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Commodities Briefing 10.Dec 2014

Posted on 10 December 2014 by VRS |  Email |Print

If the commodity markets were followed as widely as the stock market, the financial world would be buzzing with the news of a crash that has taken place in the value of “stuff.” While the plunging prices of oil, natural gas and gasoline are making headlines every day, thanks to the benefits accruing to consumers of energy products, the message of the commodity markets, in many ways, is hardly a reassuring one when it comes to the outlook for global economic growth.
Basic materials prices for the likes of copper, nickel, iron ore, and other industrial commodities, have collapsed, both in advance of, and now coincident with, weakening economies from Madrid to Moscow and from Berlin to Beijing. This is not good news for the global economy………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Commodities extended their decline to the lowest level in more than five years as crude oil continued to fall after Iraq followed top exporter Saudi Arabia in cutting prices for Asia sales.
The Bloomberg Commodity Index (BCOM) of 22 raw materials dropped as much as 0.2 percent to 110.4571, the lowest since April 2009, and traded at 110.7105 at 2:44 p.m. in Singapore. West Texas Intermediate also fell to the lowest in more than five years………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Market forces and the response of high-cost crude producers to the recent fall in prices will determine the cost of oil in the coming months, rather than OPEC, a United Arab Emirates (UAE) oil official said on Tuesday.
Prices have fallen more than 40 percent since June and Brent crude for January delivery hit $65.33 a barrel on Tuesday, its lowest since September 2009………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

“Our biggest worry is the end of the liquidity cycle. The Fed is done. The reach for yield that we have seen since 2009 is going into reverse”, said Bank of America. The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over coming months as market forces shake out the weakest producers, Bank of America has warned.
Revolutionary changes sweeping the world’s energy industry will drive down the price of liquefied natural gas (LNG), creating a “multi-year” glut and a mucher cheaper source of gas for Europe………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Equities could see a lift, but it’s bad news for oil exporters. Looking ahead to 2015, there’s plenty for markets to fret about. Rate hikes in the UK and US are a near certainty – after years of extraordinary monetary stimulus that propped up asset prices and kept sovereign bond yields low – as are continued worries over the fallout from an economic slowdown and possible “hard landing” in China.
The Bank for International Settlements, meanwhile, known as the central bankers’ bank, yesterday issued a warning over the “growing fragility” of global markets, especially as an increasingly strong dollar makes dollar-denominated loans in emerging markets more expensive to repay………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

As the price of oil plummets to a five-year low, Saudi Arabia – owner of the world’s largest proven crude reserves – is behaving with almost preternatural calm. So much so that Prince Alwaleed bin Talal Al Saud, the kingdom’s highest-profile investor, a few weeks ago professed himself astonished by official complacency in the face of this “catastrophe” – and that was when the price was still above $90 a barrel.
Now, there are doubtless technical reasons why the Saudis remain sanguine as the price dips well below $70, and the kingdom’s oil technocracy has been prodigal in providing them. This is no different, they say, from any other commodities cycle, in which the market sets prices………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Oil prices will stay at about $65 a barrel for at least half a year until OPEC changes its collective production or world economic growth revives, said the head of state-run Kuwait Petroleum Corp.
Oil is trading in a bear market as the U.S. pumps at the fastest rate in more than three decades and demand expands more slowly. OPEC decided on Nov. 27 to maintain its output target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Gold will average $1,225 per ounce in 2015, Bank of America Merrill Lynch predicted, although it could trade as low as $1,100 at some stage. Gold faces many challenges at present, with dynamics in rates, equities and the dollar all bearish factors, the bank said in a note on Tuesday.
“The macro headwinds are exacerbated by developments on the physical market, with China for instance purchasing fewer ounces than last year, when substantial pent-up demand was released during the sharp price correction,” it said. From a supply and demand perspective, prices will continue to be well supported around $1,200, particularly given current levels of jewellery demand. But this implies that a meaningful pick-up of investor sales is necessary to push prices down to $1,000, it added. ……………………………………….Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

India should allow banks to use gold as part of their liquidity reserves, which would let them make more use of gold inside the country and reduce the need for imports, an industry body said on Tuesday, seeing that as an alternative to import curbs.
The world’s second-biggest consumer of the metal should also consider setting up an exchange for transparent gold pricing and to streamline trade, according to a report commissioned by the World Gold Council (WGC). “We have made our points to the government and some of these recommendations are in consideration,” said Somasundaram PR, head of the WGC’s India operations. He did not elaborate………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Gold prices are solidly higher and have pushed well above the $1,200.00 level in early U.S. trading Tuesday. Safe-haven demand, short covering and bargain hunting are featured in the yellow metal. It’s a “risk-off” day in the market place Tuesday.
World stock markets were under pressure overnight, led by sharp declines in Asian shares, and the U.S. stock indexes are also lower in early dealings. February Comex gold was last up $22.00 at $1,216.00 an ounce. Spot gold was last up $13.30 at $1,218.00. March Comex silver last traded up $0.429 at $16.705 an ounce………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

One economist recently declared that gold in all shapes and sizes is “a 6,000-year-old bubble” and suggested that it “can be viewed as shiny Bitcoin,” or something similar to a pet rock. And the reality is: He’s right.
In the latest Global Economics View report, Citigroup global chief economist Willem Buiter provided his own perspective on the “Save Our Swiss Gold” initiative in Switzerland that would’ve required the Swiss National Bank to hold at least 20% of its assets in gold. The question on the minds of many in Switzerland was whether this would be a worthwhile initiative. Buiter was blunt. “The short answer is: no. The slightly longer answer is: absolutely not.”……………………………………….Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Copper futures rose to the highest in more than a week as prospects for a strike at a mine in Peru sparked supply concerns. Workers at the Antamina mine in Peru plan to stop work tomorrow at midnight over pay and bonuses, said Jorge Juarez, a union leader. The site, owned by BHP Billiton Ltd. and Glencore Plc, is the world’s sixth-biggest source of the metal by capacity, according to the International Copper Study Group.
“Strikes are always in general supportive for prices when the news first breaks,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a telephone interview. “If the market senses the strike is sticking because supplies really start actually decreasing and you see pressure on inventories, then it becomes something serious.”……………………………………….Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Trading volume – the number of shares of a security traded in a given day or other period – has long served as a proxy for market demand. For many traders, volume is used as a confirmation indicator to price movement. An increasing price level but a decreasing volume level may indicate that demand for that security has dried up, and that the price may soon decline.
On the other hand, a stock that breaks out of its price range on higher than average volume may indicate a higher degree of interest and probability of the demand trend continuing………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Gold has a reputation for being a contrarian investment, and for more than a decade, returns for gold have generally diverged from what the stock market has brought investors. From 2000-2009, stocks suffered two bear markets while gold soared.
After topping out at $1,900 per ounce in 2011, however, gold has plunged even as the stock market has climbed to countless new record highs. As gold has fallen, it has taken gold mining stocks down with it, sending the popular exchange-traded fund Market Vectors Gold Miners ETF to levels it hasn’t seen since the worst of the financial crisis………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Asset classes and investment strategies are two different concepts. An asset class is a category of tangible or intangible assets whose scope may or may not be fully quantifiable. The quantifiable part is the raw material from which an investment strategy is created. US equity is an asset class that’s fairly easy to define and measure. How one invests in US equity is an investment strategy, and there are many ways.
Each index provider has their own strategy for defining the US equity asset classes. This is by design. Index providers use different rules for inclusion, exclusion, rebalancing and reconstitution so they can be different………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Despite the effects of falling oil prices, commodity trading advisor (CTA) funds are still profitable, according to Lyxor Asset Management. Oil process have fallen almost 40 percent since mid-June this year, however this led to gains on the commodity complex and CTAs saw a 1.5 percent rise due to short commodities.
Lyxor says this proves CTAs to be a diversified source of gains, with most funds posting profit on equities, rates and FX. It also suggests that strategy could remain resilient if oil prices pick up. Global macro strategies were up 0.3 percent, with equities as the main driver and European markets contributing the most. Commodities posted mixed returns, with specialist generating alpha due to short positioning on all clusters, particularly energies………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

If you take the time to leaf through one of those big, densely written fund prospectuses that arrive in your mailbox every now and then, you’ll see a long section called “Risks” that attempts to lay out every possible way the fund could end up disappointing you. A fund that invests in foreign securities might include “currency risk” on that list. Sometimes that idea lands under a broader discussion of “foreign investment risk.”
But what is currency risk? How important is it? What steps do fund managers take to address it, and how should individual investors think about it?……………………………………….Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

With the dollar marching closer to an eight-year high, the impact of a solid greenback has started to worry traders and economists. The Bank for International Settlements, referred to as the central bankers’ bank, warned in its quarterly review that the strengthening dollar could “have a profound impact on the global economy,” and particularly on emerging markets.
“Should the U.S. dollar — the dominant international currency — continue its ascent, this could expose currency and funding mismatches, by raising debt burdens. The corresponding tightening of financial conditions could only worsen once interest rates in the United States normalize,” Claudio Borio, head of the monetary and economic department at BIS, said in a briefing about the quarterly review, which was published on Sunday………………………………………..Full Article: Source

Posted on 10 December 2014 by VRS |  Email |Print

Oil prices have plummeted in recent months, from US$115 a barrel in June to less than US$70. That dramatic shift could increase greenhouse gas emissions in the short term, as consumers take advantage of cheap fuel. It also gives policymakers a “golden opportunity” to scrap fossil fuel subsidies and bring in carbon pricing, a leading energy expert argued on Tuesday.
Maria van der Hoeven, executive director of the International Energy Agency, said they could consider measures that “would have been unthinkable a year ago”. She was addressing media at the UN climate talks in Lima, where negotiators are considering a target of net zero emissions by 2050………………………………………..Full Article: Source

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