Monday, March 31, 2008

Commodities Drop in Quarterly Sell-Off

Many commodity prices plunged today as investors partook in profit-taking at the end of the quarter. Another factor was the report by the U.S. Department of Agriculture which said there will be a supply problem in corn, wheat and soybeans this year, as stockpiles around the world declined.

There wasn't a commodity sector that didn't experience strong declines and sell-offs.


While the number of acres dedicated to corn planting this year have fallen, soybeans and wheat, on the other hand are increasing, with 75 million acres projected to be planted for soybeans and 64 million acres for wheat in 2008. That's an 18 percent increase for soybeans and a 5.5 percent increase for wheat over last year's total.

Corn prices increased on the news there would be only 86 million acres planted this year, in contrast to the 93.6 million planted last year; a drop of 8 percent. Corn ended at $5.6725 a bushel on the CBOT.


Major metals also fell, with gold, silver and copper all dropping as investors assured themselves profits at the quarter's end. Gold dropped by $14.40 to finish at $916.20 an ounce on the NYMEX. Silver fell 62.5 cents to settle at $17.275 an ounce, and copper prices for May declined by 0.5 cent to end the day at $3.8635 on the NYMEX.


Futures for energy also fell, as crude oil for May delivery finished down by $4.04, ending at $101.58 a barrel on the NYMEX.

Gasoline futures for April plunged by 10.07 cents, ending at $2.6163 a gallon. Heating oil also dropped 5.58 cents to settle at $3.0492 a gallon.

Friday, March 28, 2008

Commodity News around the Web

Weekend commodity news roundup


Markets drop with oil on broad quarter-end selloff

Commodities ended broadly lower on Friday, extending losses from the previous session, after a drop in oil prices and profit-taking by funds preparing to close first quarter trade.


Brazil's Real Falls on Commodities Drop, Concern Over Surplus

Brazil's real weakened for a second day on concern declining commodity prices and a narrowing trade surplus will lessen demand for the currency.


Canada dollar sags on commodities, bonds mixed

The Canadian dollar ended lower against the U.S. dollar on Friday as commodity prices fell and worries persisted about the health of the U.S. economy and the potential for spillover effects on Canada.


NYSE buys $55m interest in India exchange

NYSE Euronext Inc., the American-European corporation that operates numerous securities exchanges worldwide, has signed an agreement to purchase a 5-percent interest in the independent Multi Commodity Exchange of India Ltd. for $55 million.


Sempra Energy ratings not affected by final approval for commodities jv - S&P

Standard & Poor's Ratings Services said its ratings and outlook on Sempra Energy (NYSE:SRE) are not affected, after the company received final regulatory approval to form the commodities-marketing joint venture, RBS Sempra Commodities.


Commodities Bubble Burst? Big Clue Comes Monday

Investors wondering whether the agricultural commodities bubble has burst will get some important clues in Monday's annual crop plantings report, considered a bellwether for the direction of farming activity for the year.


How Expensive is the Food for Food?

I want to share my opinion in answer to a few questions I've received about the increased margin requirements imposed by the Chicago Mercantile Exchange (CME) for crops of agriculture futures.


Thursday, March 27, 2008

Hedge Fund Buys another Grain Business

ConAgra CEO Gary Rodkin

A number of concerns has led ConAgra Foods Inc. (NYSE: CAG) to sell off their grain business to hedge fund Ospraie.

One of the concerns came from ConAgra shareholders, who have been expressing concerns over the long term impact the extremely volatile trading business would have on ConAgra.

ConAgra CEO Gary Rodkin said the sale will help the company return its focus to its core food operations, while addressing shareholder anxiety over the trading business.

While the commodity trading unit was very profitable for ConAgra during the commodity boom, the tremendous swings in the futures market made it a huge unknown at any one time for the business and its shareholders.

A related problem was the availability of credit to raise money to back margin calls, making it harder to protect their positions.

One grains trader approved of the deal saying about ConAgra, "They can control risk better now that they're just in the food business."

This is the second time this year a grain business has been acquired by a hedge fund, as earlier in the year Whitebox Advisors LLC bought a grain elevator in Minnesota from Cargill Inc.

Some thing this is the beginning of a trend that has opened the door to a flood of these types of deals.

The reason the hedge funds are going this way is to get a better sense of what the physical markets are really doing, so they can make more informed decisions on their trades.

Commodity Surge Here Again

It looks like the commodity market is done taking a breather, and it's on the way again, as not only agricultural products went up in significant amounts, but a number of metals increased along with them.

After the hit commodities took last week, the usual number of the uninformed called the end to the sector: how wrong they were!

Of course this doesn't mean we're going to on huge surges all the time, but I do think overall, we'll see a steady climb in the overall sector, with the occasional dip. Of course it all depends on the individual commodity and its performance, but overall this trend should continue on for some time.

Both corn and soybeans gained the allowable amount on the Chicago Board of Trade. Others like cocoa also had significant increases, with cocoa growing by 6 percent and coffee by 3 percent in New York.

Upheavals in Argentina, with farmers striking ports, caused concerns on what would get out of the country, as well as wet weather conditions in the eastern part of the midwest have slowed down planting dates for corn. It finished at $5.44-3/4 a bushel for the May contract today.

Soybeans also hit their limit for the second straight day, as it reached $13.07 a bushel for May SK8, when hitting its 50-cent limit. Most other contract months on the CBOT hit their limits as well.

Wheat responded to the agriculture rally, as its May WK8 contract closed at $10.67-1/2 a bushel, an increase of 47-1/2 cents.

The rally in corn and soybeans also lifted CBOT wheat for May WK8, which closed up 47-1/2 cents at $10.67-1/2 per bushel.

Light crude in the U.S. increased to $101.22 a barrel, moving up 36 cents. Its cousin across the pond, London Brent Crude surged by 74 cents, to reach 100.60 a barrel.

Others that enjoyed surges were gold, copper and U.S. crude oil.

Monday, March 24, 2008

Watch for Impact of Falling Commodity Prices on Related Industries

According to Citigroup, the ongoing drop in commodity prices will have a strong impact on certain companies within sectors like "agriculture, mining machinery, energy equipment and alternative energy."

While investors will focus primarily on the prices of commodities like gold, silver and oil, those companies providing equipment and other energy sources could also suffer some heavy declines as well. Pressures will continue during this market correction.

Tobias Levkovich, chief U.S. equity strategist at Citigroup, said in a report that "A whole range of stocks seem to be at risk. The notion of unwinding 'crowded trades' could make the decline sharper than probably is justified."

Levkovich added, "The impressive economic development of Brazil, Russia, India and China has spawned a sense of never-ending growth that has stoked speculative juices."

Another long term impact on commodities could be if the Japanese and Europeans decide to sell their currencies in order to combat the weakness of the U.S. dollar, which on the positive side has increased American exports dramatically. It has hurt some of their domestic industries because of the strength of their currencies against the U.S. dollar.

Amex Gold Bugs Index

Last week the performance of the Amex Gold Bugs Index dropped by 15 percent, while the S&P 500 was able to gain a significant 3.3 percent, underscoring the changes occurring in the marketplace.

Amex Oil and Gas Index

The Amex Oil and Gas Index also reflected the current change in market conditions for commodities, as it declined by 4 percent last week.

Where oil, gold and wheat finished Monday

For Monday, oil futures dropped by 98 cents to finish at $100.86 a barrel, after reaching as high as $102.42. Gold also continues to fall, as it shaved off another $1.30 to finish at $918.70 an ounce. That was off from the day's high of $920. Wheat was able to manage a 3.3 percent gain, bringing $10.20 a bushel.

Saturday, March 22, 2008

Commodity News from around the Web

The commodity selloff was the financial news of the week. Here's some responses from around the web on where investors think we go from here.


The Global commodity selloff and why it's a great opportunity

This week, the commodity markets mauled many, many investors – the unsuspecting as well as the vigilant. Sometimes, there's just no way to escape harm...especially when you're in harm's way.


Dollar Set for Weekly Gain on Fed Steps to Restore Confidence

The U.S. currency rose against the pound and the Swiss franc this week after the Fed made an emergency cut to the rate it charges banks to borrow and said it would swap Treasuries for mortgage-backed securities. The Fed also lent $28.8 billion to U.S. securities firms, its first extension of credit to non- banks since the Great Depression.


Commodities fall further on US dollar recovery

Commodity prices, including gold and crude oil, sank further during Asian trading hours yesterday on the back of a steep plunge on Wednesday, as the US dollar recovery triggered a big sell-off by investment funds.



The euro settles below 1.55 dollars at the end of a session denoted by limited trading in light of the upcoming closure of main financial bourses for the easter break.


Dollar Gains on the Yen In Light Global Trading

Still, analysts weren't convinced further dollar gains may be sustained for long given a stagnant U.S. economy and low interest rates by the Federal Reserve that continue to weigh heavily on the greenback.


Silver Falls Almost 18 Percent for the Week

There's been a lot of chatter lately that there are physical coin shortages, especially silver coin.


Corn, Soybean and Soy Oil limits to Increase

With the overall commodity market undergoing a correction, the CME group let it be known that it is going to seek to get expanded limits on soy oil, soybeans and corn at the CBOT.

Friday, March 14, 2008

U.S. Dollar Continues Slide Against Major Currencies

The U.S. dollar continues its downward trend, as it again dropped to a record low against the euro, and its lowest performance against the yen in twelve years.

Another first for the greenback was it fell below one Swiss franc for the first time in its history.

The news of the bailout of Bear Stearns Co. (NYSE: BSC), along with the growing suspicion that the Fed could cut interest rates up to a full point at their next meeting, caused gold to also surge to historic highs, increasing to $1,009 an ounce.

"The initial reaction is to sell the U.S., sell the dollar, sell the equities," said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products. "This is bad news. It's definitely a confirmation of the reality that U.S. financial institutions are having a hard time."

Against the yen, the dollar plunged to 98.90, the worst performance since September 1995, while against the euro it dropped to a record $1.5688. With the Swiss franc, it feel to as low as 0.9988, down from Thursday's 1.0093.

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Thursday, March 13, 2008

Gold Breaks another Record: Surges Past $1,000 Mark

Investers continue the surge toward commodities, with Gold prices going beyond the $1,000 mark for the first time in history; as measured by U.S. dollars. With the dollar continuing to weaken, and signs that the Fed may cut interests rates by another 0.75 percentage points next Tuesday, we'll probably see this trend for some time to come.

As we talked about in the last post, the weakening dollar is also driving up the costs of oil, which is being driven up by investors (rather than supply and demand), as they are exiting the equity markets in huge numbers.

The U.S. dollar dropped to a new low against the euro, going to $1.56, while against the pound it was $2.04.

CEBR economist Richard Snook had this to say about it all: "It may be too late for the US to avoid recession but with prompt action the Fed hopes to ensure that the economy bounces back quickly."

New Highs for Oil Again: In New York and London

Growing concerns over inflation has had investors flocking to commodities, which has been one of the reasons for the ongoing surge in prices.

With oil being denominated in U.S. dollars, it has helped those buying it up in other currencies as it continues to weaken.

Earlier in the day, crude oil prices for April rose to $111 in New York, a record high before pulling back to 109.65.

Brent Crude in London increased to $107.88, alson a new record, before it also pulled back to 106.72 a barrel.

For oil investors outside the U.S., the increasing fall of the dollar should help them gain some solid profits, and it won't end anytime soon, as the Fed is expected to cut interest rates even further; probably by 0.75 percentage points.

That will cause the dollar to weaken even further, and profits for many other currencies investing in oil to rise. With the fall of the U.S. dollar, you can of course even make money if oil were to stand still in price, and foreign currencies remain strong against it.

Wednesday, March 12, 2008

Ashley Alexandra Dupre: The Prostitute behind the Fall of Eliot Spitzer

This post obviously has nothing to do with the type of commodities talked about here, but it's too interesting to just pass by.

The prostitute that was the cause of the downfall of Eliot Spitzer has been identfied as Ashley Alexandra Dupre, who was born Ashley Youmans. She is the mysterious "Kristen" talked about by FBI reports.

There are several places you can go to see more of her if you want to. The Smoking Gun has some more photos. There's a poll you can take here to give your input into the situation, and you can see her at her own MySpace page here. As others say, in a matter of a couple hours, she's become an Internet star, and now probably has it made for the rest of her life, as offers will come in from the usual outlets for her to do the usual things.

I guess her worth is going up like the overall commodity market.

Commodities Continue to Surge: Oil Hits $110 for First Time

Commodity News Around the Web

Gas Prices Jump, Oil Hits $110

Gasoline and oil prices extended their record-setting streaks Wednesday, with gas at the pump reaching a new high of nearly $3.25 and crude surpassing $110 for the first time.

The gains came as a weakening dollar led investors to shrug off an Energy Department report that crude oil and gasoline supplies jumped last week.


Dollar Falls to Record Low Against Euro

Euro Tops $1.55 for the First Time With Broad Skepticism About Fed Plan to Support Markets

The dollar fell against most major currencies on Wednesday, including a new low against the euro, which fetched $1.55, as skepticism grew over the latest U.S. Federal Reserve Bank plan to restore calm to jittery global credit markets.


New S&P Currency Indexes Cover Renminbi And Rupee

Standard & Poor's has two currency indexes linked to two of the world's hottest emerging markets. The S&P Chinese Renminbi Index and the S&P Indian Rupee Index are the first members of a full family of similar indexes that S&P is launching; the S&P Currency Beta Series will include indexes both for individual currencies and groups of currencies. They were created for use as hedging and measurement tools.


U.S. dollar sinks as Jordan says sell

The U.S. dollar has hit yet another record low against the Euro, after Jordanian central bank officials talked of reducing U.S. dollar reserves and figures showed Japan's economy is performing better than expected.

The Euro was buying US$1.5540 at 3:30 PM ET Friday, the strongest rate ever against the greenback since the Euro debuted in 1999. The U.S. dollar index, which measures the greenback's strength against a basket of major currencies, also slipped to a record low of 72.47. The Canadian dollar was slightly higher than yesterday's close at US$1.01.


COMMODITIES-Rally plows ahead as oil crosses $110; wheat up

The powerful bull run in key commodities showed little fatigue on Wednesday as oil closed up after hitting a record above $110 per barrel and wheat settled higher after rallying for a second straight day.

Metals also ended in the positive, with copper [COP/X] rising more than 1 percent after losses in two earlier sessions, and gold [GOL/X] repeating Tuesday's modest gains.

Sugar [SUG/N] and cocoa [COC/N] closed down, along with corn and soybeans. But cotton [COT/N] showed surprising resilience, closing up after hitting limit-down.

Leading commodity indexes such as the Reuters-Jefferies CRB .CRB, the S&P GSCI .SPGSCI and the Dow Jones-AIG .DJAIG ended higher too.


Tuesday, March 11, 2008

Neal Shear out at Morgan Stanley

Neal Shear, who had been a veteran commodities dealer at Morgan Stanley (NYSE: MS), has reportedly left the firm, after being demoted because of the multibillion-dollar losses stemming from bad trading.

After placing some bad bets on "complex mortgage-backed securities known as CDOs, or collateralized debt obligations," the bond-trading department Shear managed ended up costing the company billions, and resulted in a $7.8 billion write-down for Morgan Stanley in the fourth quarter.

Much of the blame was placed on poor risk-management frameworks in place, and also poor communication across the division Shear was responsible for.

Initially Shear joined Morgan Stanley as a trader in precious metals in 1982, and has been with the company since then. Sources say he quietly left the company last week, after an internal memo was sent across the company letting workers know.

John Shapiro, now head of Morgan's commodity business, had this to say about Shears' overall performanc through his years at Morgan: "The phenomenal success we have experienced during the lifetime of our business is a testimony to Neal's knowledge of the commodity space and his broad commercial skill set."

Monday, March 10, 2008

New York Governor, Democrat Eliot Spitzer, Nabbed in Upscale Call-girl Sting

The initial event that triggered the investigation into Eliot Spitzer and his activities, wasn't concerns over an upscale prostitution ring, rather it was a serious of money transfers believed to be potential bribes the Democrat Governor of New York was trying to hide.

What they discovered was the payments were being made to a high-end prostitution ring called the Emporers Club VIP, whose services Spitzer had been using.

Originally the suspicious activity had been reported by a bank to the IRS, which in turn brought it to the attention of the Justice Department, which brought in the Public Corruption Squad of the FBI.

"We had no interest at all in the prostitution ring until the thing with Spitzer led us to learn about it," said one Justice Department official.

Spitzer has been identified as "Client 9," who met a prostitute named "Kristen" as the Mayflower Hotel, room 871, for their rendevous.

It's a federal crime because the women was transferred across state line to perform the actions. Even more pathetic, the last time Spitzer partook in the actions was on Valentine's Day, February 13. I bet wifey didn't like that too much.

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Saturday, March 8, 2008

Rupee Declines against Major Currencies except ... US Dollar

The rupee was weak over the last seven days, as it was only able to gain against the US dollar in open and inter-bank markets which ended Saturday.

The US dollar traded Monday at Rs62.86, and dropped to Rs62.65 by Saturday. The greenback gained Saturday a little, as it traded at Rs62.70; still lower than Monday's price.

In the inter-bank market, the Rupee fell the most against the pound sterling, trading Monday at Rs124.5813, and reaching Rs125.4430 by the weekend. Pound Sterling also rose on the open market, closing at Rs125.95 Saturday, after trading on Monday for Rs124.25.

With the Euro, it traded at Rs94.7125 on the inter-bank market, and ended Saturday at Rs95.6875. It came close to an all-time high of Rs96 during the week. In the open market, the Euro ended up, closing at Rs95.95, while trading on Monday at Rs95.1.

For the Japanese yen, its inter-bank trading was at Rs0.6042 on Monday, and closed at Rs0.6104. On the open market the yen rose only a fraction, closing at Rs0.605.

Friday, March 7, 2008

Four Ways you can Make Money off the Falling U.S. Dollar

Luke Mullins offers up four ways you can make some money off of the failing U.S. dollar. Each of the ways if in line with what's happening in the market, and some of them, like the "Multinationals, can be a long-term play, As a matter of fact, when you look at them overall, each one has a strong argument for long-term success.

The reason why is the policy concerning the money supply isn't going to go away any time soon, if ever. That offers great opportunity to bet against the U.S. dollar for the foreseeable future.

Here are four fairly safe plays you could make:


Rather than take the risk in investing in individual commodities in a direct way, it would be bette to invest in those producing commodities, like those mining metals and oil companies. It would be worth looking into transportation of certain commodities as well (meaning transportation companies).

As the dollar falls, many of the commodities will continue to rise, which is creating this opportunity.


This one is pretty easy to understand, yet has a solid underpinning and safety involved. This is simply investing in multinational companies based in the U.S. The obvious bluechips like Johnson & Johnson (NYSE:JNJ) and General Electric (NYSE:GE) are what to look for here.

The exchange rate will definitely help these types of businesses prosper. You want to be sure they have a large foreign presence to take advantage of this successfully.

Currency ETFs

If directly investing in the U.S. dollar is the way you want to go, then an ETF fund is by far the best way to go for the average investor.

The major reason is other stock funds may include ETFs, but the other instruments included in the package would dilute the impact you're looking for from the dollar's slide.

The "DB US Dollar Bearish" fund is built to serve this market.

Foreign funds

A couple of recommendations Mullins cites are from Morningstar senior mutual fund analyst Gregg Wolper, who recommends two funds that have a lot of exposure to currency trends. Those are the Artisan International fund, which has enjoyed over a 21 percent return over the last five years, and the "Julius Baer International Equity II fund, which has many blended currency plays across a number of key nations.

How High Will Commodities Go? News around the Web

The continuing "commodity surge" this week shows there's no end in sight for how high things will go. Many currencies reached new highs against the U.S. dollar, and oil and gold also reached levels never achieved before.

Ongoing concerns about recession will keep investors interested in commodities, as well as other concerns of stagflation, inflation, weakness of the U.S. dollar, and the crisis in the banking system.

Here's the commodity news from around the web:

Record euro, commodities driven by fears of inflation

Record highs for the euro, oil, gold and a host of commodities are both cause and consequence of inflation as investors seek a safe haven from an economic storm sparked by the collapse of the US property market, analysts said Friday.

They said the main concern for investors was stagflation, which occurs when when inflation rises even as growth slows in the worst possible economic combination and was the blight of the 1970s.


Commodities boom to keep breakfast hot for a while

The commodities boom has a long way to run because demand is outstripping supply, with panicking investors snapping up gold and Asian appetites driving up the cost of the world's breakfasts, Schroders commodities product manager Christopher Wyke said on Friday.

With financial markets quaking at the prospect of a U.S. recession, investors are flocking to gold , which has hit repeated record highs and is approaching $1,000 an ounce.

"We think gold prices will continue to rise sharply in 2008," Wyke told a briefing in Hong Kong.


Commodities Wrap: Coffee and Beef

Coffee Costs Force Price Increase, Beef Acquisition Raises Hopes for Better Profits

It was a week of mixed messages for food makers, as commodity costs forced one company to raise prices for the first time since 2005 and an acquisition in the beef sector raised hopes for better profits.

Green Mountain Coffee Roasters Inc. said Wednesday it would have to raise its prices by 8 percent to 12 percent on average across all of the coffee products sold in the Green Mountain coffee division, on orders placed on or after May 5. The price increase will affect both its Green Mountain packaged coffees as well as its K-Cup single-portion packs.


U.S. equities, employment, Canadian dollar, Fed, commodities

U.S. equity index futures are lower in pre-opening trade. Dow futures are down 130 points. Traders were disappointed with the February employment report. Consensus for February Non-farm payrolls was an increase of 20,000. Actual was a decline of 63,000. Consensus for the February unemployment rate was 5.0%. Actual was 4.8%. However, the drop was attributed to a decline in the number of people who are seeking employment.

The U.S. employment report triggered additional weakness in the U.S. Dollar and strength in the Canadian Dollar and Euro. The Canadian Dollar also was buoyed by news that Canada added another 44,000 jobs in February. The Canadian dollar is up 0.80 in pre-opening trade.


Fisher Says Commodities Make Reading Inflation Harder

Federal Reserve Bank of Dallas President Richard W. Fisher said ``persistent'' increases in commodity prices make it harder for central bankers to determine precisely how much inflation may be rising.

``The fact that these increases have been persistent and not quickly reversed has raised tough questions about traditional measures of core inflation,'' Fisher said in the text of a speech today in Paris. That's also ``made it increasingly difficult for central bankers to separate signal from noise in the inflation data.''


Commodities zoom, but could crash and burn

One sure way to lose money as an investor is to buy something strictly because it keeps going up.

Now, analysts are warning investors not to become carried away with commodities. Although gold, oil, metals and agricultural commodities have been breaking records and enriching investors while the stock market has been a loser, many analysts are growing skeptical.

“The price trend in wheat, oil and gold appears to be similar to the ones seen in the late 1990s for the Nasdaq, and in the mid-2000s for home builders,” Citigroup strategist Tobias Levkovich said last week.


Rush to commodities not over, analysts say

Investors have turned from risky securities in recent months literally to bread and butter investments, namely raw commodities, such as metals, grains and oil.

But, analysts wonder when the bubble will burst. The run on commodities in world markets is probably not over, analysts told Friday's Science Christian Monitor.


Thursday, March 6, 2008

Gold News Around the Web

A lot of news on gold was around the web today, as futures fell sharply on Thursday, and a number of godl companies made announcements concerning dividends, seeking partners and opening up of mines again.

Here's the top gold stories:

Gold drops sharply following record Wednesday

Gold futures fell sharply Thursday, pulling back after surging to a record high over $995 an ounce in the previous session, as traders locked in gains.

Gold for April delivery fell $11.40 to end at $977.10 an ounce on the New York Mercantile Exchange.

"It seems like another instance of the long side paring back positions because of the worries in the equities markets," said Zachary Oxman, a senior trader at Wisdom Financial.


Dollar, Gold Fall in Europe

Gold traded in London at $982.20 per troy ounce, down from $984.45 late Wednesday. In Zurich, gold was unchanged at $982.65 bid per troy ounce.

Silver traded in London at $20.46, down from $20.49.


Gold retreats from record high as oil prices soften

Gold retreated from record highs on Thursday as oil prices slipped, but the precious metal held within striking distance of $1,000 a troy ounce as the dollar struck an all-time low against the euro.

Spot gold jumped as high as $991.90 an ounce and was quoted at $984.40/985.70 at 1603 GMT, up from an earlier low of $959.45, but below the $985.70/986.50 late on Wednesday.


Gold's glitter lures buyers, even near $1,000

Gold's near vertical climb to historic highs approaching the key $1,000 mark shows no sign of abating as bullish forces such as a sinking dollar and record high oil are not seen fading anytime soon.

Fears that expensive oil will stoke inflation combined with worries over potential stock market losses and the U.S. on the brink of possible economic recession will propel gold higher still, analysts say.

"Don't be surprised to see gold trade up to $1,100 (an ounce) or even $1,200 before year-end 2008," said Jeffrey Nichols, managing director of American Precious Metals Advisors.


Yamana Gold Declares Quarterly Dividend

YAMANA GOLD INC. (NYSE: AUY) today announced its first quarter dividend of US$0.01 per share. Shareholders of record at the close of business on Monday, March 31, 2008 will be entitled to receive payment of this dividend on Monday, April 14, 2008. The dividend is an "eligible dividend" for Canadian tax purposes.


Barrick's Wilkins Seeking Russian Partner for Gold-Deposit Bid

Barrick Gold Corp., the world's largest gold producer, is seeking a Russian partner for a venture to develop mines in the country and bid for its largest untapped gold deposit.

Barrick would accept a minority stake in a Russian joint venture, Chief Executive Officer Gregory Wilkins said today. The partnership would be used to try to secure rights to the Sukhoi Log gold and silver deposit when it comes up for government auction, he said.


Eldorado Gold Corporation: Kisladag Mine Re-Opens

Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation (TSX:ELD), is pleased to announce that earlier today, March 6, 2008 its Kisladag mine in Western Turkey re-opened and that production activities are underway.


Oil Reaches Another High on U.S. Inventory Concerns

Oil prices climbed to almost $106 a barrel, as inventory surprisingly fell by 1.3 million barrels, after seven straight increases.

Most of that was in response to U.S. supplies being lower than expected.

Other problems affecting the price were the recent decision by OPEC to not increase production, as well as the continuing tensions between Columbia and Venezuela.

Oil inventory as of the early part of 2009 has dramatically changed, as the contango, or rather - super contango conditions has resulted in oil futures buyers starting to store there oil as oil futures prices stretch out more predictably, and the perfect arbitrage opportunity exists for those looking for something that is not only safe to invest in for 2009, but will also make them some money.

The super contango for oil is one of the few guaranteed commodity futures winners for 2009, and one of the few overall investment winners overall.

Commodity investing in certain sectors will be the best investment over the next several years, and those investing in strategic commodity sectors will do very well.

Commodity and Currency News from around the Web

Indonesian shares end morning higher, led by commodities stocks

Indonesian shares ended the morning session higher Thursday, in line with other Asian markets, on a technical rebound from recent losses, with commodities leading the rally on soaring crude oil prices.

Crude oil moved closer to 105 US dollars a barrel in Asian trade Thursday, touching a new record high following an unexpected drop in US stockpiles and OPEC's rejection of calls to increase output.

The composite index ended the morning up 30.57 points or 1.2 percent at 2,670.22, on volume of 1.5 billion shares worth 2.68 trillion rupiah.


Commodities proving the saving grace for investors

According to bankers in London and New York, fears over rising global inflation, robust fundamentals and the weakness of the dollar are other reasons for the strong interest (in commodities).

Barclays Capital says inflows to both simple exchange-traded products and more complex commodity products are at all time highs.

The bank estimates that investors poured about $3bn into commodities in January, about double the amount for any month during 2007.


Oil, Gold, Corn Rise to Records, Fueling Rebound in Commodities

Crude oil, gold and corn prices surged to records, leading a rebound in commodities on renewed concern that a slumping dollar and lower borrowing costs will spur inflation and increase demand for raw materials.

The UBS Bloomberg Constant Maturity Commodity Index of 26 futures contracts jumped 41.46, or 2.8 percent, to 1,549.09. The gauge has jumped 21 percent this year, reaching a record 1,573.8381 on Feb. 29.


Commodities: The Squeeze Gets Tighter

Prices for oil, metals, and grains are surging, putting businesses and consumers in a bind. And there's little chance of relief anytime soon

Investors, worried about the shaky state of the equity, credit, and housing markets—and the steady decline in the U.S. dollar—are seeking safety in hard assets. And that is driving prices of commodities ranging from precious metals to grains through the roof. Speculators may be sporting ear-to-ear grins, but the surge is causing consternation among businesses as they watch prices for key manufacturing inputs reach uncomfortable levels.

The price spikes have occurred across the commodities spectrum, with oil, which hit a record closing high of $104.46 per barrel on Mar. 5, the most visible example.


Weak $, real int rates helping commodities: Smith Barney

Alan Heap, Chief Commodity Analyst at Smith Barney said that the US is not an important consumer of metals as before but accounts for just 12% of the copper demand. He added that there is a massive inflow of long only funds into the commodity market and that US and European pension funds are moving money into the commodity market. According to Heap, a weak dollar and negative real interest rates are supporting commodities while the global energy crunch is supporting high crude prices. He added that bulk commodities are insulated from the US slowdown.


Shanghai copper up, LME near peak on fund buying

Shanghai copper jumped 2.4 percent on Thursday after London futures surged to within 1 percent of a record high the previous day, as a weaker dollar sent funds back into commodity indices.

London Metal Exchange copper touched $8,725 a tonne in electronic dealing on Wednesday, just $75 off an all-time high, in a broader commodities rally that also drove oil and gold to record highs.

"The strong iron ore settlement prices, up 65-70 percent, have emboldened some investors into thinking demand from China will remain firm, Burg added.

The May copper contract the most active on the Shanghai Futures Exchange, rose 1,620 yuan to 69,460 yuan a tonne at midday. Spot copper in Shanghai rose 800 yuan to between 68,300 and 68,600 yuan.


Asian currencies firm; Sing dollar and ringgit at highs

The Singapore dollar and Malaysian ringgit hit their highest in more than a decade on Thursday and other Asian currencies also firmed on heightened expectations of a US rate cut in March after weak US data.

The Philippine peso and Taiwan dollar gained 0.4 percent each after the US dollar weakened to a record low against the euro overnight due to soft private sector employment data from the US and figures indicating the service sector had contracted in February.

Tuesday, March 4, 2008

Investors take Profits on Base Metals

Base metals dropped today on the London Metal Exchange, as investors took profits, with the majority of the commodity markets participating in a sell-off.

A number of metals ended up at close to the record range before cutting back later in the session.

“Supply disruptions made the fundamentals for some metals (gold, platinum, aluminium and zinc) look much better, which combined with the poor equity, property market and corporate paper market, convinced funds to go into commodities,” said BNP Paribas analyst David Thurtell.

Tin reached a new high before dropping again, reaching $19,375 a ton before fears on what Indonesia's response in battling against illegal tin mining would affect the metal. It ended the day at $19,050, an increase of $100 over what it closed at yesterday.

With most of the world's tin exports coming out of Indonesia, MF Global analyst Edward Meir said, “Tin's fundamentals look solid to us.

“The bulk of the world's tin exports come from Indonesia, and so the complex has a good chunk of its eggs in only one basket.”

Most dealers believe the sell-off was long overdue, and a correction was needed. They also said that this will be a short-term event, and prices should continue on an upward climb. Even so, with many turning to commodities as an inflation hedge, some are starting to think some metals are reaching a potential bubble, and will have to be watched carefully.

Most say we can't overly react and read into the cutback, as metals overall should be strong for some time.

Some metals shedding some of their weight were nickel, which dropped by $405, to finish at $32,845; aluminum decreased by $23, to end at $3115 a ton; lead fell by $70 to come in at $3365 a ton; and zinc declined by $45 to finish the session at $2780.

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Major Currency Updates around the web

The U.S. dollar continues to be all over the place against currencies, but continues to weaken against the majors. In Latin America it did find some strength today, as it gained against a number of currencies from south of the border.

Here's some links to major currency stories today:

Forex - US Dollar Edges Higher Versus Latin American Currencies

The US dollar was relatively strong against its Latin American counterparts on Tuesday's New York deals. The dollar recovered from an initial pull back against the Latin American majors during afternoon deals today.

If you want to know where commodity prices are going, you can dive down the rabbit hole of raw-materials supply and demand, trying to figure out everything from how the weather in Saskatchewan will affect wheat crops to what the surging Indian economy will do to demand for gold.

Or, you can just watch the currency market.

The central bank, Bangko Sentral ng Pilipinas (BSP), has built up a record $13-billion stock of foreign exchange outside its official foreign reserves as of end-January, up $2.3 billion from the end-December level, according to its official data.

Mexico's peso softened against the dollar Tuesday as local stocks fell on profit taking following big gains the previous session.

The peso was quoted in Mexico City as closing at MXN10.7230, compared with MXN10.6940 at the opening and MXN10.7075 at Monday's close.

The yen rose on Tuesday as weaker global equities encouraged investors to unwind carry trades, while the euro paused against the dollar after European officials voiced concerns about its latest rally.

The dollar slipped against the euro Tuesday in the face of fresh inflation fears in the eurozone and a call by the US Federal Reserve chief for tough action to stem US mortgage foreclosures.

The euro edged higher against the dollar as the US currency's recovery overnight began to lose momentum.

U.S. Dollar Continues to Plunge Against Japanese, European and Canadian Currencies

The U.S. dollar continues to fall against major currencies, as it is flirting with its all-time low against the euro. For the euro, the dollar was only able to buy $1.5208. For the British pound, it increased a little to $1.9859, up from $1.9847.

In late trading in New York, it also fell against the Canadian dollar, going to 1.0042, down from Monday's 1.0074 cents.

The Japanese yen also increased against the U.S. dollar, climbing to 103.14, up from 103.96. Japan's leadership is getting more concerned about the weakening dollar, as it has fallen by over 7 percent in 2008 already. They're concerned that their exports could suffer if it continues at this "abnormally rapid" rate.

This of course isn't bad news for all businesses in the U.S., as manufacturing will benefit from the weakened dollar, as well as tourist-related businesses that attract a lot of international visitors. The question there is if the weakening domestic tourist market will be made up for by foreign tourists. That has yet to be answered.

As far as the Canadian dollar, the Canadian bank cut borrowing rates by a half point; the first time since November 2001. They've indicated more cuts may be on the way in April.

For the Australian dollar, things are going the other way, as they continue to battle inflationary pressures, and continue to raise their interest rates, today increasing it by a quarter point, which now stands at 7.25 percent.

Saudi Oil Minister says they're not running out of oil - prices will remain high

The oil minister of Saudi Arabia, Ali Al Nuaimi, contradicted some of those panicking over the theory of "peak oil," which assumes we are past the ability to meet the growing needs of the world.

As Nuaimi says, by the end of 2009, Saudi Arabia alone will have production capacity of 12.5 million barrels a day; up from the 11 million barrels a day produced now. That doesn't include backup capacity of 1.5-2.0 million.

Nuaimi added that Saudi Arabia plans on adding another 200 billion barrels of oil to the reserves figure.

The purpose in doing this said Nuaimi, is "to reassure the world that we are not going to run out of oil in the next five to ten years as peak oil theorists say."

Not only is that ridiculous, it's far from the truth. Anybody that's heard about the Canadian oil sands and understands its extraordinary potential, knows there's an unbelieveable resource there.

The estimates of oil in relationship to the sands, is it could be over two trillion barrels, and maybe even way beyond that.

Proven reserves are a minimum of 175 billion barrels, which is only second to the 260 billion of Saudi Arabia. Production could reach as high as 3 million barrels daily by 2020, and even may reach 5 million barrels a day by 2030.

If the barrels of oil in the Canadian sands are close to estimates, it will make Canada the energy leader in the world.

Couple that with the two recent discoveries of oil below the ocean by Brazil's Petrobas, and you can see the reserves of oil are huge. That doesn't take into consideration that the new technology being used to discover these fields have just been employed recently, and much of the oceans haven't even been searched yet.

Formerly you couldn't see beneath the ocean floor because of salt deposits to discover oil or gas, now you can.

The Tupi oil field may yield up to 8 billion barrels of oil, with initial production expected to be at about 100,000 barrels a day.

The other recently discovered field is called "Juniper," and is similar in size to the "Tupi" field, according to Petrobas.

However you want to look at it, oil is plentiful, and it's only a matter of ramping up production.

There's a lot of great investment possibilities with oil, especially in relationship to the Canadian sands. It's something that needs to be researched by those interested in energy investments.

Silver Quietly Increasing in Value: Up 35 Percent this Year

So far in the short two months of 2008, silver has enjoyed running up by 35 percent, breaking the $20 mark today. We don't have to feel bad for gold though, as it's risen by 17 percent in 2008, a very hefty rise as well.

It's doubtful it will continue at this pace at all, and the inherent volatility of silver offers its own risk. Even so, during 2008, we'll probably see the metal grow in price, albeit at a much slower pace than it has been.

With the declining use of silver in the photography industry, this is surely an investor driven rise, and should be in the foreseeable future.

That will add to the possibility of a lot of ups and downs because of the potential for profit taking, although it should still steadily rise throughout the year. That, and the increase in scrap sales has to be watched carefully.

People will have to watch that they don't become "Silver Surfers."

Monday, March 3, 2008

Arian Silver Corp. Mineral Resource Estimate for San Jose Property

A press release from the Arian Silver Corp. concerning the San Jose property in Zacatecas State, Mexico, offers the initial resource estimates.

According to the estimates, there are approximately 27.7 million ounces of silver, 64.6 million pounds of lead and 147.5 million pounds of zinc.

The estimates, according to the company comes "from 31 holes drilled to an aggregate length of 4,500 metres (m) and is contained within four currently defined resource blocks along 4 km of the strike of the San Jose Vein (SJV). These blocks currently cover an aggregate strike length of some 1,600 m within the 4 km strike length and extend to a depth of 200 m. The percentage of oxide, transitional and primary material is undefined as part of these preliminary "inferred" estimations."

You can find the plan which shows where the resources are in relationship to the strike here.

The estimate is only in relationship to about 30 percent of the length of the known strike which Arian controls.

Arian's Chief Executive Officer, Jim Williams, said in a statement, "We are very pleased with these initial compliant resources we have so far estimated at San Jose. These resource estimates are only based on approximately 50% of the drill-holes that we have currently drilled at San Jose and therefore only cover a portion within a strike length along the main SJV of some 4 km (out of 12 plus km). We believe we can expand these resources significantly during 2008."

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Sunday, March 2, 2008

Commodity Prices Continue to Rise and Break Records

Some of the commodity records and surge in prices during the last week.

Oil: $103.05 a barrel - All time high

Gold: $976.32 an ounce on Friday - All time high

Silver: $19.95 an ounce - 27-year high

Platinum: $2,150 an ounce - down from last weeks' record $2,206 an ounce

Palladium: Reached a six-year high of $585.50

Tin: Went as high as $18,900 a ton for 3-month delivery - the highest since 1989

Gold is expected to go past $1,000 an ounce, based on demand. Supply for platinum is also facing supply problems, as the issues in South Africa concerning power in the mining industry continues. A mining strike and accidents have also cut into supply. Palladium has also been affected by similar issues.

Tin supply has also been tight, based on problems in Indonesia, and so the continual rising prices there.

Relief for the U.S. Dollar Not Coming in the Near Future

Most currency experts believe the fall of the U.S. dollar is far from over, and it has a ways to go before it reaches bottom.

There are many reasons for the decline of the dollar, and many consequences as well.

Here's some of today's stories talking about what they are:

Myriad of factors behind dollar's sudden drop

Momentum trading, the break of key options barriers and technical levels, and crosscurrents with oil and other commodities all played a role in beating down the buck.

Take, for example, momentum trades, which are market bets made simply on direction rather than fundamentals or intrinsic values. Analysts say the dollar's rapid rise against the euro this week was due in part to this strategy.

"When prices roll higher -- or lower -- and momentum kicks in, the trend attracts fresh interest from momentum traders and models," said Andrew Wilkinson, senior market analyst at Interactive Brokers.


Dollar: It will only get worse

Despite all the pain the U.S. dollar has endured in recent days, the greenback may still have further to fall before seeing any sort of relief, according to currency experts.

Driving much of the dollar's decline this week were tepid remarks about the U.S. economy by Federal Reserve Chairman Ben Bernanke, who hinted that the central bank would cut interest rates once again at the Fed's March meeting.


Euro breaches $1.50 barrier, What's it mean for Sterling?

THE EURO, once the butt of currency dealers’ jokes, is now enjoying its place in the sun. Last week the currency traded above $1.50 against the beleaguered dollar for the first time in its nine-year history.

The dollar’s fall also helped to produce a grim new milestone for energy users. Its weakness contributed to a rise in oil prices to almost $103 a barrel. Though calculations vary, on most measures that is the highest oil price in inflation-adjusted terms in the modern era, exceeding the level reached in 1980 in the aftermath of the fall of the shah of Iran in 1979.

As with other dollar-priced commodities, the American currency’s fall has a twin impact on oil. It leads to a compensatory rise in prices and encourages investors to seek what they see as the safer haven of commodities. Both effects conspire to push prices higher.

Saturday, March 1, 2008

Second Part of Jim Rogers on US Economy, FED, Ron Paul, China, US Dollar

Continuation of Jim Rogers interview with Financial Times.

Jim Rogers on US Economy, FED, Ron Paul, China, US Dollar

For this first post on Commodity Surge, I thought I'd include this interview in late November 2007 with commodity expert Jim Rogers.

Keep in mind when he's talking about what has real possibilities in the commodity market, that it's somewhat dated information.

Other than that, the underlying foundation of why he makes the comments he does is extremely important and valuable to learn.