Thursday, December 31, 2009

PetroChina Approved for Oil Sands Investment

PetroChina Canadian Oil Sands

PetroChina received the go ahead from Canada's Industry Minister Tony Clement to invest $1.7 billion into two Athabasca Oil Sands Corporation projects.

Clement stated concerning the deal: "I am satisfied that the investment is likely to be of net benefit to Canada." PetroChina will now own 60 percent of the Dover oil sands and Athabasca oil sands deposits.

Over the next three years PetroChina will pay out over $250 million for its part in developing the oil sands iniatives.

Estimated oil sands deposits at Dover and MacKay stand at about five million barrels.

Improved methods of extraction from oil sands, along with increasing oil prices, make the huge deposit of approximately 175 billion barrels of oil the largest oil reserves in the world outside of Saudi Arabia, the reputed No. 1 oil reserve country.

PetroChina Canadian Oil Sands

Nat Rothschild Investing in Russian Alumninum Company Rusal

Rusal Aluminum

Nat Rothschild has made a deal to be a foundational investing in the Russian aluminum company Rusal, which will go public in January 2010. Rusal is controlled at this time by Russian billionaire Oleg Deripaska.

Also signing on to the deal is Paulson & Co, the American hedge fund giant headed by John Paulson; Robert Kuok, a wealthy Malaysian-Chinese; and Vnesheconombank, or VEB, the Russian state development bank.

How the deal is set up is the four investors, including Rothschild, will be guaranteed shares when the company goes public in exchange for an agreement to not sell them over a period of several months.

The major listing will be in Hong Kong, and secondarily in Paris on January 29. Rusal expects to raise about $2 billion from the offering, which represents a 10 percent stake in the company.

For the most part the reason for the float is to raise money to pay down the enormous $17 billion in debt Rusal has. Most of that came from acquiring a number of businesses not too long before commodity prices fell.

Because the deal is considered highly risky, retail investors won't be allowed to participate in the IPO. Once the deal goes forward, Rusal will be the first Russian company listed on the Hong Kong exchange.

Rusal Aluminum

Copper Rises on Chile Strike Concerns

Copper Futures Prices

The demand and supply equation for copper could soon be in flux, as concerns over the possibility of a miners' strike at the state-owed Codelco’s Chuquicamata copper mine in Chile caused copper prices to surge to their highest price level in 16 months.

Talks evidently broke down today and a strike is tentatively planned for January 4.

Copper prices experienced a record gain in 2009 based on tight supplies and strong demand; especially from emerging markets in need of raw materials to continue building and expansion.

Copper futures prices rose to $3.3465, a gain of 15 cents, a record on the New York Mercantile Exchange’s Comex unit.

China has been the chief driver of copper prices, as they imported a record amount during the first half of 2009, helping to double the price of copper for the year.

With emerging markets faring better than mature economies, copper prices are expected to continue to rise in 2010 as copper demand continues to grow and copper supply remains constricted.

Copper Futures Prices

Monday, December 28, 2009

Gold Prices Going to Soar

Gold Prices 2010

There are a couple of factors that pretty much ensure that gold will continue to soar in price throughout 2010.

The obvious first factor is the interest rate environment, which after the Federal Reserve confirmed it's going to keep interest rates where they are now, which is pretty much at zero.

Because of that, the minimum 2 percent inflation projected for 2010 will mean that money invested in banks will lose its value during that period of time.

Historically when these two things have happened, gold has surged in price. Consequently, stocks during that time have always fallen and underperformed gold by a huge margin.

There is nothing to suggest any of this will change in 2010, and so we should continue to see a strong increase in the price of gold for some time to come.

While these are not the only factors influencing the price of gold, they are two that measure the surety of the price movements of gold, and near zero interest rates coupled with inflation, which causes cash investments to lose money during the period those factors are happening, have resulted in solid performance for those investing in gold during those times.

Gold Prices 2010

Saturday, December 19, 2009

Mark Mobius | Commodities Going Up!

Mark Mobius, Executive Chairman of Templeton Asset Management, says the top sector he sees going forward will be commodities, as the supply and demand force we face will continue to put upward pressure on raw materials and agricultural products prices.

Some of the particular commodity sectord Mobius likes are oil companies, mining companies and agriculture.

With the growing middle classes in China and India, along with other Asian countries, it'll be a long time before the thirst for products from these emerging markets are satiated, and that guarantees a long-term bull commodity market, which we have only been partly into, as the economic crisis interrupted that for a period of time.

Even so, China has already began a real recovery, and demand for raw materials and commodities will continue for some time to come. That means commodity prices in general will rise, along with the stock share prices of a number of companies participating in these areas.

Friday, December 18, 2009

Global Copper Demand Overcomes Supply

Commodities Copper Supply and Demand

It's thought that once the economic recovery from emerging markets kicks into gear, copper demand will skyrocket and copper producers will struggle to supply that demand.

Already copper price projections for 2010 have been changed several times and now stand above $3.00. Copper shortages are expected to increase in 2011 as well, with demand continuing to surge.

What could cause some temporary price fluctuations downward is the huge copper stockpiles of China. But they will eventually work through all that and demand will be strong again.

Long term though, copper prices should go up for a number of years based on infrastructure and recovering building projects sure to start big time again.

Commodities Copper Supply and Demand

Coal Import Demand to Rise

Coal Demand and Supply

For producers of seaborne thermal coal, it looks like there will be a strong demand while supply looks like it'll be challenged to keep up with it.

India itself is expected to import about 50 million metric tons of coal in 2009, with that increasing to 60 million metric tons in 2010. That's up from 28 percent from coal imports by India in 2008 (50 million metric tons).

This is just the tip of the iceberg for India coal imports though, as they could reach as high as 200 metric tons by 2014. This should put some upward pressure on coal prices as supply struggles to catch up.

Coal Demand and Supply

Domestic Steel Industry Remains Flat

The steel industry is one of the first looked to to see if there are signs of sustainable recovery or not, and the news from that from for domestic steel isn't good.

Even though domestic steelmakers have improved their capacity utilization, it has done nothing to generate demand for steel, as there's simply little activity to spur demand for steel, and nothing will change that any time soon.

Steelmakers say not only is there not much demand for steel, but they don't expect demand to increase in the near future at all.

This does change somewhat for overseas markets where deamdn for iron ore and seaborne coking caol is increase from Asian steelmakers. Coal exporters are very excited about how this will drive demand for their products.

For 2010 it looks like coal to supply Asian steelmakers will be in high demand, with some producers saying they've already sold out of their inventory, with iron ore expected to face demand pressures as well.

Joy Global (Nasdaq:JOYG) Fourth Quarter Results

Joy Global (Nasdaq: JOYG) is a manufacturer of mining equipment, and their fourth quarter results show the company has a solid ending to the year, and a decent 2009 in general.

Earnings per share for the year gained a nice 28 percent for 2009, and that was net sales increasing by only 5 percent.

What that tells us is Joy Global had some strong backlog o forders which helped them during these more difficult economic times, where overall mining equipment orders have been drying up.

Another positive for the company is they greatly increase their supply chain management, and were able to streamline costs nicely, which could set them up for nice profits going forward once a real recovery begins to happen.

Operating margins for 2009 endd at 20 percent, a great performance when bookings were down for mining equipment. Again, that was a testament to great cost-cutting measures.

Even with all the backlog and great performance, things remain tenuous for the time, as orders for new mining equipment have plunged by 74 percent from last year at the same time, making it tough going forward into 2010 for Joy Global.

If it wasn't for aftermarket products things would have been far more dismal, as original equipment bookings were almost non-existent for the company over the last year.

Monday, December 14, 2009

Chinese Investing in Silver

Considering silver a much better investment than gold at this time, Chinese investors have been flocking to the industrial metal in hopes of generating some significant profits in the years ahead.

Reasons for shunning gold by the Chinese are the high cost of the yellow metal at this time, which is prohibitive to a large number of Chinese.

Even though gold prices should continue to rise, silver should have a lot more upside, making it an idea investment and one many Chinese can afford to make.

Along with the upside potential of silver prices going up, it also is a better bet in short-term swings, making it more stable than its gold cousin, which many fear can make huge price swings, making it more volatile in price during the short term versus silver. That may be true, although smaller price decreases can cause equal price and percentage swings in silver, so I'm not sure that's the proper way to think about the reason for investing silver rather than investing in gold.

While I agree that silver is a better investment at this time than gold, the reason is demand rather than price alone. Demand for silver is both industrial and as a safety hedge, making it a great play going forward, as well as being off significantly from its inflation-adjusted highs. Gold is too, but it's the price difference in the two as far as it concerns the Chinese which make it so attractive.

with that in mind, we may want to watch Chinese consumption of silver as one of the market indicators and price drivers over the next several years.

Gold isn't going to go down in price for a long time, so we can count on silver remaining an attractive alternative investment choice to the Chinese, which allows us to know prices in silver will eventually start to skyrocket on that alone, but also including demand and the factor of being a safety hedge as well.

Agriculture Commodities Prices Going Up in 2010

It looks like 2010 could be a good year for agricultural commodities investors, especially those hitting it right for those food prices going up. Soybeans seems to be one of those agricultural commodities sure to rise in price in 2010, based on nothing more than continued demand from China. That's enough of a reason to believe soybean prices will continue to rise.

Another factor many are considering is in reference to a number of funds possibly having a lot of interest in the agricultural commodity sector in 2010, making it highly likely for many food prices to increase. While that's a real factor, it's not as important as what these funds are making their determinations by.

If there is a real growing demand for a number of agricultural products, then there will be a corresponding increase in prices. But to base a strategy on attempting to invest along with big funds in the sector is a risk. We should always look at the long term factor and not short term ones. Even so, it's not a certainty, and only a guess that the big funds will go this route. It's a gamble at best to follow as if that's going to be the reality.

Sugar continues its rise in price, and that could definitely be a long term trend based on the growing middle classes in China and India. Usually a growing middle class likes to spend money on sweets and things like that when they have the money to. And that should be the case in these countries, as demand for sugar rises along with sugar prices.

Based on the foolish ethanol policies of the U.S., it is expected that demand for corn will continue to rise, along with corn prices. Wheat prices probably won't fare near as well for some time, as countries continue to over-plant and over-harvest, creating downward pressures on wheat prices, which don't look like they're going to abate any time soon.

Crude Oil Prices Fall as Demand Slows

For the ninth straight day crude oil prices fell, the longest period of decline since July 2001. Much of that is attributed to a real recovery not really happening at this time, as the areas where it count - fuel and energy, haven't increased in demand as consumers continue to hold on to their capital.

Most of crude oil demand has failed to materialize in developed markets, the key reason crude oil prices continue to fall. Over the last couple of months crude oil prices have plunged 15 percent.

After breaking down through the $70 a barrel barrier, the next level expected to be broken is $65. Analysts say if oil were in reality trading based on its fundamentals, crude oil would be priced below $60 a barrel.

Because of the low oil demand, stockpiles in the U.S. have also increased, putting more downward pressure on the price of oil futures.

In the U.S., which is the largest consumer of oil, usage has been down to 18.5 million barrels a day, a three percent drop from the same period last year.

Confirming people have cut back on energy use to conserve dollars, stockpiles of gasoline have risen for the third week in a row, reaching 216.3 million barrels. That is obviously from people cutting back on travel.

Also climbing extremely high are diesel and heating oil inventories, climbing an extraordinary 25 percent over the five-year average.

Sunday, December 13, 2009

Commodities: East African Coffee, Tea

East African countries could be the strong beneficiaries of commodities like coffee and tea, which are enjoying a surge in prices as commodities as an overall class increase in price too.

Other commodities set to help the East African region are gold and other base metals such as copper, lead and zinc, as Europe, China and India buys up its raw materials and agricultural products.

Some of this has come from stimulus programs devised to work on the infrastructure of these countries, which of course generates strong demand for precious metals and other raw materials.

Because tea and coffee is a major part of all the economies of the East Africa region, it is expected that they, more than the other commodities, will be the most beneficial to them at this time.

Demand from emerging markets also guarantee commodity demand and prices over the next couple of years will help countries like Tanzania, Uganda and Kenya.

Peter Schiff: Dollar Collapse Soon

Peter Schiff believes the collapse of the U.S. dollar is imminent, and that it'll happen sooner rather than later. He believes it will happen before Obama leaves office, even if he's a one-term president.

Schiff is quick to add the U.S. dollar won't fall every day or period of time, but its overall trajectory will be down, and even with some periods of strengthening, there's nothing to keep it on it precipitous fall off the edge of the cliff.

Part of the reason the U.S. dollar hasn't completely collapsed, according to Schiff, is the continual investment of foreign governments to keep it strong.

For those governments, if the dollar falls too much, it will have a negative impact on their exports, which would of course hurt their domestic economies. So they continue to invest in the dollar through buying up U.S. debt in hopes there will be an actual rebound in the value of the greenback from market forces.

The longer foreign governments prop up the dollar, the longer there will be large global imbalances, which won't be solved until the U.S. dollar falls in value.

When the dollar loses value, the price of everything goes up, as it takes more dollars to buy the same thing. This will be true of everything; including commodities.

Food and energy usually lead the cost increases, and that has consequences because if people are spending most of their money on food and energy, they have much less, if any, to spend on other products and services.

This could affect corporations in the U.S. because if the cost of debt begins to rise and consumers aren't spending money on their products, you'll eventually see the share prices of stocks fall along with the value of the U.S. dollar as it collapses.

Saturday, December 12, 2009

Printing Money Benefits Commodities

With central banks and governments addicted to printing money as their preferred strategy to salvage the economy, that will have long term benefit to commodities investors, as prices are sure to rise in response the the inflation-producing activity.

So one indicator all of those interested in commodities as an investment can look for is how their particular country is managing their money supply.

If they're printing money at a huge rate, you can count on inflation kicking in, especially with many commodity prices, and so you can be sure that, along with growing demand for commodities in Asia will ensure there's a ripe commodity market for some time into the future.

This doesn't mean all commodities will go up in price, but in general there will be an upward price movement in the commodity sector.

Add to this the demand for food, energy and precious metals, and you have a good look at where commodity demand, and ultimately prices will head. Just watch the amount of money being printed along with supply and demand as the major factors driving long term commodity prices.

China Drives Industrial Metal Demand

China continues to drive the demand for industrial metals, as recent news that the industrial output of China increased by a huge 16 percent in November over last year, confirmed China will remain the largest consumer of industrial metals in the world for some time to come. Consequently, commodity prices will rise in unison with that huge demand.

China will also drive demand for other commodities as well, as their appetite for commodities across the board won't let up any time soon.

This is another reason banks have been expanding their commodities units, as the demand of commodities in China hasn't slacked at all, but has only been temporarily put on hold until their economy turned around.

Agriculture, water, oil and other energy products will also be in big demand in China, as the needs in those areas are immediate and evident.

Still, commodity prices, based on China demand alone guarantees prices will rise among a number of them, and add India and other countries in Asia to the mix, and you have an idea of the potential in the commodity sector going forward.

Banks Expanding Commodity Staff

With a look toward inevitable inflationary pressures, banks have been adding to their commodities staffs as they look to make some good money in the sector as faith in the U.S. dollar continues to plummet.

It is expected to be a banner and breakout year for commodities this year, as investors have more appetite for risk and economic uncertainty make commodity investing look good.

The reason why there is more appetite for risk in the midst of economic uncertainty is the growing demand for commodities, which will continue no matter what the economic circumstances are.

Real economic recovery seems to be happening in China, and so there is no doubt the middle class demand for goods will drive up the price of commodities, not only next year, but for several years ahead.

This is why large banks are ramping up their commodities units in order to perpare for this inevitable trend to continue, as the commodity bull market has been on hold in general during the economic crisis.

Another factor has been the derivative industry, which won't function like it has in the past, and won't be destructive to banks, but won't make them any money (for the most part) either. Bank commodity investment will continue to grow, along with their staffs, as a result.

Friday, December 11, 2009

Henry Kaufman Clueless on Commodities

So-called economist Henry Kaufman said recently that commodities are in a bubble, a general statement so far from the truth it's surprising he even made, as it makes him look clueless and irrelevant.

Even more clueless, Kaufman wrongly stated that gold is in a bubble, again showing, he has no idea what a bubble is in order to define what he bases his assertions on.

A gold bubble, as with other bubbles, is when the regular guy on the street starts to buy up a certain type of investment because they heard it was making everyone else money. Normally it's identified by main street investors when the peak of the investment and why it was good is past. That drives a bubble and not a price that is high. High prices can call for a temporary correction, but a bubble has nothing to do with that, something Kaufman evidently is confused about.

Kaufman based much of what he said on people using leverage to buy commodities.

All Kaufman is referring to there is the carry trade, where low interest rates encourage investors to use that leverage to buy better returns. Based on that it's nonsense to speak of a bubble because carry trade is growing, with people using that leverage to acquire commodities.

The truth is, huge sectors of commodities are down, like agriculture in general, silver and palladium. They are far from in a commodity bubble.

Speculators, overall, aren't driving the commodity markets, but safety, a weakened U.S. dollar and inflation are part of the overall picture which is the major impetus behind the interest in commodities, although even there something like gold, which relatively few investors are actually investing in, is far from a bubble as well. All it has done is gone up in price; not what a bubble is defined by.

Kaufman is using faulty reasoning and understanding about commodities and bubbles to make his assertions, which are nonsensical at minimum. Commodities aren't in a bubble, as not only the areas I mentioned are down in price, but energy commodities are down as well. His commodity bubble statements make no sense whatsoever, as he's only taking into account carry trade, which has little bearing on the issue at all.

Commodity Correction Won't Last Long

Don't be fooled at all by the slight correction in commodities, as going forward, no matter what happens to the global economy, commodities will be a solid place to put investment capital, as emerging markets should start buying again sometime soon, and even if they don't, many investors will flock to certain commodities as a safe haven; such as gold and silver.

Other areas to look at would be agricultural commodities, along with some of the foreign currencies poised to move on the ongoing weakening of the U.S. dollar. And even if there is a upward movement of the U.S. dollar, which could happen in the short term, overall we'll see the continuing collapse in value of the greenback, ensuring a number of commodities will be important hedges against that behavior.

Another thing to consider is in grains, there have been an enormous amount of production and supply, and so demand hasn't kept up with it, keeping prices down. Energy has been the same, as people have cut back on driving and monitored their home heating to keep things in line with their incomes.

If inflation surges in 2010, a real strong possibility, from the ongoing debasement of currencies around the world from central banks printing extraordinary amounts of money and throwing it into the market, you'll see commodity prices rise along with it, participating in the inevitable increase in prices of raw materials.

Commodity investing legend Jim Rogers recommends looking for commodities with depressed prices at this time, and staying away from purchasing gold until it drops in price; although Rogers is a long-term bull on the price of gold. Other areas he's recommending to buy commodities is silver, palladium, natural gas and agriculture, all of which have had downward price pressures on them.

Where commodities will really take of is when a real recovery emerges, and large middle classes in China and India generate huge demand for raw materials and products; especially the more predictable emerging middle class in China.

Few People Invested in Gold

One of the major reasons cited by a number of experts as to why we're not in a gold bubble is the fact that very few in main street America have gravitated toward gold as a key part of their investment strategy.

When the time comes when people respond to gold increasing in price to the point it can't be ignored, a lot of the upward movement will already have happened, and the resultant surge in the price of gold at that time probably will be a bubble. But for now, it's not even close to that point, and little is changing in the printing of money by central banks around the world to change gold from being an important investment over the next decade.

Investors like Jim Rogers say they wouldn't think of selling gold any time soon, and once it drop in price some, are ready to buy up even more.

Even so, silver is probably the better way to invest in commodities and precious metals at this time, as it's still 70 percent off its highs, while gold continues to flirt with highs on a daily basis.

Other good commodity investment vehicles to participate in for most would be commodity indexes, according to Jim Rogers.

Rogers also believes investors should familiarize themselves with foreign currencies, as there will be a lot of opportunities in the years ahead to make money in that commodity sector as well.

Rogers has been buying the U.S. dollar, even though he knows its doomed over the long term. He believes there will be a nice upward movement based solely on how bearish most investors are in the greenback at this time. Over the long term, he still remains bearish on the U.S. currency.

Thursday, December 10, 2009

Commodities More Than For Diversification

In the past, commodities as an investment were considered a good way to diversify your portfolio. Those days are quickly leaving us as commodities are now considered a great way to generate real returns, and not just a hedge against losses or way to add balance to an investment portfolio.

One of the ways institutional investors are going about doing that is simply in trading commodities more actively. With the commodity bull market poised to resume, a large number of institutional investors say they're going to increase their commodity holdings over the next year.

A recent survey discovered that investors, like mentioned, aren't looking simply for diversification of portfolios at this time, but are looking for absolute returns. That's a lot different than what they were seeking last year with their commodity investments, which also included commodities investment as a hedge against inflation, which is still true, but no longer the key element in commodity investment decisions.

Another trend seems to be away from commodity index funds into direct investment in commodities, as well as investment in a variety of commodity exchange-traded funds. Many commodity investors are looking for more active positions rather than holding positions going forward.

The potential fallout for commodity prices is there could be a lot more volatility in the commodities market from managed commodity positions than from holding patterns associated with commodity index funds. That may also result in commodity prices having more downward pressure as well.

Estimates are that commodity assets under management at the end of 2009 could be as high as $240 billion.

Most of those that invest and follow commodities continue to believe that we're still in the midst of a commodity bull market and commodity prices overall will continue to rise.

Is There a Gold Bubble?

A lot of people don't understand the dynamics that make up financial bubbles, and it's not simply the fact that prices of a stock, commodity, or real estate is skyrocketing, it's more related to who is driving those prices up and for what reasons. And that is true with gold futures, gold prices, gold production and gold mining companies, or many other of the precious metals as well.

There really isn't a bubble until the general public begins to invest in something. The fact that they have no idea why they're investing other than they're hearing about it on the news and around the water cooler. That's what results in bubbles, not prices rising for good reasons.

Gold prices are rising for real reasons, and the majority of those investors aren't main street America or mainstreet other countries as well. Until that happens, there will be gold futures price corrections, but not the collapse of what some consider a bubble, as a gold bubble hasn't arrived yet, as most Americans still don't understand or recognize the value of gold; it hasn't entered into their minds yet. Once it does, then we'll have a good chance of seeing a gold bubble. Until then, we should be sure gold will continue to have support and prices will continue to rise over a period of time.

A number of countries, like China and India continue to stock up on physical gold, knowing the infaltionary pressures ahead, as well as the ongoing collapse of the value of the U.S. dollar. Other major investors have also focused on investing in physical gold and gold futures in preparation for the continuing increase in the price of gold for years ahead.

With the price of gold growing fast, it doesn't mean it's in a bubble like we've been talking about, but it could be due for a correction, or at least we should probably hold off until it pulls back a little, and watch how it responds from there.

Gold mining stocks are also at high multiples at this time, making them very expensive to own. In general, it's a time to hold gold and not buy too much. At the same time, I wouldn't sell any gold at all any time soon.

Corn Futures Prices Rise as Harvest Delayed

Corn Futures

With millions of bushels of corn still in the fields waiting to be harvested, and unsurety as to when that could happen, as wet fields and drying capacities as grain elevators hamper the process. Approximately 10 million acres of corn remain in the field, equal to about 1.5 billion bushels of corn. Corn futures have risen in price in response to the dilemna.

To give an idea of how much corn remains in the field, you have to look at several states. For example, Nebraska is in fairly good shape, as it has harvested 88 percent of all corn planted this year. Sout Dakota hasn't fared as well, as they have only been able to bring in 73 percent of their corn, while North Dakota is a disaster, as it has only been able to bring in 53 percent of corn in the fields at this time.

Some in the agriculture industry say it may not be until 2010 before the corn is harvested.

Consequently, corn future prices could continue to receive support until this is all worked out, if indeed it can be worked out. There could be significant loss going forward.

According to the USDA, the ending supply of corn at the end of 2009-2010 marketing year should come in at 1.675 billion bushels.

All the major grains, corn, wheat and soybeans are projected to be higher than projected, which will result in downward pressure on prices in the year ahead for the grain commodities.

Corn Futures

Wednesday, December 9, 2009

Cocoa Prices Up While Most Other Commodity Prices Fall

A lot of commodity prices fell based on surplus stockpiles, along with some commodity investors taking profits after price runups like with copper recently. Even so, copper has also increased its stockpiles, which would have put downward pressure on copper prices either way. Taking profits was done because of the stockpiles which commodity investors knew would drive copper prices down.

Oil and natural gas have also experienced larger stockpiles, driving prices down there as well. Even with the cold weather it's thought natural gas prices will still remain down.

Commodity metals used in the industrial process are especially subject to price movements based on stockpiles or supply, and so will almost always move down in price based upon that.

Grain prices were also down, with wheat futures prices plunging to a one month low in Chicago, as global wheat supplies remain robust. The front-month contract for Chicago wheat has dropped 9 percent in December so far.

Cocoa was about the only commodity market which bucked the dropping commodity price trend, as it increased by 21 pounds to 2,266 pounds a ton, after exploding to a 25-year high of 2,269 pounds a ton.

The U.S. dollar dropped again as expected, as its three-day run in positive territory abruptly ended, with nothing there to sustain any type of real rally for the greenback.

Is Commodity Correction Here?

With many investors and commodity speculators believing there was an economic recovery at hand, many pushed up the prices of numerous commodities pricing in the expected increase in demand which hasn't materialized, as all indications are the so-called recovery is a false one, and it could be a long time before significant demand emerges.

That shouldn't dampen the spirits of commodity investors though, as the unending printing of money by governments around the world will also drive up the price of commodities, something that history has proven is a predictable event.

Even so, the misguided belief we're in a recovery could very well result in a temporary correction in commodities, especially if investors don't take into account the inflation factor which is the consequence of out-of-control money printing presses.

Commodities like crude oil and natural gas have fallen based on demand issues, while gold have dropped from the temporary resurgence of the U.S. dollar, which won't last too long, although there could be a jump in strength in the dollar based on how bearish everyone is on it.

Copper also recently fell in price, but that was mostly from profit-taking rather than decreased demand, as copper prices had made a nice upward move.

I think there will be a commodity correction, but we can't interpret that in any other way than that. Once that happens, commodity prices will continue their ascent, and continue with its ongoing bull market behavior.

Jim Rogers: Commodities Great Investment No Matter How Economy Goes

Commodity investor Jim Rogers says it doesn't matter whether the global economy is good or bad, commodities will do great for some time because historically when governments print money, commodity prices go up.

If and when the global economy does improve, than the growing middle classes in Asia, especially China, will generate huge demand for a large number of products, many of which will be commodities directly, or at minimum, commodities indirectly, through products which are manufactured using specific commodities as components of the process.

And as mentioned, if the economy doesn't improve for some time ahead, commodities are a great place to be based on investors looking to raw materials and some precious metals to protect against inflation and dropping value in the U.S. dollar. Printing money will continue to pressure the U.S. dollar downward in value, so that should be a big part of the picture with commodities in the years ahead.

Rogers pays little attention to the inevitable swing in prices of commodities, as that's part of investing in the sector. What he's looking for now is commodities that have been depressed like agriculture, silver, natural gas and palladium.

While he remains bullish on gold, he's not going to buy any at this time, while he will continue to hold what he does own as well.

Rogers says we're in a cyclical bull market, and he has learned the hard way not to short commodities during those times.

The Rogers Commodity Index, which Rogers set up, has outperformed its more well know competitor the Reuters-Jefferies CRB commodities index in 2009, as it's up by close to 30 percent this year, while Reuters-Jefferies is only up by 17 percent.

Tuesday, December 8, 2009

Countries Stocking Up on Gold

Max Keiser recently said in an interview that China, India and Germany will acquire huge quantities of gold very soon. Just in November, the central bank of India acquired $7 billion in physical gold, while China has been purchasing gold for some time now.

Not long after India acquired the $7 billion in gold, they announced they're in the market to buy up another 203 tons of gold from the IMF.

Keiser added that German contacts from the Bundes Bank confirm they're also in the market for large acquisitions of gold as well, although it isn't clear how much they're thinking of acquiring.

Keiser seems to imply that all of this is in preparation for the eventual disgarding of the U.S. dollar as the global reserve currency. That would mean the countries will be able to use gold as a medium of exchange no matter what the currency the U.S. dollar would be replaced with.

Many countries are looking at the U.S. dollar less as a solid, defensive currency to invest in, and are increasingly considering it a potential liability.

Countries invest in the greenback at this time not because they are looking for stability, but because the continue decline in the value of the U.S. dollar is contributing to loss of exports from the inability to compete from their currencies being strengthened against the dollar.

Keiser concludes that the U.S. dollar is going to suffer greatly in the years ahead, as countries realize it is no longer the place of safety it has been for decades.

As far as this relates to the price of gold going up, investors such as Peter Schiff and Jim Rogers have stated in the past gold could rise as high as $2,000 an ounce to $5,000 an ounce. Others say if the world loses faith the the U.S. currency, it could surge to as high as $15,000 an ounce.

while the latter is highly unlikely, we really haven't been in this place in history before, and there isn't much we can go to to see how things could fare in the midst of the global recession. It is all but certain that gold isn't close to running its upward course in price per ounce.

Sunday, December 6, 2009

Singapore Commodities Trader Sunny Verghese

To give an idea of how lucrative the agriculture commodity can and will be, you need look no further than Sunny Verghese, who runs his own commodity investment company out of Singapore: Olam International.

As Verghese said in a recent interview, talking of his 50 percent increase in profits during these economic hard times: "Even in a recession, people have to eat." They do. And he has profited from that.

When Verghese started the company about 20 years ago, his only goal was to become the largest exporter of cashews out of Nigeria. Olam has become all of that and more, with sales of $6.2 billion in the first six months of 2009 alone. Net profits soared to $181 million during that same period.

Now one of the largest and most successful commodity firms in the world, Olam sells, along with its cashews, soft commodites such as grains, spices, sugar, coffee and beans, along with various other edible kernals to food giants.

The company has also entered the packaged food business, running a number of processing factories across a number of countries, producing a large number of good products.

In the latest report from the company, they stated they will invest in plantations nad value-added processing to expand in the long term.

The key to the success of Olam in its agricultural commodity strategy was to source agricutural raw products from countries that had proven hard to work with, and then figuring out ways to deliver the agricultural products to companies on a timely and consistent basis.

Helping the agricultural commodity company thrive during the economic crisis has been access to hard to find capital and the discipline in maintaining its costs at a low level.

Olam recently bought an Australian almond plantation for $114 million, keeping in line with their agricultural commodity strategy to expand into plantations and other areas of agriculture.

Water as a Commodity Investment

As in most commodities, the best play going forward for investing in water is to find the closest to the most direct play you can in order to maximize your profits, as many companies investing in water are either limited by regulation, as in water utilities, or by huge companies like General Electric, wish are heavily invested in water, but is diluted by so many other parts of the company that it doesn't much good for those who want to invest in water as a commodity like they could in oil, gold, wheat, rice or silver futures.

Some of the more direct ways to invest in water would be in utilities that produce, treat and transport water, but other industries offering services in pollution management and smart grids are also possibilities. Other agriculture commodities like wheat, corn, soybeans and rice are other ways to invest in water, which we'll talk about a little later.

Another unique way to invest in water is in a company which helps decrease energy us at desalination plants that are used to clean up water for use. One decent company in that arena is Energy Recovery Corp. a small-cap stock which builds equipment for that purpose.

As far as agricultural commodities, wheat, corn, soybeans and others could be invested in in relationship to water similar to how gold is being invested in to protect against inflation and the weakening U.S. dollar. Whatever agricultural commodity you're investing in, you would do it the same as usual, but with the understanding of what higher water prices could eventually mean to the food prices; an indirect but very real way to take advantage of those changes in water prices probably coming fairly soon.

So when considering investing in water, it would probably be best to do it in reference a variety of grains and other soft commodities which will partake in the eventual increase in water prices.

With a lot of regulation and markets being fragmented, the thought is products that use water will increase in price before water itself, which will more than likely lag the overall market. So investing in products that use water, rather than water itself is a good way to think in terms of investing in the commodity water. In the long term water itself will rise in price, which will ensure those in it for the long haul should enjoy solid returns.

Saturday, December 5, 2009

Commodities | Crude Oil Prices Fall

Crude Oil Down on Rising Dollar

In what is expected to be the determining factor in ongoing price increases with gold and other commodities, the increase in value of the U.S. dollar resulted in crude oil prices falling to seven-week lows.

The advance of the greenback was the largest jump against the euro in over five months.

Prices for crude oil delivery for Junuary dropped 99 cent or 1.3 percent, to $75.47 a barrel on the NYMEX. That's the lowest numbers since October 14, 2008. Overall crude oil prices for the week fell by 0.8 percent, although they are up by 69 percent so far this year.

There are a couple of assumptions connected to the strengthening of the dollar, and both are far from being a confirmed reality. One is that the economy has in reality turned around; a very dubious and unproven assertion. Second, based upon that assumption, speculators are betting the Federal Reserve will increase interest rates.

Strange that one unproven assumption can then be invested in based upon a phantom reponse by the Federal Reserve to that assumption. Strange indeed.

While some say commodities have been shored up by the weakness of the dollar, that's not the entire story. It is definitely part of the commodity price increase story, but over the long term it's largely irrelevant.

Commodity demand is what will drive the prices of raw materials, food and precious metals going forward, not primarily the value of the dollar, although that will remain a factor.

The real long-term driver of commodity prices will be demand, and that demand will come from Asia primarily. Supply factors of course will also play a major role in commodity prices.

As expected, gold futures fell in conjunction with the dollar strengthening, falling by close to 4 percent to $1,168.50 an ounce on the Comex division of the NYMEX.

For the price of oil, Saudi Oil Minister Ali al-Naimi said they are happy with the price of oil being between $70 and $80, with a target of just under $75 a barrel.

Surprising larger U.S. oil inventories suggest the price of oil will probably fall until that changes, as there is plenty to meet current demand.

Crude Oil Down on Rising Dollar

Thursday, December 3, 2009

Investors Flock to Commodities, Gold

There seems to be very little concern by investors that gold will have a major correction any time soon, as the ongoing weakening of the U.S. dollar has them rushing to the yellow metal for safety and inflation concerns.

Just about every weak now gold breaks a new high, and commodities are becoming hot again, even before the economic recovery really even starts, which shows what will happen with commodity prices once that reality hits.

Spot gold rose to $1,226.10 an ounce recently, and investors like Peter Schiff believe it'll continue riding all the way up to $5,000 an ounce in the years ahead. Commodity superstar Jim Rogers also remains bullish on gold, although he thinks there's a possibility of a correction, and so while he's not buying, he's definitely not sellign either. He's hoping a correction will come and he can buy it at even a cheaper price.


Aluminum has been on its own run in 2009, increasing by an enormous 60 pecent just since March, to reach $2,166 a ton. Much of the reason behind the increase in aluminum price is concern over whether supply can meet the surging demand, as companies and countries will eventually start making major orders again, and stocks as of this writing are at 4.6 million tons.


Copper is primarily being driven by investors, as stocks stand at 445,400 tons, with demand down, but awaits a real recovery which could cause demand to explode.


Supplies of sugar in the top sugar consuming area of the world, including India and Pakistan, have been struggling, and so white sugar futures have surged to a record $635.00 a ton.

Crude Oil

Even though oil increased by 44 cents to $77.04 a barrel, that won't hold, as concerns over too much supply in that case will drive prices down again. Crude stocks increased to more than the projected 2.1 million barrels.

Commodities in general, at this time, are responding to the collapsing U.S. dollar, and the surety of extraordinary inflation in the years ahead from the outrageous bailouts by governments around the world.

As far as this affects the prices of commodities, once the prices are driven by demand again, and investors pour even more into them, it's sure to make the commodity bull market of the last decade look like a calf.

Thursday, November 19, 2009

Jim Rogers: Avoid Mining Stocks

A large number of investors have looked to Jim Rogers for advice on how to play the ongoing rise in silver and gold, as it looks like there's no end in sight as to how high the prices of the two precious metals will go in the years ahead.

Rogers has cautioned that he wouldn't by gold through mining stocks unless you're a great stock researcher and picker, as investing directly in gold and silver over the years has proven to be the best way to make money.

He applies that to all commodities as well, where studies confirm investing in commodities in and of themselves outperform commodity companies.

Even though gold is far below its high when adjusted for inflation, it is hovering near its all-time highs as far as price goes.

Rogers says while he's not buying, neither is he selling, as price will go up without a doubt, even if there are the usual corrections.

Concerning gold, Rogers recently stated that there is no doubt in his mind that gold will surge past the adjusted for inflation high of about $2,000. Peter Schiff has said he could see it going as high as $5,000 in the current commodity bull market.

Wednesday, November 18, 2009

John Paulson Launching Gold Hedge Fund

With many investors starting to become true believers that gold still has a long way to go up, John Paulson, founder of Paulson & Co., has announced he's going to launch a new gold hedge fund January first, putting the seed money into the company himself of $250 million.

Paulson says he's going to buy assets primarily related to physical gold, including shares of gold miner stocks.

This isn't anything new for Paulson, who at this time is the largest investor in SPDR Gold Shares ETF (NYSE: GLD), a major way to invest in gold. Paulson also already owns shares in mining stocks as well. Paulson & Co. owns 31.5 million shares in SPDR Gold Shares, worth a hefty $3.24 billion.

Gold will continue to go up in price based on nothing other than the flawed monetary policy of the United States through the Federal Reserve. Politicians don't have the will at this time to make meaningful and lasting changes in the monetary policy, and other than Ron Paul, really have no understanding of the cause and effect of it.

Investor Jim Rogers has said recently that the price of gold should be standing at it inflation adjusted price of $2,000. Even so, he is in a holding pattern with gold at this time, saying he's not buying more gold, but he isn't selling either.

Saturday, November 14, 2009

Where are Copper Prices Heading?

Copper Prices

The interference by the government in the economy has made it more difficult to know which direction copper prices will go, as the articial propping up of certain industries can also give a temporary bump up in prices.

Copper is of course one of the best indicators of the economy, as it signals whether people are buying or hoarding their cash.

Copper prices exploded upwards in 2009, but have flattened out since around August at about $2.80 to $3.00 a pound. During the summer months copper price per pound fell to around $2.20.

There is no doubt there will be a big move in copper prices sometime soon, but the question is whether that move will be up or down.

I think we could use the $2.20 a pound lows in the summer of 2009 as a sign that demand has slackened and people aren't spending. On the other hand, if prices start to rise well above $3.00 a pound, say like $3.20 or more, it would probably be a good indication that inflation is rearing its ugly head and prices will continue to shoot up.

Because we don't know how badly the government will continue to print money, copper prices are a good indicator of how much they're really doing it and how people are responding.

Copper Prices

Gold Has Much More Upside

Gold Prices

There is a basic principle seasoned investors use to check to see if any type of investment could be experiencing a bubble, and this is when the majority of the public understands it and claims to have a piece of the action. That's the same with gold, and while many people are talking like this has happened with the precious metal, it's highly doubtful that's the case.

What has really happened with gold to me is the financial press and news outlets have been covering it more, but that doesn't translate to the regular person on the street who really doesn't follow those programs. In other words, those that always follow business and investing news are aware of the reason gold is going up and why it will continue, but those that are average investors haven't picked up on it yet, so the upward price movement of gold isn't happening simply because of a hoard of investors joining in a gold feeding frenzy.

So when you hear that we are in a gold bubble, that isn't true at this time, and could even be part of a strategy of speculators who have shorted the yellow metal and could be getting clobbered as it keeps on moving up. Rumors like that are part of playing the speculation game, and very well could be the reason it's becoming part of the conversation.

The bottom line is everyday people haven't really understood or started to invest in gold yet, and until that happens, a bubble is still on the far horizon. This doesn't mean it won't happen, just that gold prices are being moved by market forces and economic circumstances, not by talk around the water cooler.

Gold Prices

Thursday, October 15, 2009

Newfield Exploration (NYSE:NFX) Upgraded to Outperform by Wells Fargo

Wells Fargo (NYSE:WFC) announced that it has upgraded Newfield Exploration (NYSE: NFX) from Market Perform to Outperform, and increased its target range from $35-$40 to $56-$60.

According to Wells Fargo, it's decision was based on Newfield's exploration potential, discount of valuation, operational catalysts and growing focus on oil.

Especially noted by Wells Fargo was Newfield's Monument Butte & Bakken programs which are the chief area where it's exposure to oil is located.

Natural gas also continues to play a major part in its valuations, as it accounts for 54 percent of Newfield's portfolio, while crude stands at 46 percent.

It was also felt by Wells Fargo that the Monument Butte asset in the Uinta Basin held by Newfiled Exploration is highly undervalued by the street, another significant factor in its upgrade of the company stock.

Friday, October 9, 2009

Chinese Buying Up More Gold

As gold prices hit new record highs, that hasn't deterred the Chinese government and individual Chinese investors from continuing to plow a lot of money into the yellow metal.

And the fact that retail jewelry built from gold has taken a hit has largely been shrugged off by the market, as that hasn't really been much of a factor ever in determing gold prices, especially in volatile economic times.

Consequently, investment in gold is the only driver of gold prices at this time, and with the economic conditions we face, there's no doubt gold prices will rise for many years to come, with occasional and obvious corrections as it goes along. But the curve will continue to be up with occasional dips in gold prices.

The Chinese government is also looking for places to place their money, and have been buying up large amounts of gold for some time, although with all of that, there's plenty of room for more, as at this time only about 1.6 percent of the china's forex reserves are held in gold.

Most Chinese believe their is significant upside to gold prices, and aren't going to cut back in their acquisitions of gold any time soon.

Jim Rogers | Gold Over $2,000

We've heard a lot of talk about the price of gold and where it'll end up going to, and the latest to make their prediction is Jim Rogers from Rogers Holdings and other companies, who says in a decade gold should go over $2,000 an ounce.

Another person predicting extraordinary increase in gold prices is Peter Schiff, who has asserted gold could top $5,000 before things settle down.

Rogers has also said for some time that commodity prices will rise for years into the future as growing demand won't be able to be met by supply.

Another major factor in ensured rising commodity prices is the fact very little in the way of new production capacity has been built over the last 30 years, and because in most cases it takes approximately 10 years to bring production online, it'll be some time before supply in many commodities will be able to meet demand.

Thursday, October 8, 2009

Jim Rogers Points to Agriculture, Silver and Palladium as Good Commodity Investments

While most of us that know Jim Rogers are familiar with his bullish outlook on agriculture, but he has been slow to add anything else to what he thinks will be big movers, other than saying all commodities over time will rise as demand from emerging middle classes in Asia drive up the prices.

But he has broken with his generalities to give his thoughts on what other specific commodities look good in the short term, and they are silver and palladium.

I do know a lot about silver and know that has a great short- and long-term future for prices going higher. But palladium I'm not as knowledgeable about, and so it was good to hear Rogers mention it, as it will get me to do some research to see why he's bullish on it now.

Rogers major reason for overall commodity bullishness is the demand factor from Asia, but also the fact that expansion of commodity production capacity has been almost zero, and so the supply will not be able to meet the demand, so commodity prices will continue to rise.

Wednesday, October 7, 2009

Commodities Rise on Dollar Collapse

As the U.S. dollar continues to plunge in value, commodities and stocks related to commodities continue rise in price, as investors flee the greenback and look to energy, raw materials and related stocks to hedge against its continuing demise.

Also benefiting from the fall of the U.S. dollar are multinational companies, which are also targets of investors. Of course foreign manufacturers are getting nervous, as their products are costing more with the collapse of the dollar, and they lose sales as their price competitiveness in America declines.

Most believe the stock market will remain volatile for some time, and will largely move in conjunction with the ups and downs of the U.S. dollar, which means it'll probably move up as the dollar over the long term moves down.

Taking into account the flight to safety and hedge against inflation, along with the ongoing collapse of the U.S. dollar, and the emerging middle classes in China, India, and other places in Asia, and you can see why commodities will continue to soar for years into the future.

Gold Prices Break Another Record

Gold prices rose to another record high, as it closed at $1,050 a troy ounce, as gold investors at this time are shrugging off the idea that there will be a correction.

Since August the price of gold has soared by over 10 percent, some thinking it is headed for $1,500, and over the long term projections have been as high as $5,000, with Peter Schiff offering that as a real possibility for gold prices.

The continuing plunge in value of the U.S. dollar, along with the fears of inflation, seem to be keeping investors in the gold game rather than taking profits.

Some in the gold industry have looked at the falling demand for jewelry in a number of nations, including India, Italy and Turkey, among others, as a reason to be concerned over the price of gold holding, but in reality, the price movements of gold are far less dependent on jewelry demand than a hedge against inflation and holding on to your money, which in times like we're living in is more relevant.

Jim Rogers has said he wouldn't buy gold while it's hitting record highs, but at the same time he's also not thinking in terms of betting against it either. He's basically waiting for the price to drop and then he'll buy more, knowing over the long term there is a lot of upside for gold before it begins to level out.

Another interesting point is while gold has reached record levels when measured against the U.S. dollar, against other currencies it is still far from reaching its highs. For example, it's 30 percent below former highs against the Australian dollar and 15 percent below highs it has hit against the yen.

Peter Schiff Bullish on Agriculture

Peter Schiff Likes Agriculture

A number of highly qualified investors have been bullish on agriculture for some time, and the latest maintaining that position is Peter Schiff, who said in a recent interview on CNBC that he is especially bullish on the agricutural industry in general, and also the fertilizer industry within those parameters.

Confirming what we talk a lot about on Commodity Surge, Schiff added that the Chinese will continue to buy up commodities as their standard of living continues to rise, and their growing middle class will create great demand for commodities going forward.

Another interesting insight from Schiff is the reason stock prices are rising at this time isn't because of stocks going up because of increased value, but because the U.S. dollar is going down. The dollar's collapse and decreased value is the determing factor there, according to Schiff.

Talking about Wal-Mart (NYSE:WMT), Schiff made an interesting observation I've never heard before, and that is that Wal-Mart could become the next Saks Fifth Avenue based on their inability to import cheap products from the Chinese any longer.

Investor Jim Rogers has also been bullish on agriculture for years, and looks upon it as the growth vehicle for the future, based primarily on less land available for crops and growing demand.

Peter Schiff Likes Agriculture

Tuesday, October 6, 2009

Silver Prices About to Explode?

Taking into account that about 150 million ounces of silver have been officially acquired this year, which represents about 20 percent of all silver production in 2009 so far, as well as 25 percent of all silver mine production. (The difference is recycling.)

Unofficially, it's thought that tens of millions of ounces of silver has been acquired since the beginning of the year, besides direct buying by investors.

Even more extraordinary, this represents approximately 15 percent of all known silver bullion known to exist at this time.

Taking into account the rising number of industrial uses silver is increasingly being used for, and some of the products it can't be recovered from, and we could have the perfect storm for increasing silver prices for a long time to come.

Monday, October 5, 2009

One Investor Corners Tin Market

Tin Market Turmoil

An unknown investor has boght up thousands of tons of tin last week, and has stored it in warehouses all over London. Reports are that basically the entire stocks of tin listed on the London Metals Exchange (LME) were acquired during the past week by that one buyer, who most assume is a hedge fund.

Some buyers of tin and other investors are whining about this, but the LME said the reason they are isn't because there's something wrong with the tin market, but because they guessed wrong as to the direction the prices would move, and it adds that they've been publishing the needed data to make informed decisions, so complaints are not legitimate.

AS far as the strategy of the mysterious tin buyer, they've either done it with the belief that the growing demand and acquisition of tin by Asian countries will continue to drive up prices, and so they bought the lot to take advantage of the real possibility, or an attempt to get some quick, short-term gains.

Although the secret tin investor has a dominant position at this time, and has a limited control of prices, they are playing a risky game that could backfire if they aren't careful. Sellers of tin are enjoying this period of time, but that will probably change some time soon, and there is some evidence that the tin buyer has already started selling its tin.

Tin demand is expected to rise to 320,000 tons this year, up from 300,000 last year.

Tin Prices Rising

BofA: Gold at $1,500 by 2011

Gold Prices Going UP

While Peter Schiff has said gold could go as high as $5,000 and ounce, and maybe more, in the short term there is still a good chance that it'll go up significantly, as some BofA (NYSE:BAC) researchers are looking at gold reaching $1,500 an ounce by 2011, saying as oil prices begin to move up again, gold will go with it.

With inflation probably higher than governments admitting to, it's only a matter of time till gold really takes off, and is doing very well in these times as it is.

Concerns are that oil prices will skyrocket because the lack of funding has cut back on production, and that will catch up with us and drive prices up as supply won't be able to meet demand.

Gold Prices Going Up

Thursday, October 1, 2009

Commodity Prices Surge on Demand

A falling and collapsing U.S. dollar, along with growing demand for oil has helped push up commodity prices, helping to rescue a poor performance by commodities in the third quarter.

Much of the six percent increase in oil prices came from government data showing gasoline inventories had dropped in the United States, catching some by surprise and pushing up prices. Gasoline demand also increased, having an effect on prices.

With the U.S. dollar also continuing to plunge in value, it spurred buying in other commodity sectors like sugar, cocoa, gold and copper, which also increased in price as investors took advantage of dollar-denominated commodities, which were cheaper as a result.

This will continue to go on once real recovery begins, as emerging middle classes in Asia drive demand for commodities for a long time into the future.

Tuesday, September 29, 2009

Commodities | Natural Gas Correction Coming

Commodities: Natural Gas

There is about to be a major correction the the North American natural gas market, as the large number of natural gas producers in America and Canade won't be able to continue on, as there are too many of them in operation today.

What to watch for are those companies high operations costs and low margins, who aren't able to compete with lower prices, which will determine the winners and losers in the coming shakeout in the natural gas industry.

Not that natural gas prices have hit a seven-year low recently, selling at $2.50 per thousand cubic feet. The problem is no natural gas producer is blinking an cutting back on production, evidently thinking they're in it too big to make that decision.

Of course the market will make that decision for them, whether they want to or not, and a market-driven supply and demand response will be the result.

If you're an investor in natural gas, you must face the fall in prices (even though there has been some recent increase in prices in natural gas), and realize that the existing prices of natural gas companies can't continue on without a major correction. Demand is low and supply is high; that will eventually bring down the price of natural gas company stocks, and you don't want to be in them when they plunge.

Either the lack of extra storage of natural gas or a price drop will bring things back to reality. Either way, you need to change your way of thinking if you believe natural gas stocks can hold these prices in the midst of the current natural gas reality.

Commodities: Natural Gas

Friday, September 25, 2009

Wheat Plunges, Oil and Copper Up

Wheat prices plunged by five percent, as global supplies keep the prices down. Other concerns are Australia may cancel its wheat export licenses at three of the large grain companies in the nation.

Another potential obstacle viewed by wheat investors was the possibility of increasing storage fees for wheat, which could effectively drive speculators out of the market.

Good weather for winter wheat has also brought fears that there will continue to be far too much wheat on the market to sustain a higher price of the months ahead. The December wheat contract dropped to $4.49-3/4 a bushel on the Chicago Board of Trade.

For crude oil, it gained 13 cents a barrel in New York, after it fell 8 percent over the last couple of days. It finished at $66.02 a barrel on the New York Mercantile Exchange.

Copper futures in the U.S. enjoyed a 1 percent gain, after a couple of rough sessions over the last couple of days, losing about five percent of its value during that time. December contracts finished at $2.7405 a pound, an increase of 3.10 cents on the COMEX metals division of NYMEX.

Copper on the London Metal Exchange rose by $40 to end the day at $5,990 a ton. Most of that increase came from a drop in inventory at the LME warhouses by 175 tons over the day before.

Tuesday, September 22, 2009

Copper Prices Rise on Dollar Weakness

Copper prices

Copper prices have been going back and forth, along with the strength of the U.S. dollar, which has reached major one-year lows on the U.S. dollar Index, which measures the greenback against a basket of six other currencies.

Even so, with China cutting back on copper imports and copper stockpiles rising, it's not expected to sustain price increases until later in the fourth quarter and into 2010.

That means that copper, for now, will probably rise and fall in conjunction with the movement of the U.S. dollar, and will swing a lot until long-term and predictable demand kicks in.

Copper prices

China Investment Corp Invests in Noble Group

China Investment Corp

China's sovereign wealth fund, the China Investment Corp., has invested in the Hong Kong-based commodities corporation Noble Group. Noble is listed on the Singapore exchange.

According to the Noble website, it will sell a total of 573 million shares to CIC for $850 million, at $1.5 a share, bringing its overall stake in Noble to 14.9 percent.

Noble holds a number of positions in agricultural and other raw materials like iron ore and coal. Its agricultural holdings are especially targeted to Latin American countries like Argentina, Uruguay, and Brazil, also operating five ports across South America.

China Investment Corp

Commodities Rise As Dollar Falls

Commodity Prices Rising

As the U.S. dollar continues to decline, commodity prices will continue to rise, and that's the way it will go for some time, although there will of course be fluctuations along the way.

After several days of commodity prices falling, they're rebounding again, with gold and silver prices rising, along with oil prices going above the $71 a barrel mark.

The U.S. dollar index on the other hand dropped a full one percent, which now stands at its yearly low.

The misguided bailouts and government spending, along with commodity demand will continue to drive up commodity prices, and lower the value of the U.S. dollar for along time to come.

Commodity Prices Rising

Monday, September 21, 2009

Jim Rogers: Investing in Commodities

Investing in Commodities

We talk a lot about the ongoing bull market in commodities, which will no doubt resume as the economic crisis winds down. Recently Jim Rogers confirmed what he mostly reiterates all the time, and that is the best way to buy commodities is to buy them direct.

Unless somone has the time to research and understands the variable connected to successfully picking a stock, it's far better to invest in commodities directly than any other way, and studies confirm this will produce the best results.

what's simple about investing in commodities this way is you then have to only identify supply and demand to make a profit one way or the other, and that vastly simplifies the process and narrows things down for you.

Investing in Commodities

Jim Rogers: Commodities and Inflation

Commodity Prices Rising

Talking about the historical pattern that arises when governments print money, Jim Roges said that there's no doubt that commodity prices will continue to rise as a consequence of those ongoing practices.

Not only is America printing money, Rogers notes, but the whole world is, and that will fuel commodity price increases for some time into the future.

Another factor will be the locked up credit markets which disallow farmers from getting loans, as well as other commodity-related sectors like mining companies.

So even if none of that was happening, Rogers has asserted in the past that the emerging markets in China primarily, and secondarily the other BRIC countries, would have driven up commodity prices on their own. Now with these other factors added in, it looks like this will have an even more dramatic impact on commodity prices rising.

Saturday, September 19, 2009

CME Offers Commodity Speculation Recommendation

In an effort to curb the influence of speculation in the commodity markets, CME Group offered up some of its own recommendations, among which is a stronger role for the Commodity Futures Trading Commission in reference to energy products in hard singel exchange positions, specifically those at exchanges that are regulated.

"We recognize that misperceptions can undermine confidence in well-functioning markets, which is why we support the CFTC's mission to provide regulatory certainty and to ensure that the energy markets can operate efficiently," said Terry Duffy, CME Group executive chairman. "Regulatory parity, however, must be given to all markets under the CFTC's jurisdiction."

But as CME's Donohue states, a number of studies have disproven the idea that commodity speculators have been the force behind driving commodity prices and energy prices up, and rather it's the supply and demand factors which drive prices, and not commodity speculators.

Donohue also, probably rightly, added, that if there are limits imposed on index funds, that will more than likely simply move the funds to invest in markets that are unregulated.

The government needs to simply stay out of attempting to be the central planner for the economy, it hasn't worked anywhere in the past, and it won't work now or in the future. Supply and demand drives commodity prices, not speculators.

Tuesday, July 28, 2009

Commodity Bull Market Will Continue

Commodity Prices, Bull Market

A number of factors will contribute to the ongoing commodity bull market, including population growth (although that isn't the primary factor) and other changes that will ensure probably at least a decade or not more of commodity price surges.

Now along with population growth, the more significant reason commodity prices will increase are the emerging middle classes in China and India, and other smaller Asian countries.

After all, population growth won't significantly change things if people aren't able to afford food. Sure, you get the subsidized food, but that always is the basics to survive, never the higher margin food middle classes enjoy and can afford.

But, either way, population growth for general food stuffs, along with available funds from emerging market consumers will drive commodity prices for years to come.

"World population growth trends suggest massive numbers of new global citizens on the way -- citizens that are going to require essentials such as food, clothing and shelter," commodity ETF expert Doug Fabian said.

"For investors who want to ride this population wave, I offer you the PowerShares DB Commodity Index, an exchange-traded fund that seeks to track the performance of the Deutsche Bank Liquid Commodity index," he added.

Of course I've been writing about this for a long time trying to show you the reasons many commodities will be highly profitable. Jim Rogers has also contributed to that conversation, saying that commodities should be the top performing investment for years into the future.

Commodity prices in many cases have dipped because of the temporary economic slowdown, and no matter how long it takes to be dug out of it, eventually commodities will begin to rise again, and when they do, they could explode in price. Of course you can make money whether commodity prices rise or fall, but this makes pricing of them easier than when there's a lot of uncertainty, which over the long term there isn't: commodity prices overall will rise, and that's a surety over the long term.

If Commodity prices continue to lag, that could be a great buying opportunity as well, and could even add to the profits of investors going forward.

Commodity Prices, Bull Market

Wednesday, July 15, 2009

Brazil Commodities Pushing Economy

Brazil Commodities

Stocks in Brazil, which are primarily fueled by the commodity sector, enjoyed a strong push, as oil and metals helped drive up the prices of producers and investors hope this is the beginning of a rebound in the Brazilian economy.

Vale SA, the world’s largest iron ore miner, climbed more than 7 percent after Bank of America Corp. upgraded the stock on valuations and higher ore prices. Tam SA and Gol Linhas Aereas Inteligentes SA, Brazil’s two biggest airlines, increased the most in the Bovespa index on hopes demand will increase. Rossi Residencial SA led gains for homebuilders after competitor MRV Engenharia & Participacoes SA recorded record contracted sales.

Industrial production in the U.S., the world’s biggest economy, had the smallest fall in eight months, the Federal Reserve said today. A New York regional factory gauge showed the smallest contraction in more than a year.

Vale Upgrade

Vale increased by the highest in two months, adding 7.2 percent to 29.84 reais, after it was raised to “buy” from “neutral” at Bank of America.

“Since March, the stock has been a big underperformer and we now believe investors are overly pessimistic on the name,” analysts led by Felipe Hirai wrote. “Vale’s current share price is not reflecting a stronger iron ore market scenario.”

The Bloomberg Base Metals 3-Month Price Commodity Index gained 3.5 percent to 156.86. Crude oil rose as much as 4.1 percent, the most in six weeks, after a government report showed a bigger-than-forecast drop in U.S. crude inventories as refineries increased operating rates.

The Bovespa has gained 36 percent in 2009 on speculation a rebound in commodity prices and falling interest rates will bolster economic growth. The measure had tumbled 10 percent from this year’s high on June 1 through yesterday on speculation the global recession will be prolonged, reducing commodity demand.

Grupo Elektra SA, the Mexican electronics retailer controlled by billionaire Ricardo Salinas, led the gains in the Bolsa index after Intel Corp. forecast sales that beat analysts’ estimates.

Grupo Financiero Banorte, Mexico’s largest publicly traded lender, rose. Mexico’s central bank is expected to cut interest rates by 25 basis points.

The Bolsa is tracking the rise of U.S. stocks, which had fallen “too much too quickly,” Guilherme Paiva, Deutsche Bank’s Latin American equity strategist, said in an e-mail. “Plus it looks like Intel figures were driven by top-line growth rather than cost cutting,” he said.

The Bolsa has gained 49 percent since its March 2 low on signs that the worst of the recession is over.

Commodities continue to help lead the way for Brazil, but I would be very cautious on making decisons based on wishful thinking that the recession is over.

Brazil Commodities

Commodities Still Hot - Jim Rogers

The commodities rally seems to have paused. The Rogers International Commodity Index has come off 13% since June 12. This pullback, essentially as I can see, is because of tin, energy and silver even as some of those agri commodities like orange juice, sugar and cotton have done well. What are your expectations going forward for commodities?

That's the way I know you know about commodities. You read The Economic Times and your ET TV. So, you know that the markets always have corrections whether they are going up or down. Nothing goes straight up or down forever. So, it's having a normal correction. In my view, the best place to be is in real assetscommodities, because if the world is going to recover, they (commodities) will recover first because of the shortages and if the world economy is not going to recover, they are still the best place to be, because governments around the world are printing huge amounts of money. So, if you got to own something, I don't much to own besides commodities.

In India, we are getting worried about the monsoon. We are looking out of our windows and not finding any clouds, and there is also talk about El Nino weather formation. Is this something you would advise investors to keep an eye on?
Of course, I would. The world's inventories of food are at the lowest they have been in decades. We haven't have had any serious weather problems around the world for several decades as a matter of fact. So, with fairly good weather, we have been having bad harvest or we have been consuming more than we have been producing. Can you imagine what's going to happen to the price of agriculture if we have bad weather around the world?

The last time we met here in Mumbai you had a sachet of sugar in your pocket and you pulled it out to underscore your point of impending shortage about agri commodities. You have been right about sugar as far as we can see from the price charts. What are you hiding today in your pockets? A silver coin, a hip flask full of crude oil, may be?

I do actually have a silver coin in my pocket. I don't know how you knew. I also have a gold coin, but the silver one is probably my better play. If I were a bright young man, I would be buying sugar now and silver, given the state of the world. That's not a recommendation, but I am just saying I do own some silver. Silver is cheaper than many things on a historic basis and I do own some silver. The dollar has fallen almost 10% since the beginning of the stocks rally in March. Commodities have risen 94% of the time that the dollar has fallen. A very strong correlation. Do we expect the dollar decline and the commodity run-up, therefore, to continue? It's not always a strong correlation. You are right; there has been (a correlation) in recent months, recent years even. But no, there are many times when the dollar and commodities go entirely separate ways. So, don't get it into your head, and I know many times that the press do have it in their head that commodities and dollars go opposite ways. I am not terribly bullish on the dollar in long term. US dollars are a terribly flawed currency and down the road I hope I don't own any US dollars. I still own some of them at the moment, but it's not getting better for the US. The dollar any way is getting worse. The fundamental for commodities continue to improve. The fundamentals for the US dollar do not continue to improve. They are deteriorating.

Are you still sticking to your prediction of a currency crisis sometime in a year or two?

Yes. The world is full of currency imbalances and economic trade imbalances would have to be resolved or corrected, one way or the other. Unfortunately, given the state of politicians and it's not just the current state of politicians, but politicians throughout history have usually got things wrong. So, we are going to have some problems in the currency market. I don't know when. May be not. I may be wrong. But having seen that sort of thing before in history somebody would have to pay the price whether it's the pound sterling or the US dollar or the rupee, I have no clue. No idea where it’s going to stop, but we are going to have problems in the currency markets.

What’s your view on global equities now? Do you think emerging markets’ premium over developed country markets has gone a way too high?

I don't pay any attention to things like emerging markets premium. You talk about it on TV, but every market is different. Why can't I just go out and buy emerging markets when it is likely to go broke. Every market is different, every country is different, every economy is different and every sector of the economies is different. Just because you are in an emerging country does not mean you are going to make money if you get the wrong sector. I have not bought any stocks anywhere in the world in the last couple of years except China. I did buy some Chinese shares back in October-November. I have not been buying anything other than that for some time. I have been worried about the world economy, about the world stock markets. If you got to be somewhere and if there is going to be a recovery, it will show up in commodities best of all, and if there is not going to be any recovery, commodities are still a better place to be.

So what are you buying nowadays?

If you want to put in your money somewhere, put it in commodities. That's the only thing I bought recently. I have bought some yen and swiss francs. If you know enough about currencies to figure out who is going to benefit, if I am right about the currency turmoil coming, then you can buy some of the currencies and if you think that the rupee is the place to be, then you can buy some rupees.

Long-term inflation expectations in the US as reflected by the five-year forward breaking rates on treasury inflation protected securities. Those have hardened considerably since the beginning of the year. That's also your view, right? Too much money in the financial systems and monetary authorities the world over don't have a credible plan to withdraw liquidity?
I cannot conceive of lending money to the US government for 30 years in US dollars for 3, 4, 5 or 6% interest. It's just inconceivable to me that I would let them have my money for 30 years and they would pay me back someday in US dollars at such a low rate of interest. I expect problems in the bond market. I don't know when. I am not sure about the bond market. I was short in the bond market, but I got out. I expect to see serious problems in the bond market down the road.

In the near term, markets seem to be more concerned about growth than they are about inflation. The difference between the 10-year and the two-year bond yield in the US has narrowed some 40 basis points since early June. Unlike you Jim, people are actually going out and buying long maturity treasuries because they don't see growth, don't see inflation. So, what do say to these bond buyers? Good luck?

When you see anomalies like this in the market, you are supposed to take advantage . The spread is very low. So, why would anybody buy a 10-year when he can buy a two-year ? Not worth the extra risk to go out 10 years. I would urge people to keep their wits. Now, granted Mr Bernanke and the US are buying a lot of government paper and driving the price up. That's why I am not sure. He has got more buying power than I do, at least for the foreseeable future. So, you are seeing longer bonds going up. That gives you an opportunity to get out if you own them or think about selling them short if you don't own them and know how to sell short.

Interview with Jim Rogers from India Times

Wednesday, July 8, 2009

CFTC Trading Limits Regulation

U.S. Commodity Futures Trading Commission trading limits?

IntercontinentalExchange Inc. and CME Group Inc. shares plunged on Wednesday following news that the U.S. Commodity Futures Trading Commission is planning to propose huge trading limits on oil, natural gas and maybe other commodities.

CFTC Chairman Gary Gensler said Tuesday the CFTC will hold hearings this summer to consider imposing position limits for "all commodities of finite supply." The agency will also review whether swap dealers, index traders and exchange-traded fund managers should be allowed to get around those limits through special hedge exemptions.

Raymond James analyst Patrick O'Shaughnessy said that the news has been dragging down shares as investors are scared about how far the government could go with regulation.

"ICE is being hit by a double whammy," O'Shaughnessy said. "There are concerns about earnings, and you have multiple compression taking place because people are concerned about what the government could do next.

"It's changing the rules in the middle of the game."

Investors are similarly concerned about CME, he said.

While O'Shaughnessy said the initial market selloff seems to be an overreaction, J.P. Morgan analyst Kenneth B. Worthington said he views the reaction as "logical," given the recent runup in ICE shares, its valuation and the beginning of the seasonally slow summer.

"While concerns with regard to Gensler's actions will likely cap valuation for both ICE and CME near term, we believe regulatory fears are overblown," Worthington said in a note. "We expect ICE stock could head lower but suggest investors buy on the dip this summer."

He added that he doesn't think ICE trading will be hurt by regulations and said Gensler's investigation into position limits, hedge exemptions and transparency could be good for "market "integrity." However, Worthington said if "regulation gets restrictive, the new CFTC chairman risks lower liquidity and higher volatility in commodities markets."

O'Shaughnessy said the CFTC has jurisdiction over ICE's West Texas crude and natural gas products, which is about a quarter of its revenue. If the trading limits go through, he said, they could lower ICE's revenue by about 3% to 4%.

But O'Shaughnessy said the larger concern is whether London could take similar actions -- which could lower revenue by an additional 4% to 5% -- and whether the U.S. government could take further steps.

In a worst case scenario, CME -- which is completely regulated by the CFTC -- would lose about 3% to 4% of its revenue from the changes, he said.

U.S. Commodity Futures Trading Commission

Wednesday, June 24, 2009

Secrets to Successful Commodity Investing

Commodity Investing

Commodities are sometimes made to look far too complicated for the average investor, and so many stay away from what is one of the most exciting and potentially profitable wealth builders for the next couple decades.

I'm going to simplify it for you, and in reality, there is nothing more to it than what I'm about to explain.

The simplicity of commodity investing? It's completely related to supply and demand. Isn't that simple? It's nothing more than that.

Having said that, I'm talking about investing in raw commodities here, not businesses or mining companies that are dependent on the quality of management, labor issues, and a plethora of other issues.

If it's that simple, than why does it seem so complicated? Most of the complications, or perceived complications are in connection to market timers or day traders, who are attempting to make a quick killing and move out of the market.

A lot of media coverage of commodities is connected to this because if offers up drama that interests viewers, and gives something for the talking heads to communicate.

In reality, market timers don't make much money, and those investing for the short term never make the amount of money those with knowledge and in it for the long term do.

So the illusion is created that commodities are completely unpredictable, and investing in them is like gambling. Now if you're trying to time the market, that's not only true of commodities, but it's true of any investment vehicle. Short term investing is gambling, and those entering into may get a high and rush from it, but they're always scrambling to make their next buck, and waiting to hit the big one.

A long term outlook and investing in a commodity itself is the foundation to success in commodity investing.

The next step is the research you do. It must be done on a continuous basis and the macro picture is the thing to be looked at.

By macro picture I mean the overall existing conditions that will determine whether prices of commodities will go up or down. Remember, you can make money in commodities whether the prices are going up or down. The secret is to look for movement, not what the direction of that movement is.

For example, if you're looking at investing in wheat, there could be drought in some regions of the world but a lot of rain in others. Either one could significantly impact the wheat harvest for any given time.

So in the short term, depending on which direction the weather is going, you could have some significant swing in wheat prices because of that.

But if you're looking at the long term, this won't be that big of a deal, as you're in it because of the demand and the ability to supply that demand.

If the demand is there, someone, somewhere, will find a way to meet that demand. It's as simple as that. You can have shortages because of a peculiar set of circumstances where the weather may disrupte wheat production in more than one important place. If that's the case, demand hasn't changed, but the supply could have. That will affect prices in the short term.

But again, it's the long term we're looking at for investing in commodities, and while those fluctuations will happen all the time, we must stay focused on demand and whether that is changing. If demand isn't changing, we can have a very accurate idea of the direction wheat prices will go in the long term future.

Just take whatever commodity you're thinking of investing in and apply these parameters to them. It takes more work with some commodities to research over others, because of the number of industrial uses they may have: for example silver, which is used in an increasing number of products, and so research must take into account demand across a number of product categories to get accurate information that action can be taken on.

Commodity Investing

Saturday, April 18, 2009

Commodities - Hedge Funds | Bruce Kovner and Caxton Associates

While it wouldn't be completely accurate to describe Bruce Kovner and Caxton Associates as a commodity hedge fund, it's close enough to make it appropriate.

In reality, what Caxton Associates is is a trend fund, or macro fund, where they look for anything in any sector in any location in the world to invest in. That's why Caxton Associates have been so good at wealth management, and great investment managers and money managers.

So more accurately, they not only invest in commodities, but in whatever sector, like bonds, currencies, debt or equities where there is an opportunity to cash in on significant movements.

After a season of time of finding what it was he wanted to do professionally, Bruce Kovner decided on trading for a living, where he initially borrowed $3,000 against his MasterCard and started trading in soybean futures contracts. He learned a good lesson from the start, as he didn't hedge that first trade, which helped him in the future learn to manage risk properly. The contract went as high as $40,000, before leveling off at $23,000 before he sold.

Kovner eventually ended up at Commodities Corporation which later became a part of Goldman Sachs, where he earned his bones, along with respect; racking up millions in profits for clients and Commodities Corporation. That success led Kovner to launch his own company - Caxton Associates, in 1983.

While there is no sure way of proving it, its supposedly among the top ten largest hedge funds in the world at this time.

Over a period of 10 years Bruce Kovner provided an extraordinary 87% annual return for his investors, on a compound basis, truly making him and Caxton Associates among the leading market wizards.

Caxton Associates is registered as a Delaware limited liability company and also is registered as an Investment Adviser with the U.S. Securities and Exchange Commission. The company is also registered pursuant to the Commodity Exchange Act, as amended, as a commodity pool operator and commodity trading advisor and is a member of the National Futures Association as a CPO and a CTA.

Interestingly, Kovner isn't like a lot of money managers and businessmen who love to enter the limelight, probably marketing themselves than really marketing the company. In the case of Kovner though, his professional and private lack of publicity is the way he like it, yet he is a powerful mover and shaker behind the scenes in the many things he appreciates and believes in.

So there you have it. One of the most successful, powerful, and wealthy men in the world that you never knew, and he likes to keep it that way.

Those who have enlisted Bruce Kovner and Caxton Associates for wealth management know who he and the company are, and as participants in one of the top hedge funds in the world, get to enjoy the profitability ride with their money and investment manager.

Investors would do a lot worse than allowing the trading strategies of Bruce Kovner and Caxton Associates guide their economic futures. They're all laughing all the way to the bank, as these money managers put a smile on all their faces.

Saturday, April 11, 2009

Oil Commodities | Oil Commodity Becoming a Commodity

When I used the play on words concerning oil commodities and oil becoming a commodity, I mean it in the sense of something that has no competitive advantage at this time.

In business in general, to become a commodity product or service, means you no longer have a moat to protect you, and you're vulnerable to those who can run operations better than you, as you only compete on price.

As far as oil goes, the demand for it is becoming slow low because of the horrific economic turmoil, that even low prices can't get people to travel more and vacation, as fears are keeping them close to home and thinking of ways they can do things for less. That isn't going to change with crude futures prices any time soon.

The latest projections from the International Energy Agency confrim this, saying oil demand will be at the lowest levels since the early part of the 1980s.

Much of the projections for oil commodities demand is based on the number for the first quarter being much lower than it was thought they would be, and so now forecasts are that over 2009 oil demand will come in at about 83.4 million barrels a day globally. That's a huge 2.4 billion barrels of oil a day less than 2008.

There is a growing consensus that oil commodity demand will not rebound until 2010. There is still room for global economic contraction, now expected to drop by 1.4 percent this year.

All of this means oil prices will continue to stay down, and even if they don't, it won't matter, as the oil commodity prices we're now experiencing, along with falling oil demand, tells us that no matter what happens to prices, until economic contraction stops and a real recovery begins, oil will continue to be a commodity in the sense of having a lot of it, but many not willing to over spend on it no matter what the price.

Other than oil contango, there's not really much to get excited about for oil while its in its commodity status.

Hopefully you understand what it means when oil commodities become a commodity, as we're in that stage now, and until that changes, it won't matter what temporary bumps and swings happen, over time demand will continue to stall, along with oil prices.

We are definitely seeing one of the weakest oil commodities experience in a long time.