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Commodities Briefing 06.Mar 2012

Posted on 06 March 2012 by VRS |  Email |Print

China’s government should be able to engineer a “soft-landing” for its economy and that should support base metals prices as the country looks to make its economic growth more sustainable, an economist at a leading Canadian bank said Monday.
China’s gross domestic product is forecast to rise 8.6% in 2012 and 8.9% in 2013, compared to 9.2% in 2010, said Patricia Mohr, vice president and commodity market specialist at Scotiabank. She said Scotiabank has a large presence in China………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Investors are worried that China’s decade-long run as the world’s growth engine may be over— along with unprecedented demand for commodities and ultra-cheap labor and parts for manufacturers.
Stocks fell Monday partly on such fears, while traders dumped assets such as copper and shares of Caterpillar. The reaction came after China cut its GDP target for this year to 7.5 percent, which would represent the slowest economic growth in eight years. That compares to an average growth rate of 11 percent over the last decade………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Widely followed commodities trader Dennis Gartman on Monday said he wasn’t concerned about an official slowdown in China.
“I pay very little to what the Chinese have to say,” he said on “Fast Money.” “I think that Premier Wen speaking this morning to the People’s Congress had to low-ball his estimate for GDP going forward so that they can do better than that.”……………………………………….Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

The prospect of slower growth in China threw a scare into commodity markets on Monday, raising worries about the sustainability of Asia’s voracious demand for a host of natural resources.
Commodity prices slumped and stocks in the sector retreated sharply after China lowered its gross domestic product growth target for the year to 7.5 per cent from 8, extending a trend of slowing expansion. Last year the economy grew by 9.2 per cent, down from 10.3 in 2010………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Commodities’ price performances will increasingly diverge this year, with supply and demand fundamentals in each market exerting a stronger role, as economies start to recover and more than three years of monetary stimulus come to an end.
The European Central Bank announced its latest stimulus this week, providing half a trillion euros of cheap three-year loans to 800 banks. But the ECB also warned that no further injections were planned………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

The operating environment might be rough, but the global mining industry remains optimistic that the commodity boom is going to run for years to come. The annual Prospectors and Developers Association of Canada (PDAC) conference, the industry’s largest event, began Sunday in Toronto with a commodity outlook.
Producers are facing enormous cost escalation at their operations and development projects, while junior companies (which dominate the conference) are still struggling to raise money………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Iran’s recent move to accept gold as payment for its oil instead of dollars underlined its uncompromising response to international sanctions, stoking concerns around supply from the oil-rich state.
As holder of the world’s third-largest oil reserves, Iran is naturally the focus of worries about the dangers politicians pose to global energy chains, with no end in sight to the row over its push to develop nuclear power………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Oil prices edged up on Monday in tug-of-war trading as supply risks and tensions over Iran’s nuclear program provided support, but concerns about global economic growth limited gains.
The potential for supply disruptions due to Iran’s row with the West over Tehran’s nuclear ambitions continued to bolster oil prices as U.S. President Barack Obama met Israeli Prime Minister Benjamin Netanyahu in Washington, hoping to convince Israel to give sanctions against Iran more time………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Estimates of the effects of higher gasoline taxes often rely on the estimated gasoline demand elasticity with respect to gasoline prices, with an implicit assumption that consumers respond to a change in gasoline taxes in the same way as they respond to a commensurate change in tax-exclusive gasoline prices.
This paper investigates this underlying assumption by separately estimating consumer responses to gasoline taxes and the tax-exclusive gasoline price………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Hedge funds reduced bullish bets on natural gas by the most in eight months as forecasts for warmer- than-usual weather in the eastern U.S. signaled a drop in heating-fuel use with supplies near a seasonal record.
Money managers cut wagers on rising prices for the first time in seven weeks, reducing positions by 56 percent in the seven days ended Feb. 28, according to the Commodity Futures Trading Commission’s Commitments of Traders report. It was the biggest decline since June 28………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

According to Warren Buffett, investing in gold is pure speculation and should not be a part of any portfolio. In his yearly letter issued to Berkshire Hathaway shareholders, the American business magnate said precious metals are a poor investment because they don’t do anything once you own them.
Because gold cannot produce revenue, it is difficult to price, a fact which Buffett says reduces it to nothing more than a speculative vehicle………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Warren Buffett is a great investor, says Christopher Goolgasian, a portfolio manager at State Street Global Advisors Inc who helps oversee a $74-billion gold fund. The Oracle of Omaha just has it wrong when it comes to the metal.
“While he won’t own gold, he also never owned Apple (up around 1,500% since January 2000) or Google (up 530% since August 2004),” Goolgasian said of Buffett in a March 2 regulatory filing for SPDR Gold Trust, an exchange-traded fund managed by State Street Corp……………………………………….Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Gold futures settled a touch above $1,700 after a volatile trading day that saw prices temporarily slip below the key price for the third time in four trading days.
The most actively traded contract, for April delivery, settled $5.90, or 0.4%, lower at $1,703.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract is down 4% from last Monday, when futures settled at $1,774.90 an ounce………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Investor interest has been in the driver’s seat for gold so far this year, with speculative positioning on Comex at its highest level since September and gold ETP holdings have scaled successive highs this year.
Gold still faces near-term hurdles such as bouts of dollar strength, broad risk reduction and profit-taking, but this is a healthy correction and the broader macro backdrop remains gold favourable, given the negative interest rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Marc Faber discusses his bias for portfolio diversification in terms of geographies as well as asset classes, and argues that gold is nowhere near a bubble phase. He cautions though that corrections of 40% are not unusual in a bull market…
If the Gold Price drops $50/oz, they’re wiped out. All I’m saying is that, in my opinion, the Gold Price correction is not yet entirely completed. I see significant support around the $1,500/oz level, but it could drop lower. It depends on global liquidity and on money printing by central banks. We could have a big correction if global liquidity tightens or they stop printing money………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Gold-supportive fundamentals remain intact, with last week’s decline largely a profit-taking pullback, said Morgan Stanley in a research note.
According to Morgan Stanley, gold lost 5.4% on Wednesday, the largest daily move in three years, after Federal Reserve Chairman Ben Bernanke failed to comment on the likelihood of another round of quantitative easing, leading investors to believe that the timeframe for expanding easing measures will be pushed out………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Platinum prices should start to show weakness in the second half of the year as labour and electricity issues in South Africa, which produces over 70% of global supplies, ease, Thompson Reuters GFMS senior mining analyst William Tankard said on Sunday.
A strike at the world’s biggest platinum mine, Impala Platinum’s Rustenburg operation, could remove at least 125 00 oz to 130 000 oz of supply this year, he said………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

After a horrendous 2011, Nickel pices may yet be in the red for 2012, a new report by UK based MEPS suggets. MEPS is a leading independent supplier of steel market information.
New mining projects in Australia, Brazil, New Caledonia and Madagascar could add more than 100,000 tonnes to global nickel production in 2012, tipping the market in yet another surplus year, MEPS said while also adding that production will continue to outstrip consumption atleast till 2014………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Mitsui & Co., holding a record $17 billion in cash, wants to buy mining stakes and expand operations to triple copper output and more than double coal production, easing its reliance on iron ore sales.
The biggest Japanese iron ore supplier is looking to buy 9 million metric tons of annual coal production from Russia, Australia, South America and Africa, Fuminobu Kawashima, head of resources of the Tokyo-based company, said……………………………………….Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Why would an investor want to invest in one of these sub-sectors? One reason is portfolio protection against the deleterious effects of rising energy prices. These negative effects are eventually manifested in the stock market, through demand destruction, higher producer costs, and ultimately, less money in consumers’ pockets.
Another reason is the general protection against inflation. While the Fed denies it, some still expect the launch of QE3. Most of the commodity sub-sectors will provide a measure of protection here………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Exchange traded product (ETP) trading activity in Europe has started to slow after investors made a strong commitment in January. The European ETP market reported a sharp decline in assets under management (AUM) in December, when €2.5 billion (£2.1 billion) was pulled out by investors.
As a more risk-on environment presented itself, this situation reversed at the start of the year and inflows of €2.3 billion were recorded during January………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

ETF Securities has launched a range of 14 sterling-hedged exchange traded commodities (ETCs) on the London Stock Exchange, designed to help investors mitigate currency volatility.
The products are designed to smooth out currency volatility by reducing exposure to the US dollar, the currency in which most commodities are priced………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

China “must boost consumer demand”, ECB forcing Europe “to go begging”, gold below $1690 could spark fresh selling but gold and silver ETFs show increased holdings on week.
Dollar gold prices briefly dipped back below $1700 an ounce Monday morning in London, as stocks, commodities and the Euro all fell before recovering some ground, following news that China has cut its official growth target………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Commodities trader Glencore brushed aside requests from Xstrata investors to improve an agreed $37 billion bid for the miner, saying its existing offer was fair to all shareholders and emphasising its own growth prospects.
Glencore’s tie-up with Xstrata, in which it already owns a 34 percent stake, would be the largest deal in the mining sector since Rio Tinto’s acquisition of Alcan in 2007, but has faced opposition from some key Xstrata shareholders who say the terms do not recognise the company’s potential………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Commodity currencies stayed under the cosh in Asia on Tuesday, having suffered a shakeout overnight as investors cut bullish positions after China announced its lowest annual growth target in eight years.
This took some pressure off the euro, which recovered from a two-week low against the greenback as it roared higher on the Australian and New Zealand dollars………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

Bets on swings in the yuan surged as policy makers signaled they may allow greater flexibility in the Chinese currency after it surged 31 percent since 2005.
Implied volatility on one-month options for the yuan versus the dollar rose nine basis points, the most since December, to 1.87 percent in New York trading after Xinhua News Agency cited People’s Bank of China Governor Zhou Xiaochuan saying the nation may “appropriately” widen the currency’s trading band………………………………………..Full Article: Source

Posted on 06 March 2012 by VRS |  Email |Print

The European Union could act to support the currently low price of carbon emissions permits. The E.U. its carbon trading scheme was implemented in 2005 and has had limited effect on overall carbon emissions, in large part because of declining economic activity in the wake of the financial crisis.
With concerns that the scheme could continue to prove ineffectual with carbon prices at their current level, the European Parliament’s Industry, Research and Energy Committee submitted a draft proposal that would allow the European Commission to withhold some undetermined number of the emissions permits………………………………………..Full Article: Source

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