MasterMetals on Twitter

October 31, 2011

Asia faces rocky road in securing energy needs | Reuters

Asia faces rocky road in securing energy needs | Reuters

SINGAPORE | Mon Oct 31, 2011 7:27am EDT

(Reuters) - Governments in emerging Asian economies will struggle to secure their rising energy needs as rapidly swelling demand in leading consumers China and India outpaces growth in supplies, which is likely to keep oil prices over $100 a barrel.

High fuel costs for importers are threatening their economies as they grapple with rising subsidy bills and inflation.

The fuel burden, with oil imports costing around 5 percent of gross domestic product, is weighing on economic growth, said Richard Jones, deputy executive director of the International Energy Agency.

"It's particularly sensitive in emerging markets, India is a country that has got a particularly high oil burden, they import a lot," Jones said.

The rise in prices has been partly blamed on the growing energy appetite of Asian nations. China, the world's second-biggest economy, has driven oil demand growth for a good part of the past decade. India is also competing to secure scarce energy resources for its billion-plus people.

The global economy needs to see lower prices, Nobuo Tanaka, former head of the International Energy Agency, said.

"If $100 oil continues, it will be as bad as 2008," Tanaka told the Singapore International Energy Week (SIEW) conference.

Brent prices have averaged over $111 a barrel so far this year, sharply up from an average of around $80 in 2010. The front-month contract hit a high of $147.50 in July 2008, just ahead of the global financial crisis of that year.

Brent at over $100 would cut global oil demand by around 1 million barrels per day (bpd) from what fuel consumption would be at a price of $70 to $80 per barrel, Tanaka said. That would slice more than 1 percent from total world fuel consumption.

Brent will average $106.80 per barrel next year and $108.60 in 2013, a recent Reuters poll of 35 analysts showed, as demand for fuel from China and other emerging economies keeps the global oil market tight.

The burden of high energy costs on growth contributed to the sharp slowdown in the global economy in the wake of the 2008 financial crisis. High prices led to such a sharp slowdown in fuel demand that oil producer group OPEC was forced to make record output cuts.

The oil minister for the United Arab Emirates did say producers can tolerate a further fall in oil prices to $80-$100 a barrel, the first indication of a preferred price range from a Gulf Arab producer since OPEC talks collapsed in June.

High oil prices would help guarantee future supplies, UAE oil minister Mohammed bin Dhaen al-Hamli said, by encouraging more investment in crude production capacity, which would mean less volatile prices.

"We need a reasonable price to continue building capacity," Hamli told the conference.

"The higher the capacity, the less fluctuation in prices."

The UAE, one of three Gulf OPEC producers with spare capacity, is pumping at 2.5 million barrels per day (bpd) from capacity of 2.7 million bpd, Hamli said, having upped output to help meet a supply shortfall from Libya.

The Arab Spring and the disruption to Libya's oil output have added to the difficulty policy makers face as they search for secure oil supplies.

"The recent spate of unrest in the Middle East and North Africa has generated doubt over the reliability of energy supplies from the region," said S Iswaran, minister in the Singapore Prime Minister's office.

"These events have caused increased volatility in energy markets and prices, heightening the policy challenge of governments to secure reliable and affordable energy supplies to sustain growth."

(Additional reporting by Simon Webb, Jessica Jaganathan, Luke Pachymuthu, Randy Fabi; Writing by Manash Goswami; Editing by Michael Urquhart and Clarence Fernandez)

Asia faces rocky road in securing energy needs | Reuters

Share
-- The MasterFeeds

October 26, 2011

Iron ore in record slide as China demand slows | Reuters


Iron ore in record slide as China demand slows
China's appetite for iron ore has weakened with slowing steel demand from the construction sector, pushing down prices for the steel-making ingredient nearly 30 percent since early September.

Some mills in China have stopped buying iron ore as they curb steel output to cope with the downturn in demand. China buys around two thirds of seaborne cargoes to feed the world's largest steel industry, and is the biggest market for the mining giants Vale (VALE5.SA), Rio Tinto (RIO.AX)(RIO.L) and BHP Billiton (BHP.AX)(BLT.L).

Weak steel demand across Asia cut profits at Japan's two biggest steelmakers -- Nippon Steel Corp (5401.T) and JFE Holdings Inc (5411.T) -- in the fiscal six months to September, and both slashed their full-year outlook.

"Steel mills have started to cut production and have suspended iron ore purchases, while miners keep on producing and delivering spot cargoes, so we see iron ore prices diving these days," said an iron ore buying official with a mid-sized steel mill in south-central China.




Iron ore is loaded into a pile at Fortescue Metals Cloudbreak iron ore mine, about 250km (155 miles) southeast of Port Hedland in Western Australia state, July 25, 2011.  REUTERS/Morag MacKinnon
Iron ore is loaded into a pile at Fortescue Metals Cloudbreak iron ore mine, about 250km (155 miles) southeast of Port Hedland in Western Australia state, July 25, 2011.
Credit: Reuters/Morag MacKinnon

SINGAPORE | Wed Oct 26, 2011 8:40am EDT
(Reuters) - Iron ore's steepest ever price slide on Tuesday reflects slowing growth in top consumer China and casts more doubts on Beijing's commodity demand at a time when the outlook for developed economies remains shaky.
China's appetite for iron ore has weakened with slowing steel demand from the construction sector, pushing down prices for the steel-making ingredient nearly 30 percent since early September.
Some mills in China have stopped buying iron ore as they curb steel output to cope with the downturn in demand. China buys around two thirds of seaborne cargoes to feed the world's largest steel industry, and is the biggest market for the mining giants Vale (VALE5.SA), Rio Tinto (RIO.AX)(RIO.L) and BHP Billiton (BHP.AX)(BLT.L).
Weak steel demand across Asia cut profits at Japan's two biggest steelmakers -- Nippon Steel Corp (5401.T) and JFE Holdings Inc (5411.T) -- in the fiscal six months to September, and both slashed their full-year outlook.
JFE said steel prices in Asia will remain stagnant because of slower Chinese demand and larger-than-expected supply from South Korea.

October 25, 2011

Where in the world is the gold?

Where in the world is the gold?

GoldSeek Web - By: Chris Powell, Secretary/Treasurer, GATA



-- Posted Sunday, 23 October 2011 | Source: GoldSeek.com


Remarks by Chris Powell
Secretary/Treasurer, Gold Anti-Trust Action Committee Inc.
Fall Dinner Meeting
Committee for Monetary Research and Education
Union League Club
New York, N.Y.
Thursday, October 20, 2011

CMRE President Elizabeth Currier chose the title of my remarks -- "Where in the World Is the Gold?" -- and I didn't argue with her, but if I knew where the gold was, they'd have to kill me. And if I knew and told you before they got to me, you'd all have a big problem too.

But for our purposes tonight it is enough to know that we will never be permitted to know, at least not in the current political circumstances.

Having been raising questions about the gold market for 12 years now, I've realized that the amounts, location, and disposition of government gold reserves are secrets more sensitive than the amounts, location, and disposition of nuclear weapons. Indeed, under nuclear weapons control treaties, governments with nuclear weapons have often shared that sort of information, even with hostile powers. But gold reserve information is far more tightly held and most gold information provided officially is actually disinformation.

Why is it this way?

It's because gold is an even more powerful weapon than nukes -- an alternative currency that is not necessarily under any governments power, a determinant of the value of other currencies, interest rates, government bonds, and equities.

It's not just me saying this. Lawrence Summers, former U.S. Treasury Secretary and off-and-on economics professor at Harvard, said so in the study he wrote with University of Michigan economics professor Robert Barsky in the Journal of Political Economy in 1988, a study titled "Gibson's Paradox and the Gold Standard." This study is posted at the Internet site of my organization:

http://www.gata.org/files/gibson.pdf

A few weeks ago, maintaining that his "Gibson's Paradox" study remains dispositive of the gold price issue, Summers provided it to New York Times columnist Paul Krugman -- and did so by giving Krugman the link to it at GATA's Internet site. That's what Krugman wrote on his blog.

This close correlation among gold, interest rates, and government bond values is why central banks long have tried to control -- usually suppress -- the price of gold. For gold is the ticket out of the central banking system, the escape from coercive central bank and government power. As an independent currency, a currency to which investors can resort when they are dissatisfied with government currencies, gold carries the enormous power to discipline governments, to call them to account for their inflation of the money supply and to warn the world against it. Because gold is the vehicle of escape from the central banking system, the manipulation of the gold market is the manipulation that makes possible all other market manipulation by government.

That manipulation operates through the largely surreptitious mobilization of Western central bank gold reserves and the gold nominally held by the major exchange-traded funds. If the manipulation was done completely in the open, as governments used to manipulate the gold market, through the gold standard and then through what was called the London Gold Pool, the Western central bank gold dishoarding scheme of the 1960s, the manipulation would fail, because then the world would understand that there isn't a free market in gold -- or in any currency, any more than there is a free market in government bonds.

Anyone can determine this for himself just by putting the unanswerable questions to central bankers and treasury officials.

For example, three years ago, as the International Monetary Fund was constantly announcing plans to sell some of its gold, I wrote to the IMF to try to determine exactly where its supposed gold was kept and whether the IMF had control of its own gold or if that gold was only pledges of gold from its member nations. The most I got out of the IMF was that its bylaws allow its gold to be stored in the United States, Britain, France, and India. When I asked if there ever had been an audit of the IMF's gold, the IMF's publicist terminated our correspondence. I was refused information as to where the IMF's gold was.

At the hearing held on March 25, 2010, by the U.S. Commodity Futures Trading Commission to inquire into the precious metals market, the managing director of the metals consultancy CPM Group in New York, Jeff Christian, a consultant to central banks, testified to what he had published in an explanatory essay in 2000. Christian testified that the world's biggest gold market, the London bullion market, is actually part of a fractional-reserve gold banking system where many times more gold is sold than is delivered. Most London gold buyers don't take delivery, and so most gold in client accounts on the books of the London bullion banks doesn't exist. It is just an unsecured claim against the bullion banks, which presumably have assurances that, in an emergency like a short squeeze, they can obtain gold from central banks.

That is, Western central banks have figured out how to increase gold's supply by vast amounts without going through the trouble of digging it out of the ground. They help to invent and sustain "paper gold" -- imaginary gold that many buyers accept, never suspecting that they're being deceived and cheated, fooled into thinking that they are buying a finite resource to hedge against the infinite creation of currency, when what they are buying is just as subject to infinite creation as the currency they want to hedge against.

October 24, 2011

Gold Climbs for Second Day as European Debt-Crisis Concern Stokes Demand - Bloomberg


Gold Climbs for Second Day as European Debt-Crisis Concern Stokes Demand - Bloomberg

The MasterMetals Blog

Barrons on FCX.... $75 stock when copper prices rebound or on a takeover offer

Barron's on FCX.... $75 stock when copper prices rebound or on a takeover offer

 

 

Barrons article suggesting that FCX stock is really cheap, trading below the value of its assets. could reach $75 (vs current $36.58) if and when copper prices rebound to $4.

If you apply what ABX paid for EQN, then FCX is worth $129 just for the copper resources. potential acquirers would be : RIO, BHP, Vale.

 

Turning Copper to Cash

Freeport-McMoRan Copper & Gold trades for far less than the value of its mining assets. The company could be a major beneficiary of the red metal's rebound—or a takeover offer.

 

A gleaming buying opportunity is emerging in shares of the world's largest publicly traded copper miner, Freeport-McMoRan Copper & Gold. The shares (ticker: FCX) are down 40% this year, to a recent $35, amid bitter labor disputes, collapsing copper prices, flagging global demand and concerns that another financial crisis is looming. One key to copper's comeuppance is the decelerating economy of China, the world's largest buyer of the red metal. Taken together, these negatives have confused the outlook for copper prices—and for Freeport's earnings.

Analysts currently expect Phoenix-based Freeport to earn $5 billion this year, or $5.29 a share, on revenue of $22 billion, versus earnings of $4.3 billion, or $4.65 a share, on revenue of $19 billion in 2010. Shares fetch just 6.6 times 2011 estimates, versus an average price/earnings multiple of 12 in the past decade, and three times earnings before interest, taxes, depreciation and amortization, about half the historic range. "In a double-digit recession, if copper were to go to $1.50 a pound, I see the stock at $20 to $25," says Douglas Chudy, a value investor who follows Freeport for New York money manager Dalton Greiner Hartman Maher.

But for a host of reasons, Chudy doesn't see a recession or $1.50 copper—a price not far from the metal's 2008 nadir. Instead, he says, "copper fundamentals should remain solid for the next few years. I don't think 2011 will prove to be the peak in earnings. If copper gets back to $4, this is a $75 stock in the next couple of years."

Enlarge Image

Close

George Steinmetz/Corbis

Workers have struck at Freeport's Grasberg mine in Indonesia and elsewhere, forcing the company to mine higher-grade areas to compensate for lost production. The labor disputes have helped depress the shares.

Stephen Leeb, another New York money manager and author of Red Alert: How China's Growing Prosperity Threatens the American Way of Life, adds that investors "should view copper and Freeport as aggressive long-term buys." Others on Wall Street could be coming around to that view, as shares held steady late last week, even as copper prices skidded.

More than three-fourths of Freeport's revenue comes from copper, which has fallen to a recent $3.21 a pound from a February high of $4.66. Another tenth derives from gold, and the rest from molybdenum (a mineral that strengthens stainless steel), cobalt, silver and other metals. The company has 120 billion pounds of proven copper reserves, and around 100 billion pounds of other minerals, including gold.

Freeport reported last week that third-quarter earnings fell 11%, to $1.10 a share, because of disruptions at its giant Grasberg mine in Indonesia. Next year the company is expected to earn $4.9 billion, or $5.18 a share, assuming copper prices stay at current levels, which are below the $3.60 a pound that Freeport realized in the third quarter. Broadly, every 10-cent change in copper prices affects Freeport's earnings by 25 cents a share, although sensitivity can change based on production levels and the amount of byproducts mined.

FREEPORT, WHICH PRODUCES FOUR billion pounds of copper a year, says it will lose 100 million pounds of copper output and 100,000 ounces of gold production this year as a result of the strikes. At Grasberg, strikers have been killed and injured in confrontations with the police; they are seeking an eightfold increase in wages. Workers also walked off the job last month at Cerro Verde, Peru's third-largest copper mine, which is majority-owned by Freeport. Company executives declined to comment.

Enlarge Image

Close

These are sensitive and problematic issues. Yet speaking during the company's most recent earnings conference call, Freeport CEO Richard Adkerson noted that Grasberg is operating at "roughly two-thirds of normal rates," and that the company is mining higher-grade areas to compensate. Capacity utilization was higher in the period than analysts expected, while net extraction costs for Freeport, the lowest-cost copper miner in the world, stayed at a modest 80 cents, owing to high gold prices. Jorge Beristain of Deutsche Bank assumes that each 10% increase in wages at Grasberg would reduce earnings per share by three pennies.

CHINA'S COPPER INVENTORIES, a critical factor in the market, were larger than expected at the end of 2010. In this year's first half, China was thought to have been destocking, but today there are signs it is back in the market. London Metal Exchange warehouses are said to be making major copper deliveries, while the price of physical copper in China is rising.

Long term, copper is becoming scarcer, given more demand from emerging markets and few new big sources of supply. "At prices much below $3 a pound and oil above $80"—which makes mining more expensive—"it is not clear that meaningful additional supplies of copper can be brought to the market, barring a technological miracle," says Leeb. "A resumption of even modest worldwide growth without major technological innovations will imply copper prices dramatically higher than fairly recent all-time highs."

Freeport will be a major beneficiary. The company is far healthier than in 2008, when it had $6.5 billion of net debt stemming from its 2007 acquisition of Phelps Dodge. It since has reduced debt and instead is sitting on $1.6 billion of net cash. With copper at $3.25 a pound, the company would have annual operating cash flow of $7 billion—sufficient to cover its capital-spending needs, taxes and $1 billion of annual dividends.

The Bottom Line

Freeport trades around 35 but could rise to $75 a share in several years if copper works its way up to $4 a pound from a recent $3.21.

Freeport plans to boost supply sharply, adding a billion pounds of copper production by 2016 by expanding its mines in Morenci, Ariz., and elsewhere in the U.S., and at Cerro Verde and Tenke Fungurume in Congo. Last week it said it would boost capital spending by $1 billion, to $3.7 billion next year.

Freeport's $33 billion market value is far below replacement value, or the value to a strategic buyer seeking decades of reserves. This year Barrick Gold (ABX) paid $7.5 billion to buy Australian copper miner Equinox Minerals, a price, says Credit Suisse, that would peg Freeport's copper resources at about $123 billion, or $129 a share—not including its gold or molybdenum.

Such calculations could present a golden opportunity for mining giants with lots of cash, such as Rio Tinto (RIO), BHP Billiton (BHP), or Brazil's Vale (VALE). Sometimes it's cheaper to mine for copper on Wall Street. 

Mining for Value

Freeport could be a tasty morsel for cash-rich mining giants such as Rio Tinto, Vale and BHP. Its shares yield 2.9%.

 

Recent

12-Month

EPS

P/E

Company/Ticker

Price

Change

2012E

2012E

 

 

 

 

 

Freeport-McMoRan Copper & Gold/FCX

$34.79

-27.0%

$5.18

6.7

Rio Tinto/RIO

47.92

-25.5

9.53

5.0

BHP Billiton/BHP*

72.64

-10.7

8.53

8.5

Vale/VALE

22.21

-32.5

4.67

4.8

Barrick Gold/ABX

44.33

-3.4

6.08

7.3

E=Estimate. *Fiscal year ends June.
Source: Thomson Reuters

E-mail: editors@barrons.com

 


 

October 23, 2011

GATA - Gold Anti Trust Action Committee

Gold Anti Trust Action Committee spat with Jeff Christian getting personal

The war of words between GATA and CPM's Jeff Christian is getting increasingly bitter coming to a head after a debate at the Silver Summit conference in Spokane (Link to video of the debate attached).
Author: Lawrence Williams
Posted: Sunday , 23 Oct 2011

LONDON -

The war of words between the Gold Anti Trust Action Comittee, GATA, and CPM Group managing director and founder Jeff Christian seems to be escalating. First Christian accused GATA in an interview as "a group that makes money by basically bilking gold investors out of fees to support GATA so they don't have to get legitimate jobs." And most recently, after a debate between Bill Murphy of GATA and Christian at the Silver Summit meeting in Spokane, GATA secretary Chris Powell accused Christian of "graduating from his usual distortions to outright contrivance."
There is obviously little love lost between GATA and Christian. The former is convinced that Governments, Central Banks and their banking sector allies and some major gold mining companies are, or have been, complicit in suppressing the global price of gold, whereas Christian is firmly on the side of the status quo which disputes this.

Indeed many in the establishment mainstream will not openly recognise that GATA maybe has a point - even though it has certainly produced documentation obtained through the U.S. Freedom of Information Act which would on the face of things appear to support at least part of its case. Indeed if one assumes that Governments as a matter of course manipulate currency exchange rates, then there is logic in their manipulating the gold price too as many throughout the world consider gold as money (currency) and that a rise in the gold price thus equates to a depreciation in currencies - notably the US dollar. Why major gold mining companies might also be complicit in this suppression is perhaps a little more obscure.

But recently Gillian Tett, the award winning U.S. Managing Editor of the Financial Times, a newspaper which is frequently the subject of GATA opprobrium as being on the side of the establishment, did seem to concede that GATA's views should not be dismissed out of hand. "For my money, though" says Tett, " I think there are at least two reasons why it would be foolish simply to deride or ignore GATA. Firstly, some of its points have at least a grain of truth. Even if you find it hard to believe that central bankers would be dastardly enough to create a plot -- or competent enough to do what GATA claims -- the fact is that global commodity markets are pretty murky, central banks are often opaque, and Western rhetoric about "free" markets is often hypocritical. Those issues merit far more debate, not just among journalists but central bankers too."

One has to give Christian credit for potentially throwing himself to the wolves at the Silver Summit - very much a pro-GATA group. Indeed it is probably doubtful if any in the audience would have been sympathetic to Christian's views. There is very much a divide between GATA-friendly conferences and those which the mainstream commentators normally attend, although it is interesting that the principal GATA view proponents seldom attend the latter, and vice versa, but whether this is because they are not welcomed or choose just not to go is perhaps uncertain. To a relatively impartial observer though the GATA conferences are certainly more fun - at least judging by the recent GATA event held here in London - even if being rather more than one-sided in the views expressed!

In truth, the actual debate at the Silver Summit was, in the writer's view, a little disappointing with perhaps insufficient time, or opportunity, for either party to make any killing arguments one way or the other. A link to the video follows so readers can make their own judgements: http://www.youtube.com/watch?v=7hnIqE1_ZGU


Mineweb.com - The world's premier mining and mining investment website Gold Anti Trust Action Committee spat with Jeff Christian getting personal - POLITICAL ECONOMY | Mineweb


October 22, 2011

Aristotle's Qualities of a Good Money - Gold Speculator

Aristotle's Qualities of a Good Money

By Gold Investing 101
Published: December 08, 2008

About 2000 years ago Aristotle defined the characteristics of a good form of money. They were as follows:

1.) It must be durable. Meaning it must stand the test of time and the elements. Money is a medium of exchange and a store of wealth so whatever form it takes, it must be able to handle the wear and tear of constant trading and transactions.

2.) It must be portable. Meaning it should be practical in the sense that it holds a high amount of 'worth' relative to it's weight and size. In other words, it's "worth" must be very dense. Imagine if money was in the form of lead bricks, these bricks would be very dense, but it would be a nightmare and near impossible to constantly exchange large amounts. And you can forget about carrying them around in your pockets.

3.) It must be divisible and consistent. Meaning it should be relatively easy to separate and distribute in smaller forms without affecting it's fundamental characteristics. This concept also works in reverse in that it should be relatively easy to re-combine several divided pieces of the money into a larger, single piece. This makes houses and paintings and cars unpractical as forms of money because taking them apart would affect their fundamental characteristics. An extension of this idea is that the item should be 'fungible'. Dictionary.com describes fungible as:

"(esp. of goods) being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind."

4.) It must have intrinsic value. This characteristic carries a bit of a subjective quality in that everyone views the world through a different lens and what I view as valuable may not necessarily be valuable to my neighbor, but for the sake of argument let's just say that there is a consensus of value given to a certain material. The basic understanding behind intrinsic value is that the material carries 'worth' in and of itself. It does not derive it's value from anything else. It just sits there and is valuable. This is why paper currencies with no backing will not stand the test of time. Paper currencies only derive their "value" from what is known as legal tender laws, which are in essence a threat of legal prosecution, and or force, if they are not accepted as money for payment.

This fourth point brings up the point of scarcity, which is in essence a matter of intrinsic value. Paper currencies in circulation today, such as the dollar, euro, yen, swiss francs, zimbabwe dollars, etc... they are all now purely fiat instruments. (by fiat, I mean that their use is declared by decree and usually by threat of force. Definition of fiat.) The governments that sponsor them have essentially unlimited power in their ability to create new supplies. Because of technology, it is now simply a matter of typing something into a computer and the amounts are instantly credited somewhere. So in theory the supply of dollars for instance is infinite, and it seems like lately the wizards in Washington are trying to see whether this theoretical limit can be reached. Take Zimbabwe as a practical real world example. It now takes trillions of Zimbabwe dollars to buy a roll of toilet paper.


Not a good form of money:



Not a good form of money:





A good form of money:



Do me a favor and think about it,
-Pip

Aristotle's Qualities of a Good Money - Gold Speculator

The MasterMetals Blog

October 21, 2011

Deutsche Bank: ‘Low Probability’ European Officials Would Use Gold For Debt Crisis Kitco News - Market Nuggets

Market Nuggets: Deutsche Bank: ‘Low Probability’ European Officials Would Use Gold For Debt Crisis

21 October 2011, 10:45 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -Deutsche Bank doubts European officials will use gold holdings for programs to deal with the continent’s sovereign-debt crisis. “In the past, gold has been a useful asset for European governments as they attempted to reduce budget deficits and outstanding debt levels in the run-up to EMU entry, which was assisted by profit transfers from central banks to national governments when gold was valued at market prices rather than book value,” the bank says. “However, we attach a low probability of European officials using gold reserves in the context of the euro crisis. Gold holdings are still in the possession of national governments but are ring-fenced from the authorities by the eurosystem. Moreover, in terms of valuation, euro-area gold holdings represent little more than 6% of public debt outstanding.”

By Allen Sykora of Kitco News; asykora@kitco.com

Deutsche Bank: Gold May Trade Sideways Next Two Months

21 October 2011, 11:03 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -Deutsche bank says gold may trade sideways for a while, as was the case with silver when it corrected last spring. Gold corrected sharply lower in September. “We expected the events in the gold market might replicate what occurred in the silver market earlier in 2011,” the bank says. “Indeed when silver prices corrected by 30% in the second quarter of this year, prices then traded broadly sideways for two months. We expect a similar fate threatens the near-term outlook for gold.” For the rest of this year and next, Deutsche Bank has not revised its gold forecasts listed in a weekly commodities report. It looks for $1,750 an ounce in the current quarter. For the four quarters of 2012, it looks for $1,750, $1,850, $2,000 and $2,000, with a full-year 2012 forecast of $1,900.

By Allen Sykora of Kitco News; asykora@kitco.com


Kitco News - Market Nuggets

October 19, 2011

Uranium explorer Hathor`s White Knight is Rio Tinto - URANIUM | Mineweb

Uranium explorer Hathor's White Knight is Rio Tinto

Mining giant Rio Tinto has made a C$578 million bid for Hathor Exploration, targeting primarily the latter's Roughrider uranium find. The friendly bid has been approved by the latter's Board and recommended to Hathor shareholders.

11% Premium to Cameco's bid.

See the whole story here:

Mineweb.com - The world's premier mining and mining investment website Uranium explorer Hathor`s White Knight is Rio Tinto - URANIUM | Mineweb

The MasterMetals Blog

Commodity trade suffers as French curb credit - FT.com

Commodity trade suffers as French curb credit

FT.com

Traders in the crude oil options pit on the floor of the New York Mercantile ExchangeGetty

Trade finance is a huge business, with lending hitting $114bn in the first nine months, down 6 per cent year-on-year, according to Dealogic.

The European banking crisis is spilling over into commodities trading with French banks, the main financiers of trading houses, reining in their lending.

BNP Paribas and a handful of other European banks, including Société Générale and Crédit Agricole, provide most of the credit lines that underpin the business of the publicity shy Swiss-based traders that dominate commodities markets.

BNP’s Geneva branch alone accounts for up to a quarter of the sector’s credit, according to industry estimates. The bank said commodity trade finance activities “will be part” of its “global deleveraging effort”, but it “had no intention to exit the business”.

Industry executives and bankers said the top traders, including Glencore, Vitol and Cargill, were unlikely to be affected by the credit crunch but small and medium-sized trading houses were already suffering.

Harris Antoniou, head of energy, commodities and transportation at ABN Amro in Amsterdam, said: “There is nervousness in the market. Mid-sized companies in particular feel there may be a need to diversify their funding sources.”

The drive by French banks to reduce the size of their balance sheets is exacerbating the adverse impact on commodities trade finance of the new Basel III capital rules. The new regulation, which phases in over the next seven years, makes the issuance of letters of credit far more onerous than in the past. While banks needed to hold capital equal to just 20 per cent of the value of letters of credit under the old Basel II rules, the new agreement raises the bar to 100 per cent, greatly increasing the cost of lending.

Read the whole story here:


Commodity trade suffers as French curb credit - FT.com

October 16, 2011

Gold Traders Most Bullish Since July After Plunge: Commodities

Bloomberg

Gold Traders Most Bullish Since July After Plunge: Commodities

October 14, 2011, 4:59 PM EDT

By Nicholas Larkin

(For more commodities columns, click CMMKT)

Oct. 14 (Bloomberg) -- Gold's biggest slump in three years means traders and analysts are now the most bullish in three months, speculating that Europe's debt crisis, slowing growth and a bear market in equities will drive demand for bullion.

Twenty-two of 25 people surveyed by Bloomberg expect the metal to rise next week, the highest proportion since mid-July. Prices rebounded 9.2 percent since reaching a two-month low at the end of September and investors are adding to their holdings in gold-backed exchange-traded products for the first time in a month, according to data compiled by Bloomberg. Traders also expect gains in copper, sugar, corn and soybeans, surveys show.

Gold slumped as much as 20 percent since reaching a record $1,923.70 an ounce on Sept. 6 as investors sold the metal to cover losses in other markets. As much as $4.2 trillion was erased from the value of global equities in the past month on mounting concern that economies will tip back into recession and European lawmakers will fail to prevent sovereign defaults. The last time traders and analysts were this bullish, bullion surged 21 percent to an all-time high within eight weeks.

"There's macro-economic, systemic and monetary risk in the world and there's no sign of that going away any time soon," said Mark O'Byrne, the Dublin-based executive director of GoldCore Ltd., a brokerage selling everything online from quarter-ounce British Sovereigns to one-kilogram (2.2-pound) bars. "All the factors that drove gold to a record are still there."

Bank of America

Gold has risen 18 percent this year to $1,683 by 1:30 p.m. in New York, heading for an 11th consecutive annual advance. It's the fourth-best performer behind gasoil, Brent crude and heating oil in the Standard & Poor's GSCI Index of 24 commodities, which rose 1 percent. The MSCI All-Country World Index of equities dropped 9.1 percent and Treasuries returned 7.8 percent, according to a Bank of America Corp. index.

Bullion dropped 11 percent in September, the most since October 2008. That spurred speculators in U.S. futures to cut their net-long position, or bets on higher prices, to the lowest since February by Oct. 4, according to data from the Commodity Futures Trading Commission. They held a net 127,249 futures and options, 13 percent below the average over the past five years.

Investors reduced their holdings in gold-backed ETPs by almost 17 metric tons last month, a pile now valued at about $900 million, data compiled by Bloomberg show. They added 8.7 tons so far this week, taking combined assets to almost 2,219 tons, more than the holdings of all but our central banks.

Accelerating Purchases

Those central banks are also accelerating their purchases. Thailand, Bolivia and Tajikistan bought a combined 18.2 tons in August, International Monetary Fund data show. The slump in prices means more buying for reserves is "very likely," according to Edel Tully, a London-based analyst at UBS AG. Central banks are adding to their holdings for a third year, the longest expansion in almost four decades.

"There's strong physical demand globally," said O'Byrne of GoldCore, which also offers 400-ounce gold bars as part of a service to high-net-worth investors.

The traders and analysts surveyed by Bloomberg are also bullish on copper, which entered a bear market last month after slumping more than 20 percent from a peak in July. Seven of nine people expect prices to rise next week. The metal for delivery in three months, the London Metal Exchange's benchmark contract, dropped 21 percent to $7,545 a ton this year. Copper reached a 14-month low of $6,635 on Oct. 3 as investors speculated that slowing growth will curb demand for raw materials.

China, the world's biggest copper consumer, imported the most metal in 16 months in September, customs data show. Diego Hernandez, chief executive officer of Codelco, the largest copper producer, said in an interview in London on Oct. 4 that the Asian nation should take advantage of the slump to restock.

Warehouse Stockpiles

While Barclays Capital cut its forecast for this year's shortfall in copper supply five times since April, the bank is still predicting a 468,000-ton deficit. That's enough metal to supply Japan for five months. Stockpiles in warehouses monitored by exchanges in London, Shanghai and New York fell about 8 percent since the end of March, a sign production is still failing to keep up with demand.

"Should debt concerns in the euro zone recede, we are looking to more fundamentally based trading through next year where the likes of copper should benefit," said Andrey Kryuchenkov, an analyst at VTB Capital in London. "We just need to shake off macro fears and concentrate on market specifics."

Seven of 12 people surveyed anticipate gains in raw-sugar prices next week and eight said white, or refined, sugar would also advance. Raw sugar traded on ICE Futures U.S. in New York slipped 13 percent this year to 27.93 cents a pound. White sugar traded on NYSE Liffe in London fell 8.5 percent to $711.30 a ton.

Top Producer

Raw sugar climbed 11 percent this week and white sugar 8.8 percent on speculation that flooding in Thailand, the world's second-largest shipper, may delay harvests at a time when mills in top producer Brazil are ending their season early.

The Thai sugar harvest may be delayed by two weeks, according to Newedge Group SA. Mills in Brazil's Sao Paulo state, which accounts for more than 50 percent of the nation's cane production, started shutting for the season in late September, the earliest in 12 years, because of a smaller crop, according to Celso Junqueira Franco, president of the Union of Biofuel Producers.

'Bottoming Out'

Fourteen of 28 people surveyed expect corn to rise next week and 19 of 27 anticipate the same thing for soybeans. Prices for both crops plunged by the most in at least three years last month on prospects for improving harvests. Both commodities rose the most in a year or more on Oct. 11 on the Chicago Board of Trade as traders speculated that declines in September would boost purchases by makers of food, animal feed and biofuels.

"Commodity markets are in the process of bottoming out and I think it may take a little time, maybe a few months, to solidify that bottom," said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $360 billion of assets. "You will see commodities going up now. The intensity of commodity selling may be ending and we may be heading in another direction."

 

October 14, 2011

Standard Life Buys Canadian Stocks, Saying Recession Is Unlikely- Correction

> Bank of Montreal comment on the story:

> Interesting view from a cautious investor: the earnings yield has RISEN to the HIGHEST level since 2009 while the yield on 10 year Canada bonds has declined to record lows. That made equities too enticing to pass up.If you look at base metals stocks they are down 50% from the peak and their balance sheets are pristine. In fact, their debt levels are less than 1/3 what they were at the end of 2008.
>
> Some favorites among the miners are: ANR, TCK/B and WLT ( coal), Cliff ( iron ore), FCX, CUM and IVN ( copper), Petra Diamonds ( diamonds), Uranium One ( uranium), Rio and BHP among the diversifieds.
>
> See news below,
>
>
> Standard Life Buys Canadian Stocks, Saying Recession Is Unlikely
> 2011-10-14 04:01:00.8 GMT
>
>
> By Matt Walcoff
> Oct. 14 (Bloomberg) -- Standard Life Plc increased investments in Canadian equities for the first time since 2009, betting that prices have plunged to levels justified only if the U.S. economy contracts, which the firm says is unlikely.
> Standard Life Investments Inc., the insurer's Canadian asset-management unit, has boosted its allocation to equities in the nation, buying shares of larger base-metals, energy and industrial companies in the past month, said Charles H. Jenkins.
> The unit, which oversees about C$5.7 billion ($5.6 billion), has sought stocks most-tied to economic growth.
> "This is a mid-cycle slowdown, subpar growth, but we're going to muddle through it," said Jenkins, a senior vice president for Canadian equities at the unit. He spoke during a telephone interview yesterday. Standard Life, based in Edinburgh, is Scotland's largest insurer.
> Canadian stocks entered a bear market this month, with the Standard & Poor's/TSX Composite Index falling more than 20 percent from its peak in April, amid concern that the U.S.
> economy is stalling. The index has rebounded 6.6 percent since then after European leaders said they are working toward a solution to the region's sovereign debt crisis. Oil and metals prices have also rallied, driving up their producers in Canada.
> The index's price relative to earnings forecasts for the next 12 months dropped to the lowest level since March 2009 on Oct. 4, while the yield on Canadian 10-year government bonds declined to a record low last month. That made equities too enticing to pass up, Jenkins said.
> "If you look at some of the metals stocks, they're down 50 percent," said Jenkins, who declined to name the stocks he bought. "Their balance sheets are pristine."
> Base-metals and coal companies in the S&P/TSX have less than one-third the debt relative to equity they had at the end of 2008, according to data compiled by Bloomberg. The stocks have tumbled 40 percent since Feb. 8.
>
> For Related News and Information:
> Developed markets view: DMMV <GO>
> World stock indexes: WEI <GO>
> Most-active Canadian stocks: MOST CN <GO> S&P/TSX map: SPTSX <Index> IMAP <GO> Top stories on stocks: TOP STK <GO> Stories on Canadian stocks: NI CNS <GO> Top stories on Canada: TOP CA <GO>
>
> --Editors: Nick Baker, Stephen Kleege
>
> To contact the reporter on this story:
> Matt Walcoff at +1-416-203-5729 or
> Mwalcoff1@bloomberg.net

October 13, 2011

Bakries in refinancing talks with Glencore

Glencore on the prowl...

Financial Times, 1:55pm Thursday October 13th, 2011
Bakries in refinancing talks with Glencore
--
By Javier Blas in New York and Anthony Deutsch in Jakarta
--
Two of the world's largest commodities trading houses are in negotiations to loan hundreds of millions of dollars to Indonesia's influential Bakrie family to help refinance a $1.35bn loan to Credit Suisse and several hedge funds

Read the full article at: http://on.ft.com/ojUaNW

Gold Stocks Top Fund Managers Are Buying And Selling

From Seeking Alpha
By Ganaxi Small Cap Movers:

The average gold stock as represented by the SPDR Gold Shares Index (GLD), was up four-fold from 2005 to its peak in early October, in tandem with the increase in the price of an ounce of gold ,from under $500 to its peak at $1,900 over the same period. However, the performance of individual gold stocks has varied over the same period, from an approximate 50% increase in the case of Freeport McMoran Copper & Gold (FCX) and Hecla Mining Co. (HL), a doubling in the case of Barrick Gold Corp. (ABX), a tripling in the case of Kinross Gold Corp. (KGC), a quadrupling in the case of Goldcorp Inc. (GG), a six-fold increase in the Yamana Gold Inc. (AUY), and finally a whopping fifteen-fold rise in the case of Silver Wheaton Corp. (SLW).

The price of gold, like in the case of many other commodities, is influenced by supply


Complete Story »







Sent from my iPad

October 12, 2011

GOLD target is to get back above its 50-week MA

GOLD -- 

GLD, having fallen below its 50-week MA, is subtly creeping higher. Its target is to get back above its 50-week MA at 170. It's going to be tough.





October 11, 2011

October 10, 2011

Gold Price Set to Drop into Aggressive Accumulation Zone

On gold's 4-month chart it is now apparent that a bear Pennant has been forming since the panic bottom, with the weak upside volume portending an imminent breakdown and steep drop. A reader pointed out to me during last week that gold's panic lows occurred in thin trading on the Hong Kong market, and for this reason we do not have to factor in the tail of the hammer candlestick when deciding where to draw the boundaries of the Pennant.

The measuring implications of this Pennant call for a drop at least to the vicinity of the intraday lows of the Reversal Hammer and possibly somewhat lower towards the $1520 area - at this point the decline should have completely run its course and we will be looking to buy aggressively.
If we look carefully we can see that a small "bearish engulfing pattern" has formed in gold over the past 2 trading days, implying that breakdown from the Pennant and the expected steep drop that will follow is imminent. A reason why this next drop should end the decline is that gold is already deeply oversold as shown by its MACD indicator, and it will of course be even more so after this impending decline.
Those interested in going long gold investments in the near future should "keep their powder dry" but stand ready to wade in big time if gold drops into the bright green "aggressive accumulation zone" shown on our chart.



Gold Price Set to Drop into Aggressive Accumulation Zone



Share
_______________________________________
Check it out on The MasterCharts

Switzerland`s Scoach first to allow gold currency derivative trade - FAST NEWS | Mineweb

As of Monday, Scoach became the first exchange in the world to allow trading in gold-denominated structured products and might also allow exchange traded funds, with gold as the trading currency.
Author: By Martin de Sa'Pinto (Reuters)
Posted:  Monday , 10 Oct 2011


ZURICH (REUTERS)  - 
Swiss structured products exchange Scoach has become the world's first exchange to allow trading in gold-denominated structured products and might also allow exchange traded funds (ETFs) with gold as the trading currency.

Structured products priced in gold, with the international currency code XAU, could previously only be traded over the counter, making them generally less liquid and prices less visible than for products traded on an exchange.

"As of today, issuers can list structured products in gold and trade them in XAU," said Scoach spokesman Stephan Meier.
"There were already structured products denominated in XAU, but previously you couldn't trade them on an exchange."
Scoach, a joint venture between Switzerland's SIX Group and Deutsche Boerse (DB1Gn.DE: Quote), teamed up with EFG Financial Products, the structured products arm of the Swiss private bank, to launch the new structured Products.

"In times of world uncertainty in relation to currencies, gold is a valid alternative. So it is only consistent to offer gold as a trading currency as well," said Christian Reuss, Chief Executive of Scoach Switzerland in a statement.

To invest in XAU-denominated structured products, investors will either need to have a precious metal or gold account, or they can buy the product using francs which their bank will then convert into XAU, Meier said.

"When they sell their products the currency will be XAU. Whether they can cash this in for physical gold will depend from bank to bank," Meier said.

Meier said XAU-denominated ETFs were also a possibility. ETFs -- baskets of securities such as stocks, bonds or commodities -- have attracted floods of money as investors seek cheap, liquid exposure to sometimes hard-to-access asset classes.

Multi-currency ETFs are already listed on the SIX, allowing investors to trade in euros, dollars, yen, francs and other currencies, but there are as yet no products denominated in XAU, Meier said.

"If market participants want to list ETFs denominated in XAU, the international currency code for gold, we could do
that," Meier said.
(Reporting by Martin de Sa'Pinto)
 
 
Mineweb.com - The world's premier mining and mining investment website Switzerland`s Scoach first to allow gold currency derivative trade - FAST NEWS | Mineweb

The MasterMetals Blog