In the near term Scotiabank’s commodity market specialist, Patricia Mohr, sees commodities in general doing very well, with gold going through a consolidation period, moving up to $1,725 an ounce in 2013.
Over the longer haul, Mohr sees commodities to continue rising based upon growth in emerging markets. Of particular note for Mohr is the potential growth of automobile ownership in Asia, specifically in China, where only about 80 in 1,000 people own vehicles at this time.
She also like fertilizer companies because of farmers holding back on buying fertilizers recently. With food prices higher and margins widening, farmers should have a positive outlook going forward, which should result in higher demand for potash especially.
Another area that looks promising is uranium, which should enjoy strong growth as demand continues to rise, even though the media reports only part of the story. While there have in fact been some cutbacks in production in some countries for political expediency, they simply make it up by importing uranium for other countries, allowing the illusory policies to stay in place, distorting the fact that uranium demand will continue to grow.
Also of note with uranium is the program instituted by the U.S. and Russia dubbed Megatonnes to Megawatts. That will result in close to 24 million pounds of U308 no longer in the market, affecting supply.
Mohr sees uranium climbing to as high as $65 a pound by the middle of the decade, up from the $40s range it has been in lately.
As for copper, that is seen by Mohr as slowly dropping from the $3.50 she sees in 2013, to about $3 a pound over the longer term. Increased mine capacity is her reasoning there.
Showing posts with label Commodity Bull Market. Show all posts
Showing posts with label Commodity Bull Market. Show all posts
Monday, February 4, 2013
Friday, October 22, 2010
Jim Rogers Says Commodities Will be Profitable Investment for Years
In an interview with Bloomberg Television, Jim Rogers again reiterated his bullish outlook for commodities, saying Asia will continue to purchase commodities for decades.
Even if the Federal Reserve weren't to print more money (which it will), the underlying fundamentals of commodities would drive the price up. With the Fed sure to inflate, or implement another round of they're now calling quantitative easing, they're just going to make the process happen quicker in U.S. dollar terms.
As Rogers has said in the past, “If the world economy gets better, the prices of commodities will go up because there are shortages developing. We already see shortages developing. You mentioned rare earths, but there are others. If the world economy doesn’t get better, I still want to own commodities because they’re [Federal Reserve] going to print money.”
So whether it's demand or faulty economic policies, the commodity sector will continue to thrive for years to come.
Of course we need to watch for new price highs and be diligent in following the sector, but overall, commodities going to boom for some time.
As for gold, Rogers has said in the past he sees it going as high as $2,000 an ounce, although he has no idea when that may happen.
For now, he's reluctant to acquire more gold because it stands close to historical highs. He's looking to buy more on corrections.
Similar to investing on a monthly basis with stocks, another commodity bull, Marc Faber, recommends investors acquire gold in the same way, acquiring it consistently over a period of time to get a decent average price for it.
Two of Rogers' favorite commodity plays at this time are rice and silver, as they haven't yet reached new highs.
Even if the Federal Reserve weren't to print more money (which it will), the underlying fundamentals of commodities would drive the price up. With the Fed sure to inflate, or implement another round of they're now calling quantitative easing, they're just going to make the process happen quicker in U.S. dollar terms.
As Rogers has said in the past, “If the world economy gets better, the prices of commodities will go up because there are shortages developing. We already see shortages developing. You mentioned rare earths, but there are others. If the world economy doesn’t get better, I still want to own commodities because they’re [Federal Reserve] going to print money.”
So whether it's demand or faulty economic policies, the commodity sector will continue to thrive for years to come.
Of course we need to watch for new price highs and be diligent in following the sector, but overall, commodities going to boom for some time.
As for gold, Rogers has said in the past he sees it going as high as $2,000 an ounce, although he has no idea when that may happen.
For now, he's reluctant to acquire more gold because it stands close to historical highs. He's looking to buy more on corrections.
Similar to investing on a monthly basis with stocks, another commodity bull, Marc Faber, recommends investors acquire gold in the same way, acquiring it consistently over a period of time to get a decent average price for it.
Two of Rogers' favorite commodity plays at this time are rice and silver, as they haven't yet reached new highs.
Friday, May 14, 2010
Jim Rogers: Commodities will Continue Roaring
The combination of increasing demand and decreasing supply has Jim Rogers a perpetual bull on the commodities market, and I think he's right.
Even with the news of China taking measures to battle its inflation, it's not a matter of whether they'll continue to acquire commodities, it's at what level they'll continue to buy them.
That isn't to say there won't be a slowdown in demand for specific commodities, but it won't dampen the bull market, but more than likely will extend it out further, albeit possibly a little smaller of a pace.
The same is true of the EU sovereign debt crisis. That, coupled with China, could definitely hurt individual commodities, and by extension, some raw materials companies, but the overall commodity bull market will continue, just some of the individual commodities within the sector may have prices drop.
Rogers likes to point out that oil demand will continue to grow while known supplies dwindle. That means ultimately oil prices will rise in response to that. It's only a question of when, not if, in Rogers' view.
One thing that Rogers has been warning about for some time and governments and central banks have refused to heed, is the bailing out of nations in Europe.
Rogers said if the European Union was really serious about the euro, they would never take the step of bailing out Greece. Not that they've not only bailed out Greece, but have put close to $1 trillion on the table for the welfare, socialist states to get hold of, he was shocked, and while before he doubted the survival of the euro, now he's adamant that there is no way it can survive in the years ahead, and it could come much quicker than he originally believed. That of course would mean the end of the EU, but that's no loss. Countries in Europe survived for centuries without the EU, they'll survive afterwards as well.
Rogers major thinking on the demise of the euro is, now that the irresponsible countries know they can get away with their over spending, they can continue on with their ways with no consequences.
While there are laws being written by these countries to put so-called austerity measures in place, we all know they'll write down anything and agree to it to get their hands on the trillion dollars.
Worst though, rumblings from the clowns running the Federal Reserve seem to imply there will be much more bailout money coming to the socialists, and they are attempting to spin that as the need to bail out the banks heavily exposed in the region.
While that's actually true, it's the banks enabling the entitlement cultures that have led to this, now those in northern Europe, and now in the United States are being called upon to rescue these deadbeats who continue to spend out money with impunity, while the banks of the world contribute to their drunken spending habit by buying up their bonds. That's why banks are in trouble. That's why we need to stop it.
Anyway, as far as commodities go, there is a finite amount of resources with the technology now at our disposal, and Rogers says that is the reasoning behind the extended bull market that could go on for more than another decade.
As far as currencies, Rogers said this will add to the commodity bull market, as they're all being debased, and investors are getting smarter and smarter as far as understanding that, and will put their money in real assets rather than paper currencies, which only survive as long as people have faith in them. That faith is waning, and that's good news for commodities, and good news for those doing their homework and investing in them.
Even with the news of China taking measures to battle its inflation, it's not a matter of whether they'll continue to acquire commodities, it's at what level they'll continue to buy them.
That isn't to say there won't be a slowdown in demand for specific commodities, but it won't dampen the bull market, but more than likely will extend it out further, albeit possibly a little smaller of a pace.
The same is true of the EU sovereign debt crisis. That, coupled with China, could definitely hurt individual commodities, and by extension, some raw materials companies, but the overall commodity bull market will continue, just some of the individual commodities within the sector may have prices drop.
Rogers likes to point out that oil demand will continue to grow while known supplies dwindle. That means ultimately oil prices will rise in response to that. It's only a question of when, not if, in Rogers' view.
One thing that Rogers has been warning about for some time and governments and central banks have refused to heed, is the bailing out of nations in Europe.
Rogers said if the European Union was really serious about the euro, they would never take the step of bailing out Greece. Not that they've not only bailed out Greece, but have put close to $1 trillion on the table for the welfare, socialist states to get hold of, he was shocked, and while before he doubted the survival of the euro, now he's adamant that there is no way it can survive in the years ahead, and it could come much quicker than he originally believed. That of course would mean the end of the EU, but that's no loss. Countries in Europe survived for centuries without the EU, they'll survive afterwards as well.
Rogers major thinking on the demise of the euro is, now that the irresponsible countries know they can get away with their over spending, they can continue on with their ways with no consequences.
While there are laws being written by these countries to put so-called austerity measures in place, we all know they'll write down anything and agree to it to get their hands on the trillion dollars.
Worst though, rumblings from the clowns running the Federal Reserve seem to imply there will be much more bailout money coming to the socialists, and they are attempting to spin that as the need to bail out the banks heavily exposed in the region.
While that's actually true, it's the banks enabling the entitlement cultures that have led to this, now those in northern Europe, and now in the United States are being called upon to rescue these deadbeats who continue to spend out money with impunity, while the banks of the world contribute to their drunken spending habit by buying up their bonds. That's why banks are in trouble. That's why we need to stop it.
Anyway, as far as commodities go, there is a finite amount of resources with the technology now at our disposal, and Rogers says that is the reasoning behind the extended bull market that could go on for more than another decade.
As far as currencies, Rogers said this will add to the commodity bull market, as they're all being debased, and investors are getting smarter and smarter as far as understanding that, and will put their money in real assets rather than paper currencies, which only survive as long as people have faith in them. That faith is waning, and that's good news for commodities, and good news for those doing their homework and investing in them.
Friday, April 16, 2010
Morgan Stanley (NYSE:MS) to Spin Off Japan Commodities Unit
Morgan Stanley Spinning Off Japan Commodity Trading Company
There will be a new commodities trading company operating under the Morgan Stanley (NYSE:MS) umbrella, as Morgan Stanley Japan Securities Co will be spun off on May 1.
Although being spun off, it'll operate as a wholly owned subsidiary of Morgan Stanley.
The purpose of the new unit will be to take care of business of Japanese companies in areas of sales in the manufacturing, shipping and trading sectors.
With commodities expected to continue their bull run based on Chinese demand, the inevitable price movements related to commodities are normally hedged by companies using derivatives trading as their chosen vehicle.
Japanese companies are expected to increase their derivatives trading to hedge commodity price movements, the reason Morgan Stanley is spinning off the company.
There will be a new commodities trading company operating under the Morgan Stanley (NYSE:MS) umbrella, as Morgan Stanley Japan Securities Co will be spun off on May 1.
Although being spun off, it'll operate as a wholly owned subsidiary of Morgan Stanley.
The purpose of the new unit will be to take care of business of Japanese companies in areas of sales in the manufacturing, shipping and trading sectors.
With commodities expected to continue their bull run based on Chinese demand, the inevitable price movements related to commodities are normally hedged by companies using derivatives trading as their chosen vehicle.
Japanese companies are expected to increase their derivatives trading to hedge commodity price movements, the reason Morgan Stanley is spinning off the company.
Thursday, March 4, 2010
JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) Chasing Commodity Investment Leaders
JPMorgan and Citigroup Looking to Commodities
Now that many of the banks and investment banks like JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) have finished shoring up their foundations and building up their reserve capital, they're looking at generating revenue, and the commodity bull market may be the best place to do that in the years ahead, as they try to catch up with competitors like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) who make a lot of money in the sector, and are positioned well to continue doing that.
Although mergers and acquisitions and initial public offerins are expected to increase some this year, that business won't be a huge revenue generator until we truly emerge from the recession.
So commodities are one of the few growth sectors left which have a good chance of increasing revenue and profits for banks and their investment bank units.
JPMorgan and Citigroup Looking to Commodities
Now that many of the banks and investment banks like JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) have finished shoring up their foundations and building up their reserve capital, they're looking at generating revenue, and the commodity bull market may be the best place to do that in the years ahead, as they try to catch up with competitors like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) who make a lot of money in the sector, and are positioned well to continue doing that.
Although mergers and acquisitions and initial public offerins are expected to increase some this year, that business won't be a huge revenue generator until we truly emerge from the recession.
So commodities are one of the few growth sectors left which have a good chance of increasing revenue and profits for banks and their investment bank units.
JPMorgan and Citigroup Looking to Commodities
Wednesday, March 3, 2010
Mark Mobius Likes Commodity Countries
Mark Mobius - Commodities in Emerging Markets
Emerging market guru Mark Mobius likes two things about investing in the BRIC countries, and that is consumers and commodities.
The head of Templeton Asset Management said he continues to look for strong performances from countries with strong natural resources and infrastructure and consistency in place to extract and distribute them.
With growing middle classes in BRIC nations, Mobius also likes industries prepared to service them like retail, banking and disposal product firms.
Anyone investing in BRIC economies need to have a longer term outlook to be successful says Mobius, as they are volatile and move up and down quite a bit.
Market timers and other need not apply here or you could get slaughtered from the short term fluctuations of the markets.
Mark Mobius - Commodities in Emerging Markets
Emerging market guru Mark Mobius likes two things about investing in the BRIC countries, and that is consumers and commodities.
The head of Templeton Asset Management said he continues to look for strong performances from countries with strong natural resources and infrastructure and consistency in place to extract and distribute them.
With growing middle classes in BRIC nations, Mobius also likes industries prepared to service them like retail, banking and disposal product firms.
Anyone investing in BRIC economies need to have a longer term outlook to be successful says Mobius, as they are volatile and move up and down quite a bit.
Market timers and other need not apply here or you could get slaughtered from the short term fluctuations of the markets.
Mark Mobius - Commodities in Emerging Markets
Wednesday, February 24, 2010
Charlie Munger Warns on America
Charlie Munger on Economics and America
Anyone reading Charlie Mungers parable over at Slate over the weekend should come away very sober, with the realization why precious metals like gold and silver, along with other commodities, will do well over the years ahead.
The parable by Charlie Munger attacked on two fronts. The first was the outrageous practices of the U.S. government which is out of control with its spending and taxation, and discourages entrepreneurs from flourishing when all they do is take wealth away from them and redistribute it like the growing socialist government and administration we now have.
On the private business side, Munger blasted the derivative trading of the banks which were a major part of the underlying problems many of us face.
While this is all true and accurate, we still face the consequences of the actions of the U.S. government and major banks no matter what is done in attempts to deal with the root causes.
This is why commodities will continue to be the major success story over the next decade or more, as real things will continue to be in demand, rather than things most people can't begin to understand.
Charlie Munger on Economics and America
Anyone reading Charlie Mungers parable over at Slate over the weekend should come away very sober, with the realization why precious metals like gold and silver, along with other commodities, will do well over the years ahead.
The parable by Charlie Munger attacked on two fronts. The first was the outrageous practices of the U.S. government which is out of control with its spending and taxation, and discourages entrepreneurs from flourishing when all they do is take wealth away from them and redistribute it like the growing socialist government and administration we now have.
On the private business side, Munger blasted the derivative trading of the banks which were a major part of the underlying problems many of us face.
While this is all true and accurate, we still face the consequences of the actions of the U.S. government and major banks no matter what is done in attempts to deal with the root causes.
This is why commodities will continue to be the major success story over the next decade or more, as real things will continue to be in demand, rather than things most people can't begin to understand.
Charlie Munger on Economics and America
Tuesday, February 23, 2010
Managed Commodity Assets Fall
Managed Commodity Assets Fall
Managed commodity assets fell for the first time in over a year, said Barclay's Capital, evidently based on worries over the global economy.
Overall commodity assets under management dropped to $245 billion, a $12 billion fall from the $257 billion from last month.
In what I think is a strange response to uncertainty, investors took close to $500 million out of exchange-traded funds, with the majority of that being funds backed by gold and a variety of other precious metals.
At a time when uncertainty should drive smart investors to gold, the idea that taking it out of gold and moving it to something else is ignorant and bizarre, although obviously a lot more was happening than only that in the overall commodity managed assets picture.
Managed Commodity Assets Fall
Managed commodity assets fell for the first time in over a year, said Barclay's Capital, evidently based on worries over the global economy.
Overall commodity assets under management dropped to $245 billion, a $12 billion fall from the $257 billion from last month.
In what I think is a strange response to uncertainty, investors took close to $500 million out of exchange-traded funds, with the majority of that being funds backed by gold and a variety of other precious metals.
At a time when uncertainty should drive smart investors to gold, the idea that taking it out of gold and moving it to something else is ignorant and bizarre, although obviously a lot more was happening than only that in the overall commodity managed assets picture.
Managed Commodity Assets Fall
Thursday, February 11, 2010
BHP Billiton (NYSE: BHP) Doubles First Half Profits on Commodity Demand
BHP Billiton (NYSE: BHP)
BHP Billiton (NYSE: BHP) had a tremendous first half to their fiscal year as profits doubled on continuing demand for commodities, largely fueled by China and India.
While some try to tout this as also being fueled by European and American demand, that's not true in general, as least from the point of view of being sustainable, as many manufactures, particularly in America, were simply replenishing supplies, a major reason the recent data haven't been that exciting to economists or analysts.
That is probably reflected in the lower dividend than expected from BHP, as the one-off results in the United States won't be repeated any time soon. The company reported a divident of 42 cents for the first half, while expectations were it would come in at 44 cents. That's usually an indicator of uncertainty and unpredictability, and I would say that would largely come from slowing demand from Western countries.
Even so, some commodities will continue to flourish as growth in emerging markets resumes, and as China especially focuses on relying less on imports and more on domestic growth, which is fueling numerous infrastructure projects which will continue for years and require numerous raw materials.
“Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.”
BHP Billiton (NYSE: BHP)
BHP Billiton (NYSE: BHP) had a tremendous first half to their fiscal year as profits doubled on continuing demand for commodities, largely fueled by China and India.
While some try to tout this as also being fueled by European and American demand, that's not true in general, as least from the point of view of being sustainable, as many manufactures, particularly in America, were simply replenishing supplies, a major reason the recent data haven't been that exciting to economists or analysts.
That is probably reflected in the lower dividend than expected from BHP, as the one-off results in the United States won't be repeated any time soon. The company reported a divident of 42 cents for the first half, while expectations were it would come in at 44 cents. That's usually an indicator of uncertainty and unpredictability, and I would say that would largely come from slowing demand from Western countries.
Even so, some commodities will continue to flourish as growth in emerging markets resumes, and as China especially focuses on relying less on imports and more on domestic growth, which is fueling numerous infrastructure projects which will continue for years and require numerous raw materials.
“Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.”
BHP Billiton (NYSE: BHP)
Wednesday, February 10, 2010
Mark Mobius Likes Commodity Stocks
Mark Mobius Likes Commodities
While most of us that know Mark Mobius understand his focus and investment strategy concerning emerging markets, we also need to include his take on the commodity market as well.
For emerging markets, what all of us need to understand is commodities will continue to play a big part in their growth, whether its a large country or not, as for the most part it'll be stuff that generates growth for them majority of them, not high-tech products and services to start off with.
With that as a background, Mobius recently said that "Commodity stocks look good because we expect the global demand for commodities to continue its long-term growth. Consumer stocks are also favoured. With rising per capita income and strong demand for consumer goods, the earnings growth outlook for these stocks is positive."
Mobius added we must be good risk managers during this period of time, as there will continue to be huge fluctuations in all markets, of which commodities are usually always like, even in the best of times.
Some of the things Mobius advises to look out for and the risks he's talking about are:
"Risks such as the inability of governments to control the derivatives markets, loss of confidence, over or poor regulation and abandonment of the market economy philosophy do also exist. Therefore, we must pay attention to valuations and long-term earnings growth prospects in order to avoid buying or holding expensive stocks as a result of dramatic price rises that we have seen."
Mark Mobius Likes Commodities
While most of us that know Mark Mobius understand his focus and investment strategy concerning emerging markets, we also need to include his take on the commodity market as well.
For emerging markets, what all of us need to understand is commodities will continue to play a big part in their growth, whether its a large country or not, as for the most part it'll be stuff that generates growth for them majority of them, not high-tech products and services to start off with.
With that as a background, Mobius recently said that "Commodity stocks look good because we expect the global demand for commodities to continue its long-term growth. Consumer stocks are also favoured. With rising per capita income and strong demand for consumer goods, the earnings growth outlook for these stocks is positive."
Mobius added we must be good risk managers during this period of time, as there will continue to be huge fluctuations in all markets, of which commodities are usually always like, even in the best of times.
Some of the things Mobius advises to look out for and the risks he's talking about are:
"Risks such as the inability of governments to control the derivatives markets, loss of confidence, over or poor regulation and abandonment of the market economy philosophy do also exist. Therefore, we must pay attention to valuations and long-term earnings growth prospects in order to avoid buying or holding expensive stocks as a result of dramatic price rises that we have seen."
Mark Mobius Likes Commodities
Monday, February 8, 2010
Is Vale (NYSE: VALE) About to Explode Upwards in Price?
Vale Iron Ore Prices
I don't think there's any doubt Vale (NYSE: VALE) is positioned and poised for an extraordinary upwards run in its share price, as their 80 percent exposure to iron ore has them ready to partake in the increasing demand for iron ore, from which steel is made.
Probably the best example of this was the recent attempt by China to dampen down the price of iron ore in the market, which they failed to do because domestic Chinese companies had such a high demand for it that they were willing to pay the asking price even as the Chinese government attempting to pressure the major three iron ore producing companies - including Vale - to drop the price.
China attempted this last year and it backfired on them as the spot price was higher than the negotiated prices other companies paid for a contract for iron ore.
Anyway, Vale should have a nice, long run going up as the demand for iron ore should outstrip the supply for some time to come. Of course any of the major three iron ore producing companies should participate in that upward run, it's just that Vale's 80 percent exposure puts them in an enviable position.
Vale Iron Ore Prices
I don't think there's any doubt Vale (NYSE: VALE) is positioned and poised for an extraordinary upwards run in its share price, as their 80 percent exposure to iron ore has them ready to partake in the increasing demand for iron ore, from which steel is made.
Probably the best example of this was the recent attempt by China to dampen down the price of iron ore in the market, which they failed to do because domestic Chinese companies had such a high demand for it that they were willing to pay the asking price even as the Chinese government attempting to pressure the major three iron ore producing companies - including Vale - to drop the price.
China attempted this last year and it backfired on them as the spot price was higher than the negotiated prices other companies paid for a contract for iron ore.
Anyway, Vale should have a nice, long run going up as the demand for iron ore should outstrip the supply for some time to come. Of course any of the major three iron ore producing companies should participate in that upward run, it's just that Vale's 80 percent exposure puts them in an enviable position.
Vale Iron Ore Prices
XSTRATA (LSE: XTA.L) CEO: Commodities Boom Coming
Xstrata: Commodity bull run to continue
According to Xstrata (LSE: XTA.L) CEO Mick Davis, commodities are set to resume their bull run as demand for raw materials outstrips the ability to supply them.
Davis said: "In my opinion, the medium term outlook for commodity demand remains very promising, driven by the ongoing urbanisation and industrialisation of high-growth, populous economies, with China and other industrialising countries taking active steps to rebalance their economies towards domestic consumption-led growth over the next decade."
While I believe that's a true statement, Davis is obviously communicating it in response to the huge drop in annual profits it reported for 2009, which plunged by 41 percent from the year before.
Much of his hope and optimism stems from China and other emerging markets which in the building up of their domestic infrastructure which will require huge amounts of materials to accomplish.
Of course if there is more demand than supply can meet, there will be an inevitable rise in prices, which would be a huge positive for the company.
Overall revenue declined by 16 percent to $23.53 billion from 2008, showing it was the low prices of commodities which caused the 41 percent drop in prices, although demand was an ongoing part of the picture, while managing costs weren't able to turn profits around.
Xstrata: Commodity bull run to continue
According to Xstrata (LSE: XTA.L) CEO Mick Davis, commodities are set to resume their bull run as demand for raw materials outstrips the ability to supply them.
Davis said: "In my opinion, the medium term outlook for commodity demand remains very promising, driven by the ongoing urbanisation and industrialisation of high-growth, populous economies, with China and other industrialising countries taking active steps to rebalance their economies towards domestic consumption-led growth over the next decade."
While I believe that's a true statement, Davis is obviously communicating it in response to the huge drop in annual profits it reported for 2009, which plunged by 41 percent from the year before.
Much of his hope and optimism stems from China and other emerging markets which in the building up of their domestic infrastructure which will require huge amounts of materials to accomplish.
Of course if there is more demand than supply can meet, there will be an inevitable rise in prices, which would be a huge positive for the company.
Overall revenue declined by 16 percent to $23.53 billion from 2008, showing it was the low prices of commodities which caused the 41 percent drop in prices, although demand was an ongoing part of the picture, while managing costs weren't able to turn profits around.
Xstrata: Commodity bull run to continue
Thursday, January 28, 2010
Commodities VaR: Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and JPMorgan Chase (NYSE:JPM) Down 25 Percent from 2008 Highs
Commodity VaR Major Financial Institutions
In the midst of all the Obama proposal for restrictions on proprietary trading for commodities and other securities, it has been found via the data that financial institutions like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and JPMorgan Chase (NYSE:JPM) have decreased their Value-at-Risk, or VaR, for commodities, by a minimum of 25 percent since their highs during the ongoing commodity surge in 2008.
That data is in reference to numbers crunched in the fourth quarter of 2009.
What VaR deals with is the confidence or willingness for a financial institution to trade in a particular market sector.
Even so, it's interesting that while the risk appetite seems to have declined some in the fourth quarter, commodities and currency investments helped some of the major financial institutions in America perform much better than they would have without those investments.
Volatile times right now will probably keep commodities in check for the short term, but almost every announcement one way or the other seems to push commodity prices in one direction or the other as uncertainty about true economic recovery, interest rates and what China will invest in commodities in 2010 has the commodity market skittish and seemingly all over the place.
Commodity VaR Major Financial Institutions
In the midst of all the Obama proposal for restrictions on proprietary trading for commodities and other securities, it has been found via the data that financial institutions like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and JPMorgan Chase (NYSE:JPM) have decreased their Value-at-Risk, or VaR, for commodities, by a minimum of 25 percent since their highs during the ongoing commodity surge in 2008.
That data is in reference to numbers crunched in the fourth quarter of 2009.
What VaR deals with is the confidence or willingness for a financial institution to trade in a particular market sector.
Even so, it's interesting that while the risk appetite seems to have declined some in the fourth quarter, commodities and currency investments helped some of the major financial institutions in America perform much better than they would have without those investments.
Volatile times right now will probably keep commodities in check for the short term, but almost every announcement one way or the other seems to push commodity prices in one direction or the other as uncertainty about true economic recovery, interest rates and what China will invest in commodities in 2010 has the commodity market skittish and seemingly all over the place.
Commodity VaR Major Financial Institutions
Monday, January 25, 2010
Commodity Buying Opportunity?
Commodity dip in prices
I think so. When you look at two of the best things that could have happened for those looking for a commodity price correction, you couldn't have had better circumstances than Obama and the Chinese leadership making the statements they did last week; both of which has a negative impact on commodities' outlook and prices.
The question is if the impact of their comments will be sustainable over a long period of time or commodity prices will continue their upward surge after many of them reaching highs recently.
It seems to me there is no way commodities over the long term will suffer long-term price decreases, although times like these are great opportunities to buy up even more raw materials going forward.
The only commodity to be cautious of concerning price is copper, which increased in price in spite of the thoughts communicated by the Chinese and Obama.
Taking everything into consideration, and even if China's leaders want to try to slow down their growth, commodities will be a huge story in relationship to China for some time to come, so when this nice dips happen, it's time to stock up again and increase our positions.
Rumor is a number of funds had been seriously thinking of decreasing their exposure to commodities. Hopefully they will and the story gets out everywhere, as it should help prices drop even more and give more opportunity to buy low.
Commodity dip in prices
I think so. When you look at two of the best things that could have happened for those looking for a commodity price correction, you couldn't have had better circumstances than Obama and the Chinese leadership making the statements they did last week; both of which has a negative impact on commodities' outlook and prices.
The question is if the impact of their comments will be sustainable over a long period of time or commodity prices will continue their upward surge after many of them reaching highs recently.
It seems to me there is no way commodities over the long term will suffer long-term price decreases, although times like these are great opportunities to buy up even more raw materials going forward.
The only commodity to be cautious of concerning price is copper, which increased in price in spite of the thoughts communicated by the Chinese and Obama.
Taking everything into consideration, and even if China's leaders want to try to slow down their growth, commodities will be a huge story in relationship to China for some time to come, so when this nice dips happen, it's time to stock up again and increase our positions.
Rumor is a number of funds had been seriously thinking of decreasing their exposure to commodities. Hopefully they will and the story gets out everywhere, as it should help prices drop even more and give more opportunity to buy low.
Commodity dip in prices
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.
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.
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.
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.
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.
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.
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.
Tuesday, September 22, 2009
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
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
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