Tuesday, May 22, 2012

BHP (BHP), Coal Unions Reach Impasse

BHP Billiton and the coal unions of Queensland haven't come to an agreement over safety staffing issues, and the radical unions have threatened to strike on Thursday, according to the Daily Telegraph.

BMA asset president Stephen Dumble said this, "Each of the solutions BMA has proposed has been rejected by the unions.

"The current BMA enterprise agreement negotiation is at an impasse over exactly this type of issue where unions want to ignore current market and employment trends and instead preserve a status quo position for their own industrial ends.

"The issue in question is too important to be caught up in this way. It is a real issue which demands a real solution."

Contractors are now running the safety staffing operations at the company.

The coal unions have also rejected a far-too-generous pay offer of an additional 15 percent over the next three years, which also includes a $15,000 bonus.

BHP has threatened to take that off the table if an agreement isn't reached soon.

They should take if off the table with the commodities markets weakening, with more contraction expected to happen in the short term. Over the long haul commodity prices will continue to rise as demand will guarantee the bull market in commodities will continue.

BHP closed Monday at $64.47, gaining $1.98, or 3.17 percent.

Friday, May 18, 2012

Pickens Sells Shares of Chesapeake (CHK)

For the first time since 2008, Texas billionaire T. Boone Pickens holds no shares in embattled natural gas producer Chesapeake Energy (NYSE: CHK).

According to Bloomberg News, Pickens sold his remaining shares in Chesapeake on May 10, which numbered just under five hundred thousand. Another 71,000 shares in the energy company were sold in the first quarter.

Pickens has been a staunch supporter of Chesapeake CEO Aubrey McClendon, and offered support for him, even though it appears Pickens abandoned the stock because of possible conflicts of interest McClendon is being investigated for by U.S. Securities and Exchange Commission in regard to personal loans.

This is probably the case because Pickens picked up other natural gas stocks in the first quarter of the year, including Devon Energy (DVN) and Encana (ECA).

Chesapeake, the second-largest natural gas producer in America, has recently gone even further into debt by securing a bridge loan from Goldman Sachs (NYSE: GS) of $4 billion.

The company hopes the loan will strengthen its bargaining position as it attempts to sell off quality assets, which have been getting low ball offers because potential suitors know the weakened position Chesapeake is in.

Chesapeake was trading at $14.23, up $0.68, or 5.04 percent, as of 1:34 PM EDT.

Thursday, May 17, 2012

China Gold Demand Soars to Record High

Demand for gold in China jumped in the first quarter to hit a record high, as inflation concerns an constrictions in the Chinese real estate marketed weighed on the nation.

That went against the grain of other nations like India, where gold demand for jewelry plunged by 19 percent; although that was caused largely by the Indian government announcing they were going to raise duties on imported gold bullion and non-branded gold jewelry.

As for gold demand around the world, it dropped five percent in the first three months of 2012 to 1,097.6 tons, according to a report from the WGC.

That was largely the result of less demand in the jewelry and technology sectors, as gold prices soared 22 percent year-over-year.

Investment demand helped to overcome some of that, as did central banks increasing their gold inventories.

With overall gold demand in India plunging 29 percent, China continues to be the top consumer of gold for the last couple of quarters. Consumer demand for gold in the Middle Kingdom rose 10 percent to 255.2 tons in the second quarter. India's gold consumption came in at 207.6 tons.

As for ongoing gold demand in China, the said this: "Further growth is expected: investors remain wary of high inflation rates; and property market restrictions continue to drive demand for gold among investors seeking access to real assets."

Gold coins and bars led the way as far as percentages go, as demand climbed 13 percent for the year to 98.6 tons. Gold jewelry demand rose to 156.6 tons, a gain of 8 percent. China gold jewelry consumption now accounts for 30 percent of the global jewelry market.

The WGC said it expects gold jewelry demand in China to slow down some as market growth in China moderates and the overall economy matures.

Wednesday, May 16, 2012

Commodities Fall on Greece, Economic Worries

Fears Greece may exit the euro has put pressure on commodities, as concerns it would lead to a domino effect, which could result in Spain, among other countries, abandoning the euro as well.

That would lead to a period of chaos in the region, which when combined, is the largest market in the world.

Not too many people are concerned about Greece itself, as it's largely irrelevant. It's what Greece represents in regard to other countries that strikes fear in the hearts of leaders in the region, as it does those who have been attempting to peddle the concept of a one-world order.

That and concerns over China, Japan and the United States, all of which seem to have economies that are slowing down, has commodities under extreme pressure, aided by the rise in value of the U.S. dollar against the euro, as well as other major currencies.

Because commodities are bought in U.S. dollars, that makes it more expensive for those trading in other currencies, exasperating the problem. That's why the price of gold and other commodities have been plummeting.

In Japan, machinery orders dropped 2.8 percent in March, while in the U.S. retail sales fell to the lowest growth level in April for 2012.

The Dollar Index was in positive territory for the 13th day in a row - a record, while the euro plunged to its lowest level in four months, falling as low as $1.2681.

As for Greece, until that situation is resolved, it appears commodities prices will remain under downward pressure. Even though nothing has really changed economically with the failure of the country to form a new government, the market is acting as if this is something new and that Greece is actually serious about austerity measures and paying back its debt.

If Greece does exit the euro, which, over time, is almost a surety, that could have a dramatic impact on commodity prices and the global economy because of the very real and legitimate concerns over what is going to happen with Italy, Portugal, Ireland and Spain.

That of course translates into the euro zone, where the inability to project the short-term future with any clarity will hinder the ability to obtain funding, and even if businesses and banks could access funds, it's highly unlikely they'd take the risk with the specter of uncertain growth weighing on them.

One thing that could quickly change that is the introduction of another round of quantitative easing, which would temporarily give the global economy a boost, but at the growing risk of even more debt, which already can't be paid down by governments that promised the moon to their people but are now reaping the whirlwind because of the failure of Keynesian economics.

While there is no doubt the commodity bull run isn't over, we are in a correction that seems to still have longer to go before commodities begin their upward climb in prices again.

This is why the U.S. dollar is the perceived place of safety for investors, even though currencies around the world, including the greenback, have been devastatingly debased.