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April 29, 2011

It's Getting Plain Silly: MF Global Hikes Silver Margin To 175% Of CME, Or Over 10% Of Contract

It's Getting Plain Silly: MF Global Hikes Silver Margin To 175% Of CME, Or Over 10% Of Contract

Tyler Durden's picture



Now it's just getting plain silly. Following two margin hikes by the CME, one for 9% and one for 10% this week, now MF Global, run by former Goldman CEO Jon Corzine has joined the fray, and has hiked its silver margin to $25,397. As a reminder, the latest CME margin is $14,513, or about 6% of the contract value of $241,750 assuming a silver price of $48.35. So MF Global's is 175% of the CME! It is obvious that everyone is now hell bent on destroying the parabolic move higher in gold and silver, which is happening for a very good reason: deranged money printing. Although, as yesterday, we very much doubt MF Global, or anyone else for that matter will hike ES margins any time soon. After all, doing anything to stop the Weimar rallyTM in its tracks is treason of the highest degree under Bernanke's dictatorship and is punishable appropriately. In the meantime, can the exchange just make margin trading in commodities illegal and move to all cash? At least that way all the weak momo hands can be relegated to chasing Netflix and other bubbles, making their eventual pop all the more memorable.
h/t @gptrading

April 26, 2011

Facts on Silver by Bob Moriarty 4/25/11

Excellent piece on the silver run. 

Facts on Silver

Bob Moriarty
Archives
Apr 25, 2011

For those who missed my piece of March 25, 2011, here is the link. I asked the question, "Is Silver Topping?" I may have been right about silver topping, only time will tell. For certain I was dead wrong about the timing and the price. Silver has rocketed from $38 and change when I wrote the piece to over $47 now.
But lots of people get lots of things wrong about silver. So here are some facts.
1. Silver is going parabolic.
According to Jim Rogers all parabolic moves end badly. I have seen similar charts in all kinds of commodities and they always correct. Parabolic charts mark tops. So when silver bugs start suggesting, "This time it's different" I know better.
Study the chart below. Ignore the commodity. When charts go parabolic, it ends badly. I was an investor in the 1970s in both gold and silver. I started buying gold at $35 and silver around $5 an ounce. I sold out all my silver in January of 1980 a week too early at $35 as it rocketed to $50.25 an ounce at the open on January 21, 1980. It went parabolic and basically that's all you need to know.
Those investors who want to buy at new all time highs almost always are the same investors who want to sell at all time lows. Naturally as a guy running a metals site, I think $46 silver is wonderful for all my readers that I was telling to buy at $4 and $6 and $10 and $20. Is silver a good buy today? No, it's a good sale... to those who insist on buying at tops.
2. The actual ratio of silver to gold in the earth's crust is not 16 to 1.
It's more like between 20 or 26 or 64 to one. This is not an absolute fact, these are opinions from experts but no experts conclude the ratio is 16-1. Go to Wikipedia and do the math for yourself.
What happens on the web is that one guy starts a rumor saying there are tens of thousands of gold-plated tungsten bars out there. Some other fool adds a few "facts" to the rumor and all of a sudden hundreds of sites are writing about fake gold bars.
Alas, years later not a single tungsten bar has showed up. It was rubbish and anyone who understood anything about metalworking would understand that technically it would be very hard to do. All 400 ounce gold bars are tracked and if by some strange process someone managed to counterfeit one, he would be caught at once. But you can sell a lot of subscriptions to those who pay to have their fantasies catered to.
It doesn't matter how many people claim the ratio of silver to gold is 16-1, it simply isn't true.
3. There is no shortage of silver. There never has been a shortage of silver. Until the laws of supply and demand are repealed, there never will be a shortage of silver.
The first person I ever read that claimed there was a shortage of silver was Ted Butler. He claimed in May that according to his figures the world was going to totally run out of silver by December. This was on the Kitco forum. I wrote and told him he was dead wrong, there were billions of ounces of silver above ground. His response was that according to his numbers, we would be out of silver bullion and that would drive the price of silver all by itself to between $50 and $100 an ounce. In a vacuum. Without gold going up or oil or anything else going up because of inflation. Silver was that rare.
My retort was that with billions of ounces around, prices would soon turn Grannie's silver service into silver bullion. He insisted I didn't know what I was talking about; he was the silver "GURU." The exchange took place in May of 2001 and by December of 2001 I had correctly called the bottom in silver while he was insisting that it would be $50 an ounce. One of us was dead right.
But then he was also the guy claiming that silver was the most critical war material and if we ever go into a war, that would drive silver prices to between $50 and $100 an ounce and it was so rare that you should, "never, never, ever sell silver." With the US engaged in three different wars at the same time, you would think that silver would be $300 an ounce. It's not.
My question is, "If you were smart enough to buy 100 ounces of silver at $4 an ounce, a 5000-year low in real terms, how much profit have you made if silver goes to $50 or $100 or $300 and you never, never, ever sell? The answer, of course, and ignored by all the silver "GURUS" is that if you buy low and don't sell ever, you don't make any profit. That may be the dumbest investment advice I have ever heard.
Silver is a commodity like any other. If you are smart enough to buy it cheap and you are smart enough to sell it when it gets expensive, you will profit. If you want to buy at all time highs, good luck with that.
There are 19 billion ounces of silver above ground today. People talking about silver "bullion" inventories are being misleading. Silver is silver is silver and it only takes a day to turn a few 200 year-old-tea pots into a boring 1000 ounce "bullion" bar.
Just how accurate is the 19 billion ounce figure? We can figure that out with simple logic. I think the figure accepted by more people for total silver production ever would be about 45 billion ounces. A favorite argument of the permabulls is that silver is consumed, not recycled. Let's think about that. Silver is used in computers, iPhones, aircraft, and lots of commercial purposes where it isn't recycled. But that use of silver wasn't common until perhaps 1960. Silver before that time was recycled. Yes, silver coins did wear but they didn't wear out, they might lose 20% of their original weight.
If 45 billion ounces were produced, it's more logical that a good percentage of it is still around. I was in my coin dealer's shop a week ago. He bought 2800 ounces of silver on Saturday. Not a bar of bullion in the bunch but 2800 ounces of real silver in other forms. The numbers on silver are not hard numbers; we simply don't know how much silver is around. But we do know there is a lot of silver and with the exception of a short period between the end of November of 1979 and January 21 of 1980, a mere six weeks later, silver has been well under $10 an ounce on average for the last 40 years. How rational is $46 silver? Not very.
I'd guess most silver mines have cash costs between $3 and $10. A market price of $46 an ounce will suck silver out of grannies' closets and out of the ground at the same time. Every silver refinery in the world is running at capacity right now, if you want silver, there is a lot of it around.
4. The most illogical thinking and worst use of "facts" is common among the silver uberbulls and the parrots that follow them.
Someone just posted the most incredible theory on the validity of SLV. That's the silver ETF that has been trashed for years by a small group of uberbulls with an agenda. One of their supporters came up with a brilliant argument. Since we don't really know and can't prove that SLV actually has all the physical silver, the proof that it is a scam is when they deny it being a scam. Read that carefully. The proof that it is a scam is when they deny it.
So, apparently, if you ask the people behind SLV if it is a scam and they admit it, that means we know it's a scam since they admitted it. And if you ask the people behind the SLV if it is a scam and they deny it, that also means it is a scam because the proof is when they deny it.
I think that's circular logic. No matter what the people behind SLV say, it's a scam.
I have said in the past I have reservations about ETFs and I think investors should be aware of those reservations. If we have a total economic collapse and the financial system freezes, all ETFs could be frozen or worse for months. That includes Sprott's paper silver, the CEF and SLV and all ETFs of all sorts. What happened in Argentina could happen in the US, it could happen all over the world. It's entirely possible that all banks close for a good period of time, after all they are insolvent now and have been since September of 2008. But a financial freeze would affect all forms of paper silver including Sprott's silver trust.
The CEF fund and the SLV have done more to improve the price of silver and gold than any other single action in the last 50 years. Silver bugs should be grateful SLV holds 366 million ounces of silver instead they are whining and posting simply absurd articles totally lacking in either facts or logic.
When someone posts something that ridiculous and lacking in logic, you may safely presume they don't know what they are talking about. That's real common when people write about silver and it's going to cost investors a whole lot of money.
The daily bullish consensus on silver is 96% as of Wednesday the 20th of April. On January 21st of 1980, the very day of the top, the bullish consensus was 94%. How many of the silver uberbulls are suggesting that maybe the record high bullish consensus is suggesting a very dangerous time to start buying? The answer is damned few because they have an agenda and their agenda doesn't involve them knowing what they are talking about. As long as they tell investors what they want to hear, they will be very popular.
5. There cannot be a run on Comex. The rules do not allow the chance for a run.
For years I have watched as each time silver runs up, certain people start spreading rumors that silver is in such shortage that there will be a run on Comex. The only problem with the rumor is that it can't possibly happen. There cannot be a run on Comex. I repeat, there cannot be a run on Comex.
Part of the reason for the rumor is that most investors confuse the purpose of the exchanges. The purpose of the exchanges is not to exchange commodities. The purpose of the exchanges is to determine price. But certainly the possibility of a run on an exchange is possible so early on the exchanges adopted rules that called for cash settlement if necessary.
Most people don't know this because they don't read the small print but if you have a savings account, the bank has the right to withhold payment for up to 90 days. And all mortgages are essentially 90 notes at their heart. That's right, the bank can demand full payment within 90 days if they wish and during the 1930s that's how thousands of Americans lost their homes even when they were paying their mortgage.
I don't write the rules and you don't write the rules and they are what they are if you like it or not. There cannot be a run on silver, it's impossible. So anyone writing about it is spreading disinformation. Of course anyone who ever passed a Series 7 exam know this but you will never hear the silver uberbulls mention it. I wonder why.
There are three guys in the mining business that are so smart and have such great track records that for 70% of investors in metals, they should buy into their mutual funds and stop trying to outsmart the market by picking stocks. The top three guys in the industry are Ken Gerbino, Eric Sprott and Frank Holmes. If you like metals and shares in resource stocks, stop trying to be so smart yourself, it's difficult work. Hand your money to them to invest in one of their funds and you will do just fine.
That said, Eric Sprott seems to have done something that hasn't happened to the market since the days of Johnny Carson. You have to be getting on in age to remember it but back in 1973 Johnny Carson started a toilet paper shortage that lasted a month. He was making a joke. He said that there was a toilet paper shortage. The next day, millions of rolls of toilet paper flew off the shelves of every store in the US and by noon there was no toilet paper to be had. It was nothing but a joke.
Don't let anyone convince you that supply and demand doesn't work. They do work and that's far more important for you to know than belief in some mysterious manipulation conspiracy theory. I've heard all the stories and know all the arguments. No one in history has made a cent from a belief in market manipulation.
If gold has gone up 4100% since 1950, higher than any other commodity, anyone manipulating it down has done a piss poor job. And who cares if 4 guys have sold more silver short than exists in the known universe? Those are all interesting theories but that's all they are. If you don't buy low and sell high, you can't make money. End of story.
Eric Sprott started his own paper silver fund called the Sprott Physical Silver Trust. It's still paper silver like SLV or the CEF fund. It has some unique features, not benefits but features. He has done a brilliant job of promoting it.
Recently he purchased $300 million dollars more physical silver to put in the closed fund. As a result of his excellent promotion, as of last Wednesday, silver was selling for $46. If you bought the CEF silver fund, you paid $47.88 for silver. If you bought SLV, you paid $46 with no premium but if you bought PSLV, the Sprott Silver Trust, you paid an incredible $57.73 an ounce for silver.
I'd say that Eric Sprott buying $300 million dollars more silver lately was incredible timing. He pocketed probably $60 million in profit. Is Eric Sprott bullish on silver? I'd say so. He has 60 million reasons to be bullish. He can buy at the exact top of silver and watch a 25% decline and still make money.
How wise was it for investors to pay a 25% premium for silver? I'd like to believe my readers are smart enough to figure that out for themselves. Eric Sprott is both brilliant and rich but paying 25% over spot is not wise investing.
The Hunt Brothers investing in silver drove silver to $50.25 an ounce for a few minutes on January 21, 1980. I think it would be fair to credit the silver boom of 2011 to Eric Sprott. He's not really saying anything new about silver, though, Ted Butler was claiming that we were about to run out of silver 10 years ago and claiming that silver was the most manipulated of all metals long before Eric Sprott bought his first ounce of silver for a fund. But Eric Sprott adds credibility. But we weren't running out of silver ten years ago. We aren't running out of silver now.
One of two things is going to happen. Either we are at a top and silver is about to crash both hard and long, or the world's financial system is about to fall apart. I have been an advocate of a total financial crash for a lot longer than most writers. I was writing about the dangers of derivatives in 2002 when they were 15% of what they are now.
But I don't believe the world's financial system is going to crash next week. As in January of 1980, the silver bulls are going to be the ones losing money. You can't profit if you don't sell and all the permabulls are screaming "Buy, buy, buy." As they will at every top. Buying at record high prices is rarely profitable. But perhaps this time it really is different.
Here's what all potential investors in silver need to know.
  1. The chart of silver has gone parabolic. Parabolic charts mark tops no matter what the commodity.
    .
  2. The bullish consensus on silver is at a record high. Record high bullish consensus on any commodity is common at tops.
    .
  3. When the most credible guys in an industry start explaining why supply and demand don't really work, it's a top. With 19 billion ounces of silver above ground we aren't about to run out any time soon.
    .
  4. When guys start writing about silver that didn't have a clue as to what it was or what it was used for at the bottom, you are at a top. I'm astonished at both the ignorance and the arrogance of the newly invented silver "Gurus."
    .
  5. When the smartest guys in an industry start telling you, "This time it's different," it's not. It's just a top.
###

Bob Moriarty
President: 321gold

April 17, 2011

Texas University places $1 Billion in Gold Bars

Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars

By David Mildenberg and Pham-Duy Nguyen - Apr 16, 2011 11:45 AM GMT+0200

The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board.

The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, added about $500 million in gold investments to an existing stake last year, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

Gold reached an all-time high of $1,489.10 an ounce yesterday in New York as sovereign debt concerns boosted demand for the metal as a store of value. Gold has climbed 28 percent in the past year on Comex.

The endowment, which oversees funds held by the University of Texas System and Texas A&M University, has 6,643 bars of bullion, or 664,300 ounces, in a Comex-registered vault in New York owned by HSBC Holdings Plc (HSBA), the London-based bank, according to a report distributed at the meeting in Austin.

To contact the reporter on this story: David Mildenberg in Austin, Texas, at dmildenberg@bloomberg.net. Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars

The MasterMetals Blog

April 15, 2011

More on the Glencore trading empire

April 14 2011 6:34 PM GMT
Glencore trading empire unveiled
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By Javier Blas in London
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Rivals fear growing financial muscle of group heading for london and HK listing and its influence on prices

Read the full article at: http://www.ft.com/cms/s/0/6d347810-66bf-11e0-8d88-00144feab49a.html?ftcamp=rss



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Financial Times: Glencore lifts veil on market dominance

More on the Glencore IPO.

50% of Copper, 60% of Zinc... Looks like this IPO will open up a can of worms in the Anti Trust Commissions around the world....


Glencore lifts veil on market dominance 
FT.comApril 15 2011 12:49 AM GMT
By Javier Blas in London

The Swiss-based commodities firm has revealed it commands at least half of some of the world's most important publicly traded metals markets on the day of its IPO launch

Read the full article at: http://www.ft.com/cms/s/0/9cdc1ec4-6665-11e0-ac4d-00144feab49a.html?ftcamp=rss

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April 14, 2011

Glencore Versus Goldman - NYTimes.com

Glencore Versus Goldman

Short term yes, mid-long term, the commodity bull market still has some years ahead. If anything more like 1997, than 1999, when people were alredy calling the top in tech boom/bubble after doubling in 2 years, only to see the market triple form there again!!

April 14, 2011, 10:23 am

Glencore Versus Goldman

AP Photo/Richard DrewHenry M. Paulson Jr., then chief executive of Goldman Sachs, on the bank’s first day of trading in 1999.
Glencore, which on Thursday formally announced its plans for an initial public offering, is drawing comparisons to Goldman Sachs.
But how similar are the global commodities trader and the global investment bank?
They’re both stalwarts in their respective industries. They’re both highly secretive about their businesses. And they’re both have corporate structures with influential partnerships at their cores.
The financial profiles aren’t all that different, either.
Glencore’s public offering could value the company at $60 billion. Recently trading at $160 a share, Goldman had a market capitalization of roughly $87 billion.
Glencore has the edge on revenue, notching $145 billion in 2010, an increase of 36 percent over the prior year. Goldman reported revenue of $39 billion in 2010, falling 13 percent from 2009. But Goldman is more profitable with net income of $8.3 billion, compared with $3.8 billion at Glencore.
Perhaps the most striking similarity is the timing of their respective initial public offerings. Glencore and Goldman both picked opportune moments to go public — that is when the market offered the best potential for peak pricing.
Goldman went public in May 1999. It was the middle of the dot-com boom when financial firms were generating enormous fees and profits from taking technology companies and other upstarts public.
The investment bank raised $3.7 billion from its I.P.O., then the second-largest debut ever after Conoco’s offering in 1998. Shares of Goldman jumped 33 percent on the first day of trading, to close at more than $70. The bubble burst a year later, and Goldman’s stock stumbled in the bear market that followed.
Glencore’s offering, which is expected to take place in May, comes when gold, metals and the like are booming. And it is a commodities bull market, as Goldman recently said, that may be nearing its end.


-Glencore Versus Goldman - NYTimes.com

Glencore Versus Goldman - NYTimes.com: "- Sent using Google Toolbar"

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April 11, 2011

Glencore listing

Glencore says listing will boost firepower

By Javier Blas in Baar, Switzerland

Published: April 10 2011 22:09 | Last updated: April 10 2011 22:09

Ivan Glasenberg
Ivan Glasenberg, chief executive, said it would make sense to combine with Xstrata

Ivan Glasenberg has broken a decade-long silence ahead of the launch of Glencore'sinitial public offering this week, saying that the flotation will give the world's top commodities trader the financial firepower it needs as consolidation gathers pace.

Mr Glasenberg told the Financial Times that the launch of the offering – the largest ever in London – was "imminent" after it received robust support from big institutional investors. Glencore plans to sell a 20 per cent stake worth about $10bn-$12bn, valuing the whole company at around $60bn, bankers said.

"The interest from the cornerstones was a lot stronger than we envisaged," Mr Glasenberg said. "Markets are in our favour too. We have a strong commodities market."Bankers close to the deal said the intention-to-float document will be filed on Thursday, although Mr Glasenberg declined to specify the day.

The company's chief executive mapped out a strategy of "opportunistic" acquisitions at a much larger scale than in the past and said it would make sense to combine with Xstrata, the London-based miner in which the trader owns a 34 per cent stake.

"We believe there is good value in the two companies being together," he said, but insisted that a deal was not on the table.

"Why has that not happened? It is a value debate. Xstrata . . . seems more comfortable for Glencore to go public and get a market price before they may or may not enter into discussions," he said.

Mr Glasenberg explained that having the flow of Xstrata's commodities production within the Glencore trading system was "advantageous" to both companies.

"There are a lot of benefits and synergies to put the two companies together," he said.

The flotation will move Glencore, run from a nondescript Swiss building, further from its origins under Marc Rich, the oil trader who was indicted for tax evasion in the US and pardoned by President Bill Clinton on his last day in the White House.

While insisting that Glencore would be disciplined and opportunistic, Mr Glasenberg said it could use its shares as currency to buy larger assets.

"We will get firepower and we can buy assets when opportunities present themselves in areas and sizes that we could not do before," he said, adding that Glencore could attempt purchases of $4bn-$5bn, up from $1bn-$2bn now. He said Louis Dreyfus, the family owned trader looking for a sale or IPO, would be a good complement for Glencore.

The trading house's IPO will be the third largest in history in Europe, only after the offerings of Deutsche Telekon and Enel of Italy in the late 1990, making it the deal of the year, bankers said.

The flotation will trigger massive gains for the 485 senior employees who own shares. But, in his first interview since becoming head of Glencore in 2002, Mr Glasenberg vehemently denied that the IPO marked the staff's cashing in at the top of the commodities cycle, saying that top employees will be locked in for up to five years. Mr Glasenberg said he was the largest shareholder, but declined to disclose his exact stake. He said he would not sell shares as long he worked in Glencore and added: "I have not intention to retire anytime soon."

He also insisted that being a public company would not alter Glencore's search for long-term returns. Over the past 10 years, it has delivered returns on equity of 38 per cent per year. "We will continue to be major shareholders of this company, and we are going to run this company to make maximum profits and maximum returns for our investors – including ourselves," he said.

"We are going to try to make maximum money for ourselves and investors could coat tail with us."

Glencore main advisors on the IPO are Morgan Stanley, Citigroup, Credit Suisse, Deloitte and Linklaters. BNP Paribas, Société Générale, Bank of America-Merill Lynch, Barclays Capital, UBS and Liberum Capital will also participate on the sale.



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April 8, 2011

Equinox rejects Minmetals’ $6.6bn offer

Financial Times: Equinox rejects Minmetals' $6.6bn offer

 

April 07 2011 10:33 PM GMT
Equinox rejects Minmetals' $6.6bn offer
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By Bernard Simon in Toronto
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The Australian-Canadian copper miner has rejected a C$6.3bn bid by China's Minmetals Resources as inadequate and designed to frustrate Equinox's own pursuit of Vancouver-based Lundin Mining.

Read the full article at: http://www.ft.com/cms/s/0/c012b9ec-6161-11e0-a315-00144feab49a.html?ftcamp=rss

 

GFMS bullish on copper

It is hard to be anything but bullish on copper prices over the long term - GFMS

China stocked, and then de-stocked, copper last year and while there remain downside risks to the price of the metal in the near term, GFMS says, given the fundamentals the long term remains bullish
Author: Rhona O'Connell
Posted:  Thursday , 07 Apr 2011




LONDON - 
There is a possibility of the emergence of negative news for copper consumption in the near future (linked to European sovereign debt, yet more trouble in the Middle east, further tightening of Chinese monetary policy or a series of lower than expected economic indicators for key mature markets), which could produce a significant correction in the price (currently at $9,500/t).  This, though, would generate a floor for prices, which should remain comfortably above $8,000/t.  Copper prices should subsequently resume an upward path, reaching new all-time highs approaching $11,000/t.
This is one of the key conclusions from the recently-published GFMS "Copper Survey 2011".  The research house is expecting copper production to accelerate this year in line with higher prices, but does not believe that it will be able to keep pace with demand, thus keeping the market in deficit at least through to the end of 2011.  The Survey records a residual market deficit of just over 300,000 tonnes in 2010 (just less than one week's refined consumption).  This comprised a gross deficit of 206,000 tonnes, a fall in reported stocks of 60,000 tonnes and an increase in "unreported" stocks of 176,000 tonnes.
The increase in these unreported stocks was concentrated primarily in China and South Korea and follows a 750,000 tonne increase in unreported stocks in 2009.  GFMS notes that the majority of the stock increase in China took place in the first months of last year, when there were arbitrage opportunities between local and international prices.  GFMS information suggests that there was destocking later in the year, especially in the last quarter; some of this was the mobilisation of physical investor positions, while much of the balance came from fabricators using inventory.  Some mobilisation is likely to have come about as a result of tightening credit and the need to generate cash.  Physical premia thus fell in China towards the end of the year, although the tightness in the market elsewhere in the world meant that international copper prices continued to rise, while local Chinese prices moved to a discount to the LME.
Global consumption increased by 11% or just under 2M tonnes over 2009 to 19.4M tonnes.  Almost 600,000 tonnes of this growth came from the mature economies, while the BRIC nations contributed a gain of 1.1M tonnes, much of which, of course, was in China.  The year 2009 was one of depressed demand in the mature economies, however and demand in these nations in 2010 did not regain the levels of any of the years 2006-2008 falling short of 2008 demand by more than 700,000 tonnes.  The rapid growth in demand in the BRIC nations, and the fact that 2009 demand in the Asian Tigers was barely below that of 2008, meant that the global fall in demand in 2009 was relatively shallow; global demand in 2010 was 4.2M tonnes higher than in 2000, an annual average growth rate of 2.5%.
Total reported inventories of copper stood at end-2010 at 1.28M tonnes, a fall of 160,000 tonnes or 11% from 2009, but substantially higher than the average level over 2004-2008.  The bulk of these stocks, which equated to just less than 3-1/2 weeks' global refined demand, were in the hands of producers and the Exchanges.
The Survey, which goes into immense detail of the copper industry all across the supply and demand chains, identifies electrical and electronic products as the largest consumer of copper, with 38% market share last year, ahead of a 31% share for building construction.  Transport, and Consumer & General Products took up 11% each, with the balance in Industrial Machinery & Equipment.  The Survey comments that the general improvement in demand was encouraging given the economic uncertainties that continued to cloud the market.  Among mature economies as a whole, the construction sector was the only area that failed to register a double-digit rebound last year; these improvements in the other sectors reflected continued government stimuli in some areas, the release of pent-up demand and strengthening export demand, although overall offtake in these sectors in the mature economies remained below historical peak levels.
The continued improvements in the BRIC nations meant that their market share increased to more than 45% of total last year, compared with only 16% in 1990.  GFMS expects this trend to continue in the years to come, reflecting the continued shift of copper-product manufacturing towards China and other developing economies.  China accounted for 37% of global copper demand in 2010, reflecting the nation's rapid economic growth, much of which revolved around copper-intensive end-uses.  Copper consumption in the mature economies, by contrast, has been falling at an annual rate of more than 3% over the past decade, reflecting the fact that infrastructure and urbanisation processes are now largely complete in these economies, along with the shift in the manufacturing sector towards low-cost areas.  This has been exacerbated by miniaturisation and technological advances that have impeded copper consumption in the mature economies.  Copper's intensity of use, for example (expressed as tonnes of copper consumption per million dollars of GDP), has grown from 0.41 in 1990 in China to 0.79 last year; while in Brazil it has also doubled from 0.12 to 0.23.  In the United States it more than halved from 0.27 to 0.13.
GFMS takes a generally positive short and medium-term view for the metal's fundamentals, with the rebound in demand expected to continue for much of the year.  Primary producers are responding to higher prices; secondary production was up by 19% last year and continues to increase this year.  GFMS believes though that much of the improvement in the market's fundamentals have been discounted by prior investor activity and this, along with a speculative overhang, does mean that there are near-term downside risks to the price.  For the longer term, however, "it is hard to be anything but bullish for copper prices".

GFMS bullish on copper - MINEWEB


The MasterMetals Blog

April 7, 2011

Newmont plans to link dividend to gold prices


The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price.

Newmont plans to link dividend to gold prices

(Reuters) - Newmont Mining Corp (NEM.N), the world's second-largest gold producer, plans to link its quarterly dividend to the price of gold it realizes for the preceding quarter.
The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price. The current gold price of about $1,450 an ounce will mean Newmont's annual dividend would be $1.00.
"With our strong balance sheet and cash flow, we are positioned to fund profitable growth and to pay a new gold price-linked dividend," Chief Executive Richard O'Brien said in a regulatory filing before its investor day.
The first quarterly dividend under this policy is expected to be payable on June 29. The company paid a quarterly dividend of 15 cents per share on March 30.
Newmont continues to see 2011 attributable gold production of 5.1-5.3 million ounces.
Newmont shares closed at $56.45 on Wednesday on the New York Stock Exchange.
(Reporting by Krishna N Das in Bangalore; Editing by Maju Samuel)

Newmont plans to link dividend to gold prices | Reuters

April 6, 2011

Coal ETFs burn bright

FT.com - Commodities News and Market Data
April 06, 2011
ETFs linked to the coal industry have seen an upsurge in interest following the crisis at the Fukushima nuclear plant in Japan and flooding in Queensland which has disrupted coal production in Australia.

View article...

April 5, 2011

Jim Rogers: Dollar will be debased; gold and silver to hit new highs | 05 April 2011 | www.commodityonline.com

below are some excerpts from Jim Rogers interview:
Dollar will be debased; gold and silver to hit new highs
Chinese economy:
There is some overheating and inflation
setback in urban, coastal real estate is under way
China has been overbuilding ever since I have been visiting. There is at least eventual demand for much of it, but that does not preclude some bankruptcies in the future.
Europe:
I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it's the banks or the countries, but somebody has to acknowledge that they are bankrupt.
Following is an interview that The Daily Bell had with Jim Rogers:

Jim Rogers: Dollar will be debased; gold and silver to hit new highs
05 April 2011 | www.commodityonline.com

Daily Bell: We've interviewed you before. Thanks for spending some time with us once again. Let's jump right in. What do you think of the Chinese economy these days?

Jim Rogers: There is some overheating and inflation, which they are wisely trying to cool – especially in urban, coastal real estate. They have huge reserves so will suffer less than others in any coming downturn.

Daily Bell: Is price inflation more or less of a problem?

Jim Rogers: More. At least they acknowledge inflation and are attacking it. Some countries still try denying there is inflation worldwide. The US is even pouring gasoline on these inflationary trends with more money printing instead of trying to extinguish the problem.

Daily Bell: Is China headed for a setback as you suggested last time we spoke?

Jim Rogers: Did I say a setback or a setback in real estate speculation? I think you will find it was the latter. Yes, the setback in urban, coastal real estate is under way.

Daily Bell: They are allowing the yuan to float upward. Good move?

Jim Rogers: Yes, but I would make it freely convertible faster than they are.

Daily Bell: Will that squeeze price inflation?

Jim Rogers: It will help.

Daily Bell: Why so many empty cities and malls in China? Does the government have plans to move rural folk into cities en masse?

Jim Rogers: That is a bit exaggerated. China has been overbuilding ever since I have been visiting. There is at least eventual demand for much of it, but that does not preclude some bankruptcies in the future.

Daily Bell: Is such centralized planning good for the economy?

Jim Rogers: No. Centralized planning is rarely, if ever, good for the economy. But the kind of construction you are describing is at the provincial level – not the national level.

Daily Bell: The Chinese government is worried about unrest given what is occurring in the Middle East. Should they be?

Jim Rogers: We all should be. There is going to be more social unrest worldwide including the US. More governments will fall. More countries will fail.

Daily Bell: Are they still on track to be the world's biggest economy over the next decade?

Jim Rogers: Perhaps not that soon, but eventually.

Daily Bell: Any thoughts on Japan? Why haven't they been able to get the economy moving after 30 years? Will the earthquake finally jump-start the economy or is that an erroneous application of the broken-windows fallacy?

Jim Rogers: It has been 20 years. They refused to let people fail and go bankrupt. They constantly propped up zombie companies. The earthquake will help some sectors for a while, but there are serious demographic and debt problems down the road.

Daily Bell: The Japanese were going to buy PIGS bonds. What will happen now? Does that only leave China?

Jim Rogers: Obviously the Japanese have other things on their mind right now. I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it's the banks or the countries, but somebody has to acknowledge that they are bankrupt. The thing that the world needs is for somebody to acknowledge reality and start taking haircuts.