Metals commodities likely to be hot and volatile for some time - INDEPENDENT VIEWPOINT | Mineweb

Metals commodities likely to be hot and volatile for some time

Programs to stimulate the economy are likely to keep commodity prices strong in the short to medium term and net longs have been increasing for the past four weeks as funds increased their bullish bets.

Posted: Tuesday , 13 Sep 2011

NEW YORK (Economic Times) -
Funds increased bullish bets on raw materials for a fourth straight week, the longest series of gains this year, on speculation that economic-stimulus programmes will lift demand for metals, grains and energy.
In the week ended September 6, speculators raised their net-long positions in 18 commodities by 0.2% to 1.28 million futures and options contracts, government data compiled by Bloomberg show. That's the highest level since June 14. Funds became bullish on copper for the first time in three weeks, and wagers on a gold rally increased for the first time since early August.

Last week, Federal Reserve chairman Ben S Bernanke said policy makers this month will discuss tools they may use to help the recovery, and president Barack Obama proposed a $447-billion plan to spur job growth. The Standard & Poor's GSCI Index of 24 commodities has surged 22% in the past year as the Fed kept US borrowing costs near zero percent and bought Treasuries in a bid to stimulate growth.

"The printing presses of various governments running overtime is likely to keep the commodity markets hot and volatile for quite some time," Philip Gotthelf, the president of Equidex Brokerage Group in Closter, New Jersey, said ....
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Eric Sprott interview-Silver is a 30 Bagger to $1,200

Eric Sprott - From Here Silver is a 30 Bagger to $1,200

“I think it’s becoming obvious to everyone that it’s the one area that you can feel safe to invest in. We are witnessing events unfolding that are suggesting to us that we are finally seeing a differentiation in the market between gold stocks and general stocks.

One of the key days was August 19th and on that day the Dow was down something like 500 or 600 points and the HUI gold index was up 4%. When you can outperform an index by 800 basis points in one day, it’s telling you that things have changed.

We all recall that in the last serious market selloff in 2008, the gold stocks got hammered. This time when the markets are weak, typically the gold stocks and gold have done well. So there have been a lot of things that have changed in the market just recently, that are telling us the market is looking at gold very, very differently than it has in the last ten years....

When asked where he sees the price of silver headed Sprott responded, “I think silver will outperform gold in the next decade. If silver should trade at a 16 to 1 ratio (to gold), it will probably trade at 10 to 1 because things tend to overshoot. Let’s use Jim Sinclair’s $12,000 target, that would suggest $1,200 silver, which is a thirty bagger from here...The biggest reason it (silver) should go there is people should fear bank deposits, that’s what I think they should fear.”

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How much gold is traded every day?

How much gold is traded every day?

Excellent article from the FT on London Bullion Market Association's (LBMA) study on the gold trading market in London.

their conclusions are that the OTC Trades represented a mere 10% of the overall daily trading volume, as reported by the LBMA members.

"...the volume of gold traded in London is ten times what is implied by the clearing statistics: 10.9bn ounces of gold, worth $15,200bn, changed hands in the first quarter of this year, according to the LBMA’s estimate.

"...That is 125 times the annual output of the world’s gold mines – and twice the quantity of gold that has ever been mined.

"...The 10.9bn figure compares to 1.2bn ounces of gold trades that were cleared – in other words, only a tenth of gold traded on the London market is cleared. About 1.2bn ounces were traded in the form of Comex futures in the same period.

"...The vast majority of the trading – roughly 90 per cent – was in the spot market, rather than forwards, options or swaps.

"...the $240bn average daily turnover in the London bullion market is higher than the global daily turnover of any currency pair except for the dollar/euro, dollar/yen, dollar/sterling and dollar/Aussie dollar, according to the most recent Bank for International Settlements survey

The dollar/Swiss franc, that other great safe haven trade, is worth a mere $168bn a day."

See the report from the London Bullion Market Association has just carried out a study

The Ft article is here: Gold earns its crust as haven asset - FT.com

More related articles from the FT:

• Gold vaults charge more for storing bullion
• Randgold climbs as gold sales double
• Commodities Note Central banks polish gold’s shine
• Gaddafi regime sold $1bn of gold
• ECB to reassess inflation risks

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