Copper, Zinc, Nickel, Tin all Drop

Many commodities took a big hit Friday, as copper, zinc, nickel, tin, gold, silver, platinum and palladium were all trending down, with copper, platinum and palladium taking the biggest hits as measured by percentages, and with platinum and palladium, also falling by the most in U.S. dollars.

Copper has been the major story this month regarding commodities, as it plunged to its lowest levels this week in three months, with falling demand for scrap-metal weighed on the base metal. Most of that is from the slowing demand in China, which has been working on slowing down its heated up economy.

For the last three months, discounts for scrap copper plunged by 25 percent. This is a dramatic turn around from September where copper prices got a boost from the implementation of further stimulus in the United States and Europe.

One of the best leading indicators for copper prices is scrap, and demand has been weakening for the last quarter, even with the bump in copper prices for September.

Copper futures fell to about $3.70 a pound on the Comex in New York for December delivery, at just before 1:30 PM EDT. For the week it is down two percent. Copper futures are trading about 40 cents above No. 2 scrap. That's ten cents above the 30 cents discount it traded at against copper in the 3rd quarter.

Credit Suisse (CS) estimates copper production in 2013 to be at 293,000 metric tons, in contrast to the 102,000 ton shortfall in 2012.

On the London Metal Exchange, copper for December delivery was down to $8,130 a ton ($3.69 a pound), a decline of 1.3 percent.

December Gold Drops Over $10 an Ounce

Some commodity prices were under pressure Tuesday after a report from the International Monetary Fund revealed it slashed global economic growth for the year from 3.5 percent to 3.3 percent.
Gold for December delivery dropped $10.70 an ounce to settle at $1,765. December silver was down 3.2 cents an ounce to $33.985. January platinum fell $3.50 to settle at $1,695.30 an ounce.
Unsurprisingly, the IMF confirmed the leading economies of the world are at risk of recession, although the reality is we've really never emerged from latest recession, and there has been no recovery.
Those commodities moving up on the day included energy, palladium and wheat. Soybeans fell a penny to $15.50 a bushel. Palladium climbed to $658.20, up $1.25 an ounce.

Concerns over supply because of a slowdown in production in the North Sea and rising tensions in the Middle East were behind the rise in energy prices. Recent fires at a refinery in the U.S and another in Russia has also added price support in some energy segments.
Benchmark crude oil futures climbed $3.06, or 3.4 percent, to settle at $92.39 a barrel in New York. That is the highest level in over a week. Brent crude closed at $114.50, jumping $2.68, or 2.4 percent.

Heating oil increased by 5.89 cents to $3.2032 a gallon, and wholesale gasoline was up 6.56 cents to $2.9587 a gallon. Natural gas was up by 6.4 cents to $3.467 per 1,000 cubic feet.

The Dow Jones Industrial Average plunged 110 points to close at 13,473, a loss of 0.8 percent. The S&P 500 Index dropped to 1,441, losing 14 points or just under 1 percent.

The ICE dollar index climbed to 80.023, up from Monday's 79.595.

Euro Climbs to Two-Week High Against Dollar

The euro soared to a two-week high against the U.S. dollar Thursday, as that and other factors accounted for a number of commodities also climbing.

Concerning the euro, European Central Bank President Mario Draghi reaffirmed his commitment to maintain and preserve the euro, as well as the monetary system of the area.
 
That announcement was what pushed the euro up against the dollar, which helped boost many other commodities as well.

Not only were commodities helped though, as the news from the ECB also helped Wall Street equities to soar as well.

Precious metals gold and silver were unsurprisingly higher, as was much of energy, although that was aided by Turkish strikes on Syria, which generated supply concerns, along with a fire at the largest refinery in the U.S, which is run by Exxon Mobil (XOM), along with another refinery fire in Russia.

In agriculture, corn, wheat and soybeans were all up on the day, after hitting a three-month low the day before. Sugar was also up.

Other metals rising included platinum and palladium in the U.S.

BHP (NYSE:BHP), Teck (NYSE:TCK), Freeport (NYSE:FCX) and Rio Tinto (NYSE:RIO) Will Soar on Quantitative Easing

With the Federal Reserve poised to inflate via quantitative easing, a number of commodities will surge in price, which will strongly benefit diversified miners like BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK), Freeport McMoran (NYSE:FCX) and Rio Tinto (NYSE:RIO).

According to UBS (NYSE:UBS), some of their top commodity picks include gold, copper, palladium, iron ore, thermal coal and zinc. They added they believe it's a "game changer" for commodities.

Talking on global capital flows, UBS said that should strengthen "credit creation in emerging markets." The giant bank concluded, "We believe that QE2 will prolong the bull market in commodities."

UBS' top pick in the commodity sector is palladium, which they see making significant gains through 2015.

In what could be troubling news for aluminum producers like Alcoa (NYSE:AA), UBS sees aluminum and nickel, among other commodities whose supply has little constraint upon them as being less desirable and affected by quantitative easing.

Gold of course will continue to perform strongly for some time to come. In that space, besides companies mentioned above, they like gold mining giant Barrick Gold (NYSE:ABX).

UBS said they like gold mining stocks over ownership of physical gold.

JPMorgan (NYSE:JPM) Sees Platinum, Palladium Rising

Prices for platinum and palladium are poised to rise, according to JPMorgan (NYSE:JPM), citing the implementation of new mining rules in South Africa.

The new rules transfer some rights at mines to black South Africans. With the son of the South African president being connected to the largest shareholder in Kumba Iron Ore LTD., which had some of the rights of the mine transferred to them, it undermines the assertion it's for the purpose of redressing what is being called "inequalities," related to apartheid years ago.

Consequently, the uncertainty related to these political moves has caused potential investors to hold back until more clarity about the mining laws of the country is made, and ultimately laws put in place that can also be counted on by investors to make intelligent decisions upon.

Even worse, is the upcoming congress next month in South Africa, where the ruling party is beginning talks on nationalizing the large mine next month.

Already Anglo American Plc and Lonmin Plc have complained about the government taking away their mining rights.

This uncertainty is sure to drive up platinum and palladium prices in the near future,

Mines Minister Susan Shabangu said the nation will work on clarifying all the uncertainties surrounding the changes, especially investor concerns over the awarding of rights, which could change the entire picture as far as return of investment if leaders arbitrarily award others the rights in relationship to internal political considerations.

Anglo Platinum (OTC:AGPPY) Increases Production Guidance by 200,000 Ounces

Anglo Platinum (OTC:AGPPY) (JNB:AMSPP) announced it could produce from 150,000 to 200,000 ounces of platinum than their original guidance, according to chief executive officer Neville Nicolau.

Nicolau also had this to say about palladium, "Palladium may be in deficit for most of the next decade as Russia depletes inventories, and uses for the metal increase."

Palladium prices are expected to soar this year as growing demand from the auto industry, along with low supply, should push palladium prices up going forward.

China Platinum Demand Driving Prices Up

Gold is of course grabbing the majority of the headlines lately, and rightly so, but that hasn't kept some of the other precious metals performing strongly so far in 2010, and that includes platinum and palladium, which have outperformed gold by a wide margin so far this year.

Platinum has ralled by 17 percent and palladium has performed even better at 25 percent gains in 2010. On the other hand, gold has been struggling at gains of about five percent.

With the possibility of increased demand in China for platinum and palladium for use in catalytic converters, and what seems to be a growing and new demand in the jewelry sector, there are expectations there will be a shortage of platinum in 2010, in contrast to a surplus last year on lower demand.

China has become the largest car market in the world now, which of course will be the primary driver of platinum and palladium prices, as it is with other raw materials it needs to grow its economy.

Some platinum and palladium companies have been performing strongly recently, as the market attempts to sort out whether or not the seeming growing demand for platinum and palladium is real and sustainable, which means it needs to be seen that China is continuing to grow, especially in the auto sector.

That news has been confirmed as far as pace of growth, now it'll need to be broken down more to find out the details.

Assuming the demand for platinum and palladium from China is real, and it does seem to be, that should continue to push prices up throughout 2010.

North American Palladium (AMEX:PAL) Surges on Reopening of Lac de Iles Palladium Mine

North American Palladium (AMEX:PAL) exploded by over 7 percent today on the news it is reopening its Lac de Iles palladium mine, the key mine of the company.

A secondary factor has also affected the overall palladium and platinum industry, as news China may be hungrier for the two metals over gold has investors looking at the possibility closely.

Going beyond the usual idea of use in catalytic converters, palladium and platinum are also being eyed by consumers for jewelry, as it seems some are abandoning gold for the latest fad, although we'll have to wait to see if that emerges as a longer term trend. Gold usually never goes out of favor in that regard, but rising prices could result in consumers turning to alternative metals, as shown by the much more price of palladium, even after going as high as $548.50 an ounce on Wednesday. Much of that is of course attributed to catalytic converters and anticipated increasing demand.

Either way, the reopening of the Lac de Iles palladium mine by North American Palladium will give them a big boost, and the additional demand from China for cars and jewelry should offer strong support for the share price of the company.

Palladium Surges to 20-Month High

Palladium Prices

Earlier in the day palladium increased to $479.10 an ounce, its highest level since June, 2008. Later in the day the price for June delivery stood at $476.70 and ounce, still a nice 2.9 percent move of $13.50.

Most of this is based on the possibility that increasing auto sales will be sustainable, something I wouldn't count on, but it is a possibility.

Assuming demand does continue to grow, the supply situation would work for palladium prices to continue increasing during 2010. If that does happen, it is estimated there will be a shortage of palladium of up to 800,000 ounces.

Palladium Prices

Commodities Rise on Falling Dollar

Commodity Prices Rising

The falling dollar gave commodities a boost today, as many raw materials rose as a result of the dollar-denominated factor.

Gold, silver, copper, platinum and palladium all enjoyed price increases with little resistance in a relatively light day of trading.

Another commodity sector rising was energy, where oil, natural gas and gasoline all spiked.

Also joining the other commodity sectors in rising in price were the grains, where corn, soybeans and wheat all moved upwards.

What this shows me is how important the U.S. dollar is to the inflationary pressure we continue to face. While that's nothing new, it does show how just a little weakness in the dollar can drive commodity prices upwards.

It also shows me how vulnerable we are to inflation, and how quickly things can change in relationship to that.

Commodity Prices Rising

Financial Advisor

Precious Metals: Long Upward Climb

Precious Metals

It may surprise some that over the last 10 years the best performing asset class has been precious metals, and they still have a long run before them before they reach the height of their performance.

Just think of the most well known and popular precious metals: gold and silver. Even though they've been all over the financial news over the last couple of years, and gold especially has had a tremendous run, they aren't even close to running out of steam, and should perform strongly for years into the future.

Or think of much lesser known precious metals like platinum and palladium, which are driven primarily by the automotive industry. Recent exposure to those metals have grown because of the popularity of a recently launched exchange-traded offering. And that's at a time when the automotive industry is way down.

Copper has been doing well too in spite of the general collapse of the housing market. What's going to happen when that regains some traction.

The same with iron ore in China, which is now scrambling and wheeling and dealing in attempts to keep the prices of iron ore down in the face of growing domestic demand.

The precious metal story won't mature until the China story matures, and their rate of growth should continue on for at least a decade, which is also the time frame looked upon by commodity experts when precious metals and other commodities mature as well.

Either way, precious metals have a lot of legs left, and they're only in the middle of the historic bull commodity market.

Precious Metals

Commodity Correction Won't Last Long

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

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

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

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

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

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

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

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

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

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

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

Platinum, Crude Oil, Corn Drag Commodities Lower

Demand continues to be a big drag upon commodities, as slowing economic growth continues to hammer raw materials and agricultural products in a number of areas.

We talked about platinum and palladium last post, which is being directly impacted from the declining auto industry.

But cooler and wetter weather has also increased the outlook for corn, which has been plummeting since corn reached a record price of $7.30 a barrel on the CBOT Friday the 13th of 2008. Corn fell today to a four-month low of $5.3625 a bushel, a 3.5 percent drop.

With the World Bank predicting global growth for crude oil dropping from the 2007 levels of 3.7 percent to 2.7 percent this year, prices have been dropping, going as low as $188 a barrel.

Other commodities plunging have been rubber, which is now at a two-month low; palm oil; nickel, which fell to a two-year low ($17,450 a metric ton); and zinc, which is at its lowest since December 2005 ($1,730 a ton); and soybeans, which fell 3.4 percent to $12.51 a bushel.

Commodity-tracking indexes show investors took out $680 million out of commodities last week, a record sixth week in a row.

"I'm not saying the long-term upward trend for commodities is going to come down," Mark Mobius, who oversees about $40 billion in emerging-market equities at Templeton Asset Management Ltd. in Singapore, said in an interview. "But you're going to see this overreaction, or the higher prices that we've seen recently that are beyond the trend, come back down again."

Platinum, Palladium Fall on Auto Demand Concerns

Platinum fell by almost 7 percent today, and palladium followed the same pattern, falling by 6 percent, as high fuel prices continue to hamper demand in the auto sector.

Spot platinum fell to $1,644.50/1,664.50 an ounce at 1507 GMT from $1,749.50/1,769.50. Spot palladium fell to $363.50/371.50 an ounce from $379.50/387.50 on Thursday. It dropped to a seven-month low during the day to $356.00.

"Everybody expects car demand to be very low and the higher oil price will dampen it further," said Commerzbank analyst Eugen Weinberg.

It didn't help to hear the news in the industry that all the major auto companies plunged in sales during July. Nissan (NSANY) was able to grow by 8.5 percent, but that was because the $10,000 incentive included to buy its Titan pickup truck.

Commodity Prices Continue to Rise and Break Records

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


Oil: $103.05 a barrel - All time high

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

Silver: $19.95 an ounce - 27-year high

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

Palladium: Reached a six-year high of $585.50

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


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

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