop and market sentiment. As growth assets, the base metals are vulnerable to any slowing in economic activity and will therefore remain sensitive to the ebb and flow of economic data.
Zinc and Tin are the metals facing the largest losses and we expect zinc to continue underperforming the complex given its comparatively weaker fundamentals……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

The last thing the base metals complex needed was yet another shock. No, not the downgrading of the US credit rating. As metals trading opened on Monday in Shanghai, things were a bit shaky but not too bad. Copper, for instance, managed to keep above the critical $US9000 a tonne level.
But not for long. Metals plunged afresh on news of the latest downgrading of mortgage lenders Fannie May and Freddie Mac……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Rare earth monopoly China earned a whopping $1.54 billion from the export of the precious minerals in the first half of this year.
According to China Non-Ferrous Metals Industry Association, country’s export value surged 9.3 fold year on year while volume of rare earth ore, metals and mixtures products was steady compared with the same period of last year……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Oil prices will rise again soon even if they fall further in the short-term because governments have no other tools to combat slow growth other than further ease monetary policies, leading commodities trading banks said on Monday.
“For many governments, monetary policy could be the only tool for expansion. Given the broad supply constraints in this (oil) sector, an extensive monetary response would create a rather positive backdrop for commodities,” Bank of America Merrill Lynch said in a research note……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Organisation of Petroleum exporting Countries (OPEC) ministers will hold consultations if the price of crude oil continues to fall but it is too soon to call for an extraordinary meeting, Iran’s representative to the organisation, Mohammad Ali Khatibi has said.
“If the oil price fall continues, the OPEC ministers will consult. But whether there is a need for an extraordinary meeting, it is too early to say, since fluctuation of oil prices is normal in the market,” Khatibi was quoted by the oil ministry’s news agency SHANA to have said……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Members of the Organization of Petroleum Exporting Countries, including key Gulf oil producers, see no need for now to call an emergency meeting or alter output, delegates said Monday, viewing a recent drop in oil prices as normal volatility and still within an acceptable range.
“There is no need for an OPEC meeting now and there has been no consultation between OPEC members over one,” one Gulf delegate said……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

The Jakarta Futures Exchange (JFX) will launch sharia-compliant commodity contracts in September, an official said.
“We plan to launch this new physical trading product in mid-September,” Bihar Sakti Wibowo, a director at JFX said late on Monday……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Dow Jones Indexes is joining other index providers in offering a barometer of the commodities markets aimed at blunting the impact of costly month-to-month contract changes.
The company, owned by exchange operator CME Group Inc. (CME), said the Dow Jones-UBS Roll Select Commodity Index will track a variety of different contract months for the various commodities it follows……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

There is still growing demand for Australia’s commodities, particularly from Asia, despite turmoil in global markets, Australian Resources Minister Martin Ferguson said on Tuesday.
Australia’s economic fundamentals remained sound despite concerns about the economic situation in the United States and Europe, he added, saying Australia would ride out any crisis as it did during the last global downturn……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

I am short emerging markets. So I do not know emerging markets have been going down quite a lot for a while as you know. Last time we spoke, I told I would short emerging markets and I am short American technology stocks.
If the market crescendos and as the selling climax is weak, I will have to cover, but if I buy something I would buy agricultural commodities. I would not be buying stocks. Stocks are going to be, at best, in a trading range for years to come……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Emerging-market currencies that three weeks ago showed the least volatility in a decade are dropping as traders bet slower expansions and an end to interest rate increases may weaken exchange rates from Sao Paulo to Moscow.
Implied volatility on three-month options on developing- nation currencies climbed to 12.1 percent from 8.9 percent on July 20, when it was within 30 basis points of the lowest level since March 2001 versus the Group of Seven nations, according to JPMorgan Chase & Co……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Asia’s policy makers braced for a surge in capital flows that threaten to push up currencies and hurt exports after the US sovereign-rating downgrade, with nations from Japan to the Philippines pledging to stem excessive foreign exchange moves.
Japan is ready to sell yen again following last week’s move if it sees speculative trades driving the currency higher, Vice Finance Minister Fumihiko Igarashi said on a television programme of public broadcaster NHK on Sunday……………………………………….Full Article: Source

Posted on 09 August 2011 by VRS |  Email |Print

Emirates, Dubai’s flagship carrier, said the European Union’s planned carbon emission scheme may cost it as much as $1 billion over 10 years, as it joined others airlines in objecting to the tax.
From January, airlines flying to or from Europe will have to buy permits from the EU’s emissions trading scheme (ETS) for 15 percent of the carbon emissions produced during the entire flight……………………………………….Full Article: Source

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