While they acknowledge the challenges associated with the European debt crisis, especially if it continues on for the rest of 2010, and onward, Goldman Sachs (NYSE:GS) remains bullish on the broader market.
Here's how they described the reason for their bullish sentiment:
“We recognize the dramatic decline in the Euro, and the potential impact it may have on reported US corporate earnings if it persists through year-end. We acknowledge the risk that European economic growth may be weaker than many currently expect as a result of pending fiscal tightening. However, we remind equity investors that US companies in the S&P 500 have total annual revenues of $8.4 trillion and Europe, Middle East and Africa combined explicitly account for just 10% of the total (and if charitably inclined, perhaps as much as 15% of the total if a generous allocation of sales to “Other” regions is allocated to Europe).”
I'm not as optimistic as Goldman, and just like their positive outlook for the banking sector, looks a little too strong for the broader market as well.
Even if revenue is close to what Goldman states, many companies have said their growth is going to be based on China, something Goldman didn't comment on.
With the demand from China expected to decline, combined with the austerity pressure in Europe, it looks like the outlook by Goldman may not be as good as they're saying.
It does make me wonder if they're doing this as a gesture to put them in a more positive light or not, as they have to take the global exposure of these companies, and not just selected regions.
Showing posts with label China Demand. Show all posts
Showing posts with label China Demand. Show all posts
Monday, May 24, 2010
Monday, March 22, 2010
Bank of America (NYSE:BAC) CEO China Visit
Bank of America's China Strategy
Bank of America (NYSE:BAC) has been working hard to go beyond its limited China presence via the China Construction Bank to being granted licenses of its own which it can have much better branding control over.
What Bank of America wants to do, and the reason CEO Brian Moynihan is visiting China, is to be allowed to expand its current products in the Chinese market beyond retail banking to commercial and corporate banking.
Competitors in China like JPMorgan (NYSE:JPM) are working on joint ventures with Chinese companies where they can underwrite stock offerings in the country, a major advantage over Bank of America. Other competitors already have these types of deals in place.
The strategy to implement the plan is to be incorporate locally in the country, which would allow the company to provide many more products there.
Bank of America (NYSE:BAC) has been working hard to go beyond its limited China presence via the China Construction Bank to being granted licenses of its own which it can have much better branding control over.
What Bank of America wants to do, and the reason CEO Brian Moynihan is visiting China, is to be allowed to expand its current products in the Chinese market beyond retail banking to commercial and corporate banking.
Competitors in China like JPMorgan (NYSE:JPM) are working on joint ventures with Chinese companies where they can underwrite stock offerings in the country, a major advantage over Bank of America. Other competitors already have these types of deals in place.
The strategy to implement the plan is to be incorporate locally in the country, which would allow the company to provide many more products there.
BHP Billiton (NYSE:BHP): Good Investment?
Is it a good time to invest in BHP Billiton?
BHP Billiton (NYSE:BHP) is one of the most diversified and largest of all commodity companies, as most people know. The question now is, is it a good time to invest in BHP Billiton or should you wait?
As of this writing, BHP Billiton has a market cap well over $200 billion, and operations on six continents.
To make a decision as simple as possible, as you can wear yourself out trying to trace every aspect of this company, especially when commodity prices can be strongly effected by geo-political circumstances. And when you have a company as large and diversified as BHP Billiton, they can be booming in one part of the world and getting hammered in another part.
So with that in mind, it's better, as far as it relates to BHP, to solely base your decision on supply and demand, and how the company is weighted during this season of time.
And when talking of supply and demand, we're largely talking primarily about China, and secondarily about India. As China and India go, that's how demand will go on a macro-economic scale.
Even if China tightens their capital markets, they are still expected to grow at an eight to nine percent rate. Still huge by any measurement you use.
Another key element in investing in BHP Billington will be the actions of major central banks around the world concerning interest rates.
If you think interest rates will go up soon, it could be a bad time to invest in a company like BHP, but if you think they'll stay low for some time, then investing now could reap some nice returns.
BHP is still close to 20 percent below its highs in 2008, so there is room to move up for them.
Even in these extremely volatile times, supply and demand will eventually win out on investing in commodities, and even though temporary events can cause huge fluctuations, that should be the deciding factor for investing in any commodity company. Otherwise there are too many variables to consider that can really be made sense of in a cohesive way which can lead to an informed decision.
BHP Billiton (NYSE:BHP) is one of the most diversified and largest of all commodity companies, as most people know. The question now is, is it a good time to invest in BHP Billiton or should you wait?
As of this writing, BHP Billiton has a market cap well over $200 billion, and operations on six continents.
To make a decision as simple as possible, as you can wear yourself out trying to trace every aspect of this company, especially when commodity prices can be strongly effected by geo-political circumstances. And when you have a company as large and diversified as BHP Billiton, they can be booming in one part of the world and getting hammered in another part.
So with that in mind, it's better, as far as it relates to BHP, to solely base your decision on supply and demand, and how the company is weighted during this season of time.
And when talking of supply and demand, we're largely talking primarily about China, and secondarily about India. As China and India go, that's how demand will go on a macro-economic scale.
Even if China tightens their capital markets, they are still expected to grow at an eight to nine percent rate. Still huge by any measurement you use.
Another key element in investing in BHP Billington will be the actions of major central banks around the world concerning interest rates.
If you think interest rates will go up soon, it could be a bad time to invest in a company like BHP, but if you think they'll stay low for some time, then investing now could reap some nice returns.
BHP is still close to 20 percent below its highs in 2008, so there is room to move up for them.
Even in these extremely volatile times, supply and demand will eventually win out on investing in commodities, and even though temporary events can cause huge fluctuations, that should be the deciding factor for investing in any commodity company. Otherwise there are too many variables to consider that can really be made sense of in a cohesive way which can lead to an informed decision.
Monday, March 15, 2010
Citigroup (NYSE:C) Right on China Debt
Citigroup on China Debt and Risk
Citigroup (NYSE:C) was right when it warned China could have some major problems based on local government debt issues in the country. Seeming to confirm that, China Premier Wen Jiabao said China faces some challenges in that regard of its own, but the global economy also faces major problems going forward, with double dip recession very possible.
Of particular concern to Wen was the export market, which remains down, as consumers (especially Americans), hold back on spending, causing demand for products to continue to falter.
Other things that could dramatically impact the markets could be ongoing instability in the exchange rates, along with continuing sovereign debt problems in Europe, which while temporarily relaxed because of commitment by the European Union to back Greece if its efforts don't pan out, still are there with more important countries like Portugal, Ireland, Italy and Spain, which if any were to fall would be much more damaging than the fall of Greece; as far as the EU being able to save them goes.
For China, there are also issues of the extraordinary debt they now have as the consequences of their stimulus program, which Citigroup estimates could result in up to $350 billion in bad loans in the years ahead.
Citigroup (NYSE:C) was right when it warned China could have some major problems based on local government debt issues in the country. Seeming to confirm that, China Premier Wen Jiabao said China faces some challenges in that regard of its own, but the global economy also faces major problems going forward, with double dip recession very possible.
Of particular concern to Wen was the export market, which remains down, as consumers (especially Americans), hold back on spending, causing demand for products to continue to falter.
Other things that could dramatically impact the markets could be ongoing instability in the exchange rates, along with continuing sovereign debt problems in Europe, which while temporarily relaxed because of commitment by the European Union to back Greece if its efforts don't pan out, still are there with more important countries like Portugal, Ireland, Italy and Spain, which if any were to fall would be much more damaging than the fall of Greece; as far as the EU being able to save them goes.
For China, there are also issues of the extraordinary debt they now have as the consequences of their stimulus program, which Citigroup estimates could result in up to $350 billion in bad loans in the years ahead.
Thursday, February 25, 2010
Marc Faber: Will China Collapse?
Marc Faber on China
We've been talking about a lot of negative factors which could have a dramatic effect on the market and commodities lately, and all of them are important to keep in mind. That's the case with Marc Faber and his input on China.
Faber sees China as being at a tremendous risk of crashing, to the tune of about a 30 percent chance. He adds that whether it crashes or not it will definitely slow down.
With that in mind, it will have a significant impact on certain commodities, as the Chinese government, to a certain degree, is starting to tighten up some on its lending.
I'm not convinced on the motives of the Chinese yet though, as I think some of tightening is a move in relationship to negotiating on some of its commodity imports, specifically iron ore.
Even so, they do want to cool the economy down some, and that is probably a surety going forward.
The problem is where are they going to cut back on? It doesn't seem it will be in the area of iron ore or steel, as there is huge demand still in China for those, not only domestically but for exports too.
We do have to remember that China, even if it cuts back from its approximate 10 percent growth, down to 8 or 9 percent growth, it's still the biggest growth market on earth, and will drive the commodity market for years to come.
I think a small slowdown in China is more likely than an outright crash, as the elements involved in their are much different than their Western counterparts.
Marc Faber on China
We've been talking about a lot of negative factors which could have a dramatic effect on the market and commodities lately, and all of them are important to keep in mind. That's the case with Marc Faber and his input on China.
Faber sees China as being at a tremendous risk of crashing, to the tune of about a 30 percent chance. He adds that whether it crashes or not it will definitely slow down.
With that in mind, it will have a significant impact on certain commodities, as the Chinese government, to a certain degree, is starting to tighten up some on its lending.
I'm not convinced on the motives of the Chinese yet though, as I think some of tightening is a move in relationship to negotiating on some of its commodity imports, specifically iron ore.
Even so, they do want to cool the economy down some, and that is probably a surety going forward.
The problem is where are they going to cut back on? It doesn't seem it will be in the area of iron ore or steel, as there is huge demand still in China for those, not only domestically but for exports too.
We do have to remember that China, even if it cuts back from its approximate 10 percent growth, down to 8 or 9 percent growth, it's still the biggest growth market on earth, and will drive the commodity market for years to come.
I think a small slowdown in China is more likely than an outright crash, as the elements involved in their are much different than their Western counterparts.
Marc Faber on China
Thursday, February 11, 2010
Marc Faber on China Commodities
China Commodities
Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.
Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.
Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.
This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.
But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.
China Commodities
Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.
Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.
Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.
This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.
But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.
China Commodities
China Copper Imports Plunging
China Copper
According to the largest metal-trading company in China, Minmetals Nonferrous Metals Co., Chinese imports of copper in 2010 could be half of what they were in 2009, setting up a potential plunge in copper prices if that assessment is true.
The Chinese are winding down the spending on infrastructure from the stimulus money, and also tightening up their credit somewhat to cool down growth.
Estimates are refined copper imports may stand at about 1.5 million metric tons for 2010, a 53 percent decrease for 2009. That is more the norm on real demand, as it's close to the 2008 numbers of 1.46 million tons of refined copper imported.
In the Chinese markets copper is mostly in a contango where buyers can get it cheaper right now than they can in the intermediate term.
Another reason for cutting back on copper imports by China is they stockpiled far more than they needed last year, and numerous empty buildings built from the artificial stimulus are largely empty and standing there with no immediate use, making more building in that sector largely irrelevant and not fueled by market forces.
China Copper
According to the largest metal-trading company in China, Minmetals Nonferrous Metals Co., Chinese imports of copper in 2010 could be half of what they were in 2009, setting up a potential plunge in copper prices if that assessment is true.
The Chinese are winding down the spending on infrastructure from the stimulus money, and also tightening up their credit somewhat to cool down growth.
Estimates are refined copper imports may stand at about 1.5 million metric tons for 2010, a 53 percent decrease for 2009. That is more the norm on real demand, as it's close to the 2008 numbers of 1.46 million tons of refined copper imported.
In the Chinese markets copper is mostly in a contango where buyers can get it cheaper right now than they can in the intermediate term.
Another reason for cutting back on copper imports by China is they stockpiled far more than they needed last year, and numerous empty buildings built from the artificial stimulus are largely empty and standing there with no immediate use, making more building in that sector largely irrelevant and not fueled by market forces.
China Copper
Wednesday, February 3, 2010
China and Iron Ore Prices
China Iron Ore
Iron Ore demand has scuttled China's attempt to pressure prices down for the raw material as they've come back to the negotiating table with major companies like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) in order to attempt to make the type of deal which eluded them in 2009.
Last year China ended up paying more on the spot market than they would have if they had negotiated a contract, something they may try to avoid this year, although resumed talks are expected to be tough.
As mentioned, the key element undermining the Chinese strategy is demand for steel domestically, which is pushing iron ore prices up. Over the last year prices for iron ore have soared to almost twice what they were, rising to over $120 a metric ton on the spot market.
The other factor is the Chinese steel industry remains fragmented, which gives it less bargaining power at a time demand forces them to buy.
Steel production could rise as high as 640 million metric tons in China this year, in contrast to the 570 million metric tons of steel produced in 2009; about half of all steel in the world.
china chose to release stimulus money for infrastructure projects in the ongoing recession, and that of course has generated the demand for steel and iron ore we've been talking about.
There's no way out of it, the fragmented Chinese steel industry and the ongoing demand for steel will force China to pay a much higher price for iron ore than they want to, profiting Rio Tinto, BHP Billiton (NYSE:BHP) and Vale SA of Brazil.
Another clear beneficiary of the situation will be iron ore producer Cliffs Natural Resources (NYSE:CLF).
China Iron Ore Demand
Iron Ore demand has scuttled China's attempt to pressure prices down for the raw material as they've come back to the negotiating table with major companies like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) in order to attempt to make the type of deal which eluded them in 2009.
Last year China ended up paying more on the spot market than they would have if they had negotiated a contract, something they may try to avoid this year, although resumed talks are expected to be tough.
As mentioned, the key element undermining the Chinese strategy is demand for steel domestically, which is pushing iron ore prices up. Over the last year prices for iron ore have soared to almost twice what they were, rising to over $120 a metric ton on the spot market.
The other factor is the Chinese steel industry remains fragmented, which gives it less bargaining power at a time demand forces them to buy.
Steel production could rise as high as 640 million metric tons in China this year, in contrast to the 570 million metric tons of steel produced in 2009; about half of all steel in the world.
china chose to release stimulus money for infrastructure projects in the ongoing recession, and that of course has generated the demand for steel and iron ore we've been talking about.
There's no way out of it, the fragmented Chinese steel industry and the ongoing demand for steel will force China to pay a much higher price for iron ore than they want to, profiting Rio Tinto, BHP Billiton (NYSE:BHP) and Vale SA of Brazil.
Another clear beneficiary of the situation will be iron ore producer Cliffs Natural Resources (NYSE:CLF).
China Iron Ore Demand
Monday, February 1, 2010
Mark Mobius: Brazil Versus China
Mark Mobius talks Brazil versus China
While Mark Mobius, like many others, continues to be bullish on China, he considers the economy of Brazil "more sustainable," as it has no need to depend on imports, in contrast to China, which must import large number of crops and metals in order to grow.
“Brazil’s economy is more sustainable because they don’t have to import anything. China has to import oil, iron ore and foods,” said Mobius. “Brazil is in a situation where it has tremendous resources. Not only mineral resources, but agricultural resources.”
Of course the difference is China has about a billion more people, which makes long-term demand for products and services a key element of its economic policies, which grant it leverage when dealing with foreign companies and governments.
Either country is to be considered a bull, and even with its better position of sustainability, China is still the country to look for over the next decade or two for major growth.
Of course Brazil will participate in that growth by providing a number of crops, metals and other raw materials needed to supply the growing Chinese needs.
Mark Mobius talks Brazil versus China
While Mark Mobius, like many others, continues to be bullish on China, he considers the economy of Brazil "more sustainable," as it has no need to depend on imports, in contrast to China, which must import large number of crops and metals in order to grow.
“Brazil’s economy is more sustainable because they don’t have to import anything. China has to import oil, iron ore and foods,” said Mobius. “Brazil is in a situation where it has tremendous resources. Not only mineral resources, but agricultural resources.”
Of course the difference is China has about a billion more people, which makes long-term demand for products and services a key element of its economic policies, which grant it leverage when dealing with foreign companies and governments.
Either country is to be considered a bull, and even with its better position of sustainability, China is still the country to look for over the next decade or two for major growth.
Of course Brazil will participate in that growth by providing a number of crops, metals and other raw materials needed to supply the growing Chinese needs.
Mark Mobius talks Brazil versus China
Wednesday, January 13, 2010
Commodity Currencies Fall China Reserves Ratio Announcement
China Reserves and Commodity Currencies
After China announced it would be tightening up its reserve requirements for its banks, commodity currencies across the globe fell in value in response to the possibility China demand could slow down, which would hinder what small hope of a minimal economic recovery there is at this time.
The central bank of China said in a statement yesterday that the required reserve ratio would be increased by half a percentage point starting next weak, an obvious action showing China is going to tighten up their monetary policy.
Nations with strong links between their currency and commodities had their currencies hit lows against the U.S. dollar as a consequence of the announcement, which could dramatically influence their value for the year. The Australian, New Zealand and Canadian dollars were especially impacted by the news.
What's interesting about all this, is China seemed to be surging forward on increasing its commodity stocks for 2010, as December imports had increased by 56 percent for 2009, and commodity exports in December grew by a solid 17.7 percent, seeming to imply they were importing commodities based on consumer demand for products.
Even so, in general, commodities are expected to do well this year, but it seems those estimations have been based upon the idea we are actually in a real recovery something in my thoughts is far from being proven as a reality.
China Reserves and Commodity Currencies
After China announced it would be tightening up its reserve requirements for its banks, commodity currencies across the globe fell in value in response to the possibility China demand could slow down, which would hinder what small hope of a minimal economic recovery there is at this time.
The central bank of China said in a statement yesterday that the required reserve ratio would be increased by half a percentage point starting next weak, an obvious action showing China is going to tighten up their monetary policy.
Nations with strong links between their currency and commodities had their currencies hit lows against the U.S. dollar as a consequence of the announcement, which could dramatically influence their value for the year. The Australian, New Zealand and Canadian dollars were especially impacted by the news.
What's interesting about all this, is China seemed to be surging forward on increasing its commodity stocks for 2010, as December imports had increased by 56 percent for 2009, and commodity exports in December grew by a solid 17.7 percent, seeming to imply they were importing commodities based on consumer demand for products.
Even so, in general, commodities are expected to do well this year, but it seems those estimations have been based upon the idea we are actually in a real recovery something in my thoughts is far from being proven as a reality.
China Reserves and Commodity Currencies
Monday, January 11, 2010
Jim Rogers | No China Bubble
Jim Rogers China Bubble
Jim Rogers seems to be exasperated by a number of so-called experts who seem to be calling bubbles on anything that rises in price; including countries like China.
As Rogers educated Nouriel Roubini in concerning gold lately, a bubble isn't a bubble because prices rise. A bubble in gold will happen, according to Jim Rogers, when everybody starts to start investing in gold, without knowing why. At this time very few people are investing in gold, and until that dramatically changes, there won't be a gold bubble.
Rogers maintains sometime in the next decade gold will probably hit somewhere around $2,000 an ounce.
As far as China goes, Rogers is striking out at global hedge fund manager Jim Chano, who claims China is also in a bubble, and that the bubble will burst sometime soon.
The China economy is built on a solid foundation according to Rogers, and the country is a great place to invest in.
As far a Chanos goes, who is a notorious short-term trader, you have to wonder how much of China he has shorted in a variety of companies, which is probably what caused him to make his remarks in hopes of making a quick killing.
Of course Chano may have made those trades for some time, and could be in danger of losing a lot of money betting on China being in a bubble that he thought would burst, but hasn't.
Rogers probably knows the Asian and Chinese investment sector as well as any Westerner, and if he says China's not in a bubble, I tend to believe him more than anybody else.
As far as commodities go, China seems to continue to be buying them up, but now it looks like it'll be not just for domestic consumption, but to feed the export industry, which may be starting to grow again.
Jim Rogers China Bubble Burst
Jim Rogers seems to be exasperated by a number of so-called experts who seem to be calling bubbles on anything that rises in price; including countries like China.
As Rogers educated Nouriel Roubini in concerning gold lately, a bubble isn't a bubble because prices rise. A bubble in gold will happen, according to Jim Rogers, when everybody starts to start investing in gold, without knowing why. At this time very few people are investing in gold, and until that dramatically changes, there won't be a gold bubble.
Rogers maintains sometime in the next decade gold will probably hit somewhere around $2,000 an ounce.
As far as China goes, Rogers is striking out at global hedge fund manager Jim Chano, who claims China is also in a bubble, and that the bubble will burst sometime soon.
The China economy is built on a solid foundation according to Rogers, and the country is a great place to invest in.
As far a Chanos goes, who is a notorious short-term trader, you have to wonder how much of China he has shorted in a variety of companies, which is probably what caused him to make his remarks in hopes of making a quick killing.
Of course Chano may have made those trades for some time, and could be in danger of losing a lot of money betting on China being in a bubble that he thought would burst, but hasn't.
Rogers probably knows the Asian and Chinese investment sector as well as any Westerner, and if he says China's not in a bubble, I tend to believe him more than anybody else.
As far as commodities go, China seems to continue to be buying them up, but now it looks like it'll be not just for domestic consumption, but to feed the export industry, which may be starting to grow again.
Jim Rogers China Bubble Burst
China Commodity Demand 2010
Commodity prices going up 2010
The growth of raw materials imported to China had a strong effect on commodity prices, and it looks like China commodity demand in 2010 will surge higher as it seems to be moving from building up commodity inventory to using the raw materials to make products to export.
As of December 2009, it showed that commodity exports grew by 17.7 percent for the year in China, while Chinese commodity imports increased an extraordinary 56 percent for the year.
Chinese commodity consumption will continue, but demand to build products should continue to put upward pressure on many commodity prices in 2010.
Some commodities alreay going up in price for 2010 are gold, copper and light, sweet crude oil, which have already climbed significantly in the first week of 2010, and show no sign of subsiding.
Commodity investors will have to watch carefully for some commodities, as soybeans and iron ore are near record import highs, and it's impossible at this time to see if that will be sustainable during 2010.
Commodity prices went down, in general, during the latter half of 2009, but it looks like the China factor is again in big play, but we need to be sure of the actual numbers and true commodity demand in the country to be sure if commodity prices will go up throughout 2010, and which ones.
Commodity prices going up 2010
The growth of raw materials imported to China had a strong effect on commodity prices, and it looks like China commodity demand in 2010 will surge higher as it seems to be moving from building up commodity inventory to using the raw materials to make products to export.
As of December 2009, it showed that commodity exports grew by 17.7 percent for the year in China, while Chinese commodity imports increased an extraordinary 56 percent for the year.
Chinese commodity consumption will continue, but demand to build products should continue to put upward pressure on many commodity prices in 2010.
Some commodities alreay going up in price for 2010 are gold, copper and light, sweet crude oil, which have already climbed significantly in the first week of 2010, and show no sign of subsiding.
Commodity investors will have to watch carefully for some commodities, as soybeans and iron ore are near record import highs, and it's impossible at this time to see if that will be sustainable during 2010.
Commodity prices went down, in general, during the latter half of 2009, but it looks like the China factor is again in big play, but we need to be sure of the actual numbers and true commodity demand in the country to be sure if commodity prices will go up throughout 2010, and which ones.
Commodity prices going up 2010
Saturday, December 12, 2009
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.
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.
Saturday, January 24, 2009
Commodities | Platinum Prices 2009
Commodities and platinum prices enjoyed a rebound last week that could be a sign of what is ahead for us in 2009. Many of the metals, including platinum, enjoyed price increases as the U.S. dollar fluctuates, and confidence in the greenback continues to fall.
Many investors are looking at platinum as a potentially great investment for 2009, as the price ratio to gold makes many think platinum is ready for a strong upward move.
What this means is two different indicators are being looked at to determine where things will go over the short and long term for platinum.
The first indicator is the demand side of the equation for platinum, the obvious industry being the auto sector, which isn't looking too good at this time in spite of the government bailouts used to shore them up.
It isn't known whether demand for platinum will be the determining factor in the price rising, even though it is very low.
One smaller but significant factor in the ratio between gold and platinum, is the rarity issue. There is about three times as much gold as platinum in the world, and that could determine some of the pricing for platinum in 2009 in relationship to gold.
Another player in the field is the strength of the U.S. dollar, which will definitely be under downward pressure for some time ahead, including 2009. All of the money promised by the variety of government bailouts ensure inflation is just a short step away, as the Federal Reserve ramps up its printing presses.
The reason this will happen is Sovereign Wealth funds and other funds are starting to move away from the dollar, as it is increasingly being looked at as an inferior currency. Foreign governments are no longer thinking of it as a place of refuge, certainty and safety.
China is already experimenting with using its currency internally as the way to exchange goods in certain wealthier provinces.
So for the long term the greenback looks bad and gold and platinum are looking pretty good. Gold will advance this year for sure, and platinum, if it moves in lock step with it, could bring solid returns for investors, whether it's moved by demand or the ratio of it to gold.
If it begins to move in the way it has historically, platinum could surge to high prices in 2009, making it a potentially great investment.
There has been a temporary lull in the commodities bull market, but that will only be for a short season of time, as demand for natural resources inevitably starts again. Platinum will mirror that move, and gold will continue to be a haven for investors looking for a place their money can be safe, as well as grow.
We need to continually monitor platinum futures and prices, now, and in the next couple of years, as it has the potential to surprise on the upside, and long term platinum should have a lot of upward movement, as the global economy eventually rebounds and demand skyrockets. Platinum has a lot of potential going forward.
Many investors are looking at platinum as a potentially great investment for 2009, as the price ratio to gold makes many think platinum is ready for a strong upward move.
What this means is two different indicators are being looked at to determine where things will go over the short and long term for platinum.
The first indicator is the demand side of the equation for platinum, the obvious industry being the auto sector, which isn't looking too good at this time in spite of the government bailouts used to shore them up.
It isn't known whether demand for platinum will be the determining factor in the price rising, even though it is very low.
One smaller but significant factor in the ratio between gold and platinum, is the rarity issue. There is about three times as much gold as platinum in the world, and that could determine some of the pricing for platinum in 2009 in relationship to gold.
Another player in the field is the strength of the U.S. dollar, which will definitely be under downward pressure for some time ahead, including 2009. All of the money promised by the variety of government bailouts ensure inflation is just a short step away, as the Federal Reserve ramps up its printing presses.
The reason this will happen is Sovereign Wealth funds and other funds are starting to move away from the dollar, as it is increasingly being looked at as an inferior currency. Foreign governments are no longer thinking of it as a place of refuge, certainty and safety.
China is already experimenting with using its currency internally as the way to exchange goods in certain wealthier provinces.
So for the long term the greenback looks bad and gold and platinum are looking pretty good. Gold will advance this year for sure, and platinum, if it moves in lock step with it, could bring solid returns for investors, whether it's moved by demand or the ratio of it to gold.
If it begins to move in the way it has historically, platinum could surge to high prices in 2009, making it a potentially great investment.
There has been a temporary lull in the commodities bull market, but that will only be for a short season of time, as demand for natural resources inevitably starts again. Platinum will mirror that move, and gold will continue to be a haven for investors looking for a place their money can be safe, as well as grow.
We need to continually monitor platinum futures and prices, now, and in the next couple of years, as it has the potential to surprise on the upside, and long term platinum should have a lot of upward movement, as the global economy eventually rebounds and demand skyrockets. Platinum has a lot of potential going forward.
Tuesday, November 4, 2008
Commodities: Jim Rogers Likes Silver
Jim Rogers said he likes commodity metal silver better than gold this year
Jim Rogers said in an interview Monday that he thinks silver will be a better investment than gold this year, as continued pressure to raise cash by large funds, central banks and possibly the International Monetary Fund (IMF) could continue to pressure the yellow metal down.
“Silver will do better than gold,” Rogers, chairman of Singapore-based Rogers Holdings, said on Monday in an interview. “It’s been beaten down horribly. If you put a gun to my head and said you have to buy one, I would buy silver rather than gold.”
While the IMF has agreed to a plan to sell gold in May, it still has to gain legislative approval from member countries to go ahead with sales. To reduce a budget deficit, the IMF will sell 403.3 metric tons of gold if approved.
Although he believes silver will outperform gold, he said if gold continues to have downward pressure, he will start buying into it again.
He reiterated his assertions that the current commodity sell-off doesn't represent the underlying fundamentals, and they'll come back much higher.
Inflation and the ability to meet surging demand will push metal, energy and agricultural prices higher, said Rogers.
The emerging Chinese middle class pretty much guarantees this will happen, and once commodities begin their rebound, the commodity bull market will continue on and last longer than projected because of this temporary slowdown.
It'll be interesting to see whether silver indeed does surpass gold in 2009 in the commodity sector.
Jim Rogers said in an interview Monday that he thinks silver will be a better investment than gold this year, as continued pressure to raise cash by large funds, central banks and possibly the International Monetary Fund (IMF) could continue to pressure the yellow metal down.
“Silver will do better than gold,” Rogers, chairman of Singapore-based Rogers Holdings, said on Monday in an interview. “It’s been beaten down horribly. If you put a gun to my head and said you have to buy one, I would buy silver rather than gold.”
While the IMF has agreed to a plan to sell gold in May, it still has to gain legislative approval from member countries to go ahead with sales. To reduce a budget deficit, the IMF will sell 403.3 metric tons of gold if approved.
Although he believes silver will outperform gold, he said if gold continues to have downward pressure, he will start buying into it again.
He reiterated his assertions that the current commodity sell-off doesn't represent the underlying fundamentals, and they'll come back much higher.
Inflation and the ability to meet surging demand will push metal, energy and agricultural prices higher, said Rogers.
The emerging Chinese middle class pretty much guarantees this will happen, and once commodities begin their rebound, the commodity bull market will continue on and last longer than projected because of this temporary slowdown.
It'll be interesting to see whether silver indeed does surpass gold in 2009 in the commodity sector.
Tuesday, October 21, 2008
Commodities | Copper Futures Drop
For the first time in almost two years, copper futures fell below the $2 a pound mark today, as a slowing global economy dries up demand.
In the middle of the session copper futures fell as low as $1.9920 before finishing at $2.0070 a pound for December delivery; a 5.2 percent decline. The last time it was below $2 a pound was in November of 2005.
If copper continues to fall at this pace, we'll see it suffer its worst yearly decline in 20 years.
So far this year its dropped by 34 percent, already its largest loss by percentage since 1988.
Because of the widespread use of copper in the market, it's used as a measuring stick for the overall economy. It's fall in price confirms the slowing global economy, especially growth in China.
In the middle of the session copper futures fell as low as $1.9920 before finishing at $2.0070 a pound for December delivery; a 5.2 percent decline. The last time it was below $2 a pound was in November of 2005.
If copper continues to fall at this pace, we'll see it suffer its worst yearly decline in 20 years.
So far this year its dropped by 34 percent, already its largest loss by percentage since 1988.
Because of the widespread use of copper in the market, it's used as a measuring stick for the overall economy. It's fall in price confirms the slowing global economy, especially growth in China.
Wednesday, October 15, 2008
Commodity Surge: China's Slowdown
While I don't see expectations of an ongoing boom in commodities changing in any way over the long haul, in the short term we could definitely see a period of time when commodities will be out of favor, as demand stalls.
Leading the way in commodity demand is China, and they are definitely looking like they're going to be slowing down. China is estimated to account for over 40 percent of the commodity demand in the world.
Much of this is coming about because of the vulnerability of China to the slowing consumer product demand in America, which much of its growth is dependent upon. If America slows, China slows, and there's no way around it.
This will cause a period of slowing growth in China, although it'll definitely keep growing, as the momentum they carry can in no way be stopped. It's a matter of how fast they grow, not if they grow.
Before the pullback of consumer spending in America, China was expected to grow in 2009 by between percent and 10 percent. Now it's more likely that'll drop by a percentage point or two to around 7 percent to 8 percent. While that's not shabby, it's pretty huge when you consider the size of China's economy.
This will definitely hit a variety of commodities companies like miners, who in many cases are betting everything on China. Companies like BHP Billiton and Rio Tinto will definitely be hit hard, and already have, as they've already lost 10 percent of their market value, equal to about £10bn. It's suspected that this isn't through yet either, and we'll see more pain before we start to see a gain.
What all this may mean for commodities investors, is the growth period could extend longer than thought, while the pace of growth slows down. That could me less volatility (once things settle down), but smaller yearly gains; at least for the next couple years.
There of course will always be exceptions to that, but that probably will be the general rule.
Don't forsake the idea of commodities, just watch the market and be ready to dive in again when things start to turn around.
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