Sprott Loves Silver, But Slashes Many Mining Stakes

Sprott Loves Silver, But Slashes Many Mining Stakes

Yahoo! Finance

the tickerspy.com Staff, On Monday May 16, 2011, 10:01 am 

 

Canadian commodity hedge fund manager Eric Sprott was shifting his precious metals-focused bets during Q1 as the huge bull run for gold and silver continued.

In recent months, Sprott has been particularly bullish on silver, as the metal went stratospheric before pulling back sharply in commodities trading. In an interview in early April, Sprott predicted silver could go to $100 an ounce and called it "the investment of this decade." In early May, he called the underperformance of silver miners as compared to the metal itself, "shocking."

A look at Sprott Asset Management's top-15 U.S.-listed equity holdings from the end of Q1 shows that the bullion-backed Sprott Physical Gold Trust ETV (NYSE: PHYS - News), which debuted in early 2010, remained the firm's largest position. Sprott also introduced a similar, silver-backed entity in late 2010, the Sprott Physical Silver Trust (NYSE: PSLV - News). Elsewhere, Sprott was putting capital to work, with a new stake in gold miner Extorre Gold Mines (AMEX: XG - News) and increased stakes in Yamana Gold (NYSE: AUY - News), Brigus Gold (AMEX: BRD - News), Eldorado Gold (NYSE: EGO - News), and Sprott Resource Lending (AMEX: SILU - News), a Sprott-controlled firm that provides funding for commodities companies. 

Elsewhere, Sprott was trimming stakes in Barrick Gold (NYSE: ABX - News), Golden Minerals (AMEX: AUMN - News), Alexco Resource (AMEX: AXU - News), Claude Resources (AMEX: CGR - News), IAMGold (NYSE: IAG - News) and Exeter Resource (AMEX: XRA - News). Sprott was reducing its largest silver bets in the three months ended March 31. Sprott slashed its Silver Wheaton (NYSE: SLW - News) and First Majestic Silver (NYSE: AG - News) stakes during the period, but the latter was nonetheless the firm's second-largest equity holding heading into Q2.

Looking at tickerspy.com's graph charting the performance of Sprott's end-of-Q1 holdings so far in Q2, one can see that the holdings have been quite volatile compared to the broader market. If you want to see how your performance stacks up to Sprott's or take a look at some of the other stocks it's invested in, visit tickerspy.com to see the firm's top holdings and a chart of their combined performance.

Pro portfolio performance is based on institutions' top-15 holdings as disclosed in quarter-end filings with the SEC. Pro performance does not take into account additional holdings beyond the top 15 nor does it include positions that are not required to be disclosed by the SEC. As such, Pro portfolio performance should be considered an approximation and not a precise record of how an institution has performed over time.

http://finance.yahoo.com/news/Sprott-Loves-Silver-But-indie-2810516445.html?x=0&.v=1

http://www.printfriendly.com/print?url=http://finance.yahoo.com/news/Sprott-Loves-Silver-But-indie-2810516445.html?x=0

'Widowmaker' Oil Trade Lives Up to Its Name - CNBC

Widowmaker' Oil Trade Lives Up to Its Name

OIL COMMODITIES MARKETS ECONOMY INTEREST RATES INFLATION FUEL PRICES GASOLINE FUTURES NYSE FTSE

CNBC.com

| 12 May 2011 | 03:10 AM ET

Big oil traders who bet on a rise in gasoline prices relative to heating oil ahead of the summer driving season may have thought they broke the curse of a "widowmaker" trade even as oil prices crashed.

They were dead wrong. Some of the traders who shun the big, directional bets that hedge funds love have crowded into a common springtime trade: betting gasoline futures on the New York Mercantile Exchange (NYMEX) will hold at a premium to heating oil futures as consumption accelerates into the summer.

They have been counting their winnings since March, when the spread staged its biggest seasonal rise since 2007.

The surge accelerated earlier this week as the Mississippi River swelled, threatening refinery operations in Louisiana and Tennesse.

But then came Wednesday, when gasoline futures collapsed in the biggest absolute drop in more than two years.

The spread dropped by over 17 cents, the biggest one-day move since September 2009.

"There will be widows. Some people got pretty whipsawed. But that trade is not for the faint of heart," said Stephen Schork, editor of the Schork Report.

Indeed, lately it's been a stomach-churning ride. The spread has moved by more than 6 cents in either direction in four of the past eight trading sessions; prior to last week it moved by such a margin only nine times in two years.

First, the U.S. Energy Information Administration came out with data showing an unexpected build in gasoline stocks as the threat level for refineries from the Mississippi river abated.

This, coupled with mounting concerns that gasoline pump prices near the critical $4 a gallon level will cause U.S. consumers to balk, pushed many bulls to the exit.

RBOB gasoline at one point slumped by over 30 cents or 8.95 percent.

The price drop was so big it triggered a five-minute trading halt in all three oil major contracts for the first time since Sept. 22, 2008.

Victims

The "widowmaker" trade tends to be popular among trading houses and hedge funds which house some of the biggest speculative traders in the market.

One victim is said to have lost $500 million on a single bet in the summer of 2008 when gasoline failed to reach a premium to heating oil, contrary to the usual pattern.

On Wednesday, traders said a big Europe-based oil trading company was forced to stop out, or reverse its long position on gasoline to prevent further losses.

Volumes spiked to the highest level in hitory as dealers rushed to place orders.

"If you were long you were happy this time yesterday and you're probably not so happy now," said an oil trader with a European bank. "The flood story freaked everyone out. The market attracted tourists and then we overshot."

U.S. refineries, which ramped up their gasoline production by 111,000 barrels-per-day last week, according to the EIA, are also set to take a hit if the slump in the futures market is carried to spot markets over the coming few days.

The price crash in theory wiped off more than $5 in profits for every barrel of crude processed into gasoline.

Traders who sensed that the price may have been reaching a peak were relieved on Wednesday to have sold near the top.

The signs were already there. Gasoline demand has been on a continuous slump since the second week of April according to EIA's 4-week average gasoline supply data.

"Luckily, I sold this morning. I'm too scared to watch it," said a gasoline trader with a bank.

Before Wednesday's crash, gasoline was trading at a record premium to heating oil, according to Reuters data going back to 2008.

Others saw the plunge as symptomatic of a new oil trading environment, characterized by huge price swings following last week's record drop in oil prices, for no obvious reason.

In percentage terms gasoline price fell by less than crude in last week's price crash, but on Wednesday they led the whole complex lower, analysts said.

"Last week's steep slide has increased volatility in the market, and we are still responding skittishly to that.

Often in the period after a crash like that things become a little more volatile," said Gene McGillian, analyst at Tradition Energy.

Flagship commodity fund Astenbeck II run by top Phibro trader Andrew Hall was one name that suffered a double-digit loss last week as oil prices tumbled.

© 2011 CNBC.com

commodities - 'Widowmaker' Oil Trade Lives Up to Its Name - CNBC

Share

-- The MasterFeeds

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

\

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

Share

-- The MasterFeeds