Clive Capital On Commodity Slam... er...Outlook

Clive Capital On the Commodity Slam...sorry,we mean, Outlook

www.businessinsider.com

Until we learn which hedge funds REALLY got clobbered, Chris Levett's $5 billion Clive Capital, which lost $400 million, will be known as the hedge fund that just got clobbered by the commodities dump.

Clive was "at a loss to explain what had caused crude oil markets to be “annihilated," Clive's management said, according to the FT.

Click here to see what might have caused it >

We assume Levitt's will bounce back. But for some smaller funds, what happened last week was game over.

Until then, check out what Clive Capital was saying about commodities in October.

Below is a summary from their October letter to investors. We published Clive's macro view in November.

From Clive Capital's October letter to investors:

Energy

-- Bullish on gas, power, and emissions

• Estimates for U.S. onshore oil production growth are continually revised up
• In Asia, Chinese oil demand continues to beat expectations
• With floating inventories of crude and products continuing to whittle away, oil fundamentals appear to be tightening. Onshore commercial inventories would be the next to draw, which should be supportive to oil spreads in general.
• Ethanol shortages in 2011 look increasingly possible, which would be supportive for gasoline, particularly in Brazil and the U.S.
• Gas is expected to remain in a competitive position versus Coal all winter long and throughout 2011.
• Germany will reach 2008 level power consumption by the end of 2011 if current growth trend is sustained.

Precious Metals

-- Bullish on Precious Metals Growing fears over the value of the major paper currencies as well as the persistence of ultra low real rates across the world should be bullish for Precious Metals as a group going forward. We made no major changes to our Gold positioning and should continue to benefit from a move higher in prices... PGM’s also rallied in October; with Palladium outperforming Platinum and seeing Palladium prices reach 9-year highs. The longer-term bullish supply story is not only a function of constrained supply but also of increased cost pressures (particularly in the face of a strong South African Rand and power tariff increases), which are reducing producer profit margins despite these higher prices. On the demand side, tighter emissions legislation around the world has been a positive driver for many years. The implementation of regulations for off-road vehicles (e.g. those used in agriculture, construction) in Europe and North America in 2011 as well as demand from stationary fuel cells should add two further demand components to markets that are already struggling/unable to supply enough metal for all the other uses.

Base Metals

-- Bullish on Copper and Tin Market balances for 2011 are pointing towards market deficits in Copper, Tin and Lead while Nickel and Zinc should see small surpluses... Copper mine supply is expected to expand by less than 500kt in 2011 (compared to annual refined production of around 19mt)... To put this into perspective, global demand is expected to expand by around 700kt (with the bulk of that growth coming from China and using very conservative assumptions for the G3). As such, there is a strong likelihood that the market will record an even bigger deficit in 2011 than the estimated 300-400kt deficit in 2010. Add in the growing likelihood of physically backed Base Metal ETFs and one could easily envisage a scenario where several metals, particularly Copper and Tin, trade well into record territory in 2011 while others, such as lead, Zinc and Nickel (which are still well below their respective 2007/08 peaks) will see prices rising closer to those prior highs.

Read more: http://www.businessinsider.com/check-out-what-clive-capital-was-saying-about-commodities-before-the-annilhilation-2011-5#ixzz1LrXHGfGX

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Clive Capital On Commodity Outlook


Also read:

Clive Capital Investor Letter on the Commodity Slam 

The Biggest Commodities Hedge Fund In The World On QE And Why It's Still Bullish On China

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-- The MasterFeeds

Jim Sinclair says 'relax', don't do it - don't sell your gold!

Some commentators now see gold - and silver - ripe for recovery with the suggestion that like the rise, the subsequent falls may have been too far too fast. Others disagree.

Author: Lawrence Williams
Posted:  Friday , 06 May 2011 

LONDON - 

The correction in the gold price and the sharp plunge in silver had been anticipated by a number of commentators, although the rapidity and depth of the sell-off may not have been expected, but it is interesting now that some of those who called the top are already suggesting that it may be time to move back in.

Notable among these is Peter Grandich of the well respected Grandich Letter who recommended selling gold and silver right at the top and is already telling readers to start climbing back in.  Grandich says: "After literally getting out within minutes of the top in silver and gold and then watching a decline I anticipated could take weeks or months happen in a matter of days, I believe it's time to go back in and buy back those positions.  I may be 10% too early but we have plenty of room given what we sidestepped.  So I'm now back in fully in gold and silver."

Looking at what has happened in the past week, gold has lost, from peak to current levels, just under $100 - a fall of around 6% which is not massive in the scheme of things.  Silver though has lost around 30% from its peak.  Momentum had carried it up far faster than was reasonable and at least one commentator had described the silver price surge, and subsequent fall back, as "an accident waiting to happen".  It had risen too far too fast and to an extent the euphoria so generated had probably been partly responsible for dragging gold up a little faster than expected, or warranted.

In a similar manner, silver's initial stumble, and then sharp plunge, may have also been a factor in gold losing its lustre. 

But the sell-off hasn't just been in precious metals.  Revived general doubts about global economic strength have run over into most commodities, with investors scrambling for what they see as a safe haven - but in this respect it has been the dollar they have turned to, rather than gold and there has been a recovery in the dollar index over the past day or so which has been another contributing factor in the precious metals' decline.

More sober analysis suggests, though, that the dollar is not worthy of a revival as long as the U.S. Fed keeps on pumping money out to the banks, and then supposedly to the U.S. economy as a whole - although there are serious doubts about how much of this government largesse is actually filtering down the line.  History tells us that money printing on this kind of scale eventually has to lead to inflation - indeed to severe inflation.  Perhaps the banks' sticky fingers have to an extent prevented this from happening so far with the government money finding its way to the investment community and boosting the stock markets rather than the economy as a whole.  - Another bubble waiting to burst?

Indeed all the factors which had led to the rise of gold - we'll leave silver out of it for the moment because it was speculative fervour largely responsible for that metal's over the top advance - are still with us, and at some stage the investment community will recognise this and move back into gold as the haven of preference.  Whether that will happen now - or later in the year, remains to be seen.

Long term gold proponent, Jim Sinclair, who has quite a following, advises gold holders to "relax".  He's looking for a major upturn in gold as soon as June and is still targeting $5,000 as a longer term objective.  This seems far-fetched - but then people would have said that about $1,000 gold, let alone $1500,  only two or three years ago.

As for silver, will we see another meteoric rise if gold does recover first.  Perhaps too many people got their fingers burnt in the recent rise for a similar surge to happen in the short to medium term, and there could still be ground here for further falls befor the price stabilises and starts to rise again.  Maybe a return to a gold:silver ratio of nearer 45:1 or higher (currently 42.5) may be on the cards before real progress starts to be made again here.

On the bearish side, however, there are those who suggest that the decline in gold and silver may not be done yet.  Technical analyst, Dr Nu Yu, points to a "Three Peaks and a Domed House" chart pattern - I guess this means something to the technical analysis community - suggesting a gold price fall of 17% to around $1290 by June, but offers no further projections beyond then.  His chart is shown below courtesy ofwww.munknee.com.

 

As with economists, so it is with gold analysts.  There are always drastically opposing views.

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Glencore lists fraud, criminal case among IPO risks - Yahoo! Finance

Glencore lists fraud, criminal case among IPO risks

On Wednesday May 4, 2011, 1:23 pm

By Clara Ferreira-Marques and Quentin Webb

LONDON (Reuters) - Commodity trader Glencore, set to list this month in one of London's largest-ever offerings, has detailed its involvement in a Belgian criminal probe as it outlines risks to investors, including fraud and corruption.

Glencore said in a prospectus on Wednesday, ahead of its planned $11 billion listing, that its subsidiary Glencore Grain Rotterdam, a former employee and a current employee had been charged in a criminal case in Belgium.

Glencore said the criminal investigation was probing a public official, the European Commission's Directorate General for Agriculture and others for "violation of professional secrecy, corruption of an international civil servant and criminal conspiracy."

Glencore's unit and its current and former employees have been charged with having committed corruption in exchange for information on European export subsidies, it added.

The case was initiated in 2003, with co-operation from Dutch and French police, and covers facts dating from 1999 to 2003.

Commission agriculture spokesman Roger Waite confirmed that the EU executive expected a trial into alleged corruption by former agriculture department official Karel Brus.

Brus, a Dutch national, is accused of having passed confidential information relating to EU export subsidy application decisions to a French farming lobbyist between 1999 and 2003.

"As far as the Commission is concerned, we cannot comment further on an ongoing investigation," Waite said.

Glencore declined to comment on the case beyond details included in the prospectus. It says it is not involved in legal proceedings which could have a material impact on its profits.

Belgium's federal prosecutor confirmed on Wednesday that there is a criminal case against Glencore but declined to comment further. The case will be heard in Brussels on May 12.

The Commission, the European Union's executive arm, has become a civil party to the case, Glencore said.

FRAUD RISK

Glencore also listed in its prospectus over 30 other risks to the broader company, its marketing and trading operations.

The formerly publicity-averse trader and miner operates around the world and says its willingness to move into riskier countries in Eastern Europe, Central Africa and South America before rivals gives it a "first-mover advantage."

Companies typically outline a vast number of risks to future performance in the run-up to a listing, in order to satisfy requirements to provide a full picture for future investors.

Glencore, however, detailed more than many, with risks including declines in demand for commodities, geopolitical risk and the risk it may not be able to retain key employees.

It also raised the risk of fraud and corruption, "both internally and externally."

"Glencore's marketing operations are large in scale, which may make fraudulent or accidental transactions difficult to detect. In addition, some of Glencore's industrial activities are located in countries where corruption is generally understood to exist," the company said.

Glencore said it has internal controls, external due diligence and compliance policies.

(Additional reporting by Ben Deighton and Charlie Dunmore in Brussels; Editing by Alexander Smith and Mike Nesbit)

Glencore lists fraud, criminal case among IPO risks - Yahoo! Finance

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