Archive | May, 2013

Natural gas drops as supplies rise in line with expectations

31 May

Natural gas prices dropped in U.S. trading on Thursday after official data revealed U.S. supplies grew in line with expectations.

In the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD4.021 per million British thermal units, down 3.91%.

The commodity hit a session low of USD4.013 and a high of USD4.184.

The U.S. Energy Information Administration said in its weekly report earlier that natural gas storage in the U.S. in the week ending May 24 rose by a healthy 88 billion cubic feet, broadly in line with market expectations.

Read more: Natural gas drops as supplies rise in line with expectations.

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India, China consumers expect gold price to rise: WGC

31 May

In May 2013, 45 per cent of Chinese and Indian consumers said that they had bought gold in the previous six months, the report said. The outlook for the remainder of 2013 is even more positive.

After a sharp fall in gold rate in April, consumers in India and China see an opportunity in the price moves, believing that over the next five years it will increase, World Gold Council (WGC) said here today.

“New WGC research shows that 82 per cent of Asians believe that the price of gold will increase, or will be stable in the next five years. Not surprisingly, demand has surged as consumers have seen an investment opportunity to buy significant amounts of gold,” WGC Chief Executive Officer Aram Shishmanian said in a report here.

In May 2013, 45 per cent of Chinese and Indian consumers said that they had bought gold in the previous six months, the report said. The outlook for the remainder of 2013 is even more positive.

“We anticipate record quarterly totals for the second quarter in India and China. Even if ETF outflows continue, it is quite likely that gold previously held in the ETFs will find its way to Asian consumers taking a long-term view on gold,” WGC said.

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What would move Gold, Silver today

30 May

Two key data releases are awaited for the day and yes, it is from US. Both releases—US GDP QoQ and initial jobless claims—are scheduled for around 07.00 PM IST.

The US GDP is forecast to have grown by 2.5% in the first quarter of this year (January-March). If the reading turns out to be a positive surprise i.e. to the upside, it would strengthen US Dollar and thereby weaken bullion prices.

The other data release scheduled for the evening for 7.00 PM IST is US Initial Jobless Claims. The data measures the number of people who have applied for unemployment insurance for the first time during the past week.

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If the data released exceeds the forecast of 3,40,000 in numbers, then it would give a fillip to dollar and weaken the precious metals gold and silver.

Besides, the data would also be tracked by US Federal Reserve’s FOMC (Federal Open Market Committee) as the debate on whether or not to continue with QE measures rages on.

The FOMC, responsible for initiating Quantitative Easing measures that involves bond-buying to the tune of $85 billion a month, has tethered the termination of the program to job market recovery and healthy inflation.

Both gold and silver have been plagued by correction and are entrapped in a stalemate condition ever since news arrived that George Soros has liquidated his holdings in SPDR Gold Trust, world’s biggest ETF of gold. While physical demand of gold has picked up recently, it has failed to buoy prices beyond a point.

“Physical buyers have helped to limit declines but they have also become more price-sensitive and tend to stay on the sidelines near $1,400,” said Yang Shandan, a senior trader at Cinda Futures Co., in China to Bloomberg.

Total holdings in ETPs have dipped to the lowest level since June 2011, shrinking by 5.4 percent this month, according to data compiled by Bloomberg.

Barclays notes:

“Market sentiment remains negative towards gold with non-commercial Comex gold positions at their lowest since December 2008 and ETP outflows showing little sign of slowing down. Net redemptions have hit 94 tons in May thus far (as of Saturday), and once again negative interest is skewed towards the US listed products, with GLD down 58 tons and at its lowest since February 2009.

On a regional basis, US listed products have suffered the largest outflows of 341 tons for the year to date, followed by UK primary listed products at 48 tons and the Swiss listed products at 47 tons. Metal held in trust across the 55 physically backed products we track are now at their lowest since July 2011 with year-to-date outflows of 443 tons, almost the equivalent of the net inflows over the past two years (476 tons).”

Gold on the Comex for delivery on August 13 was seen trading at $1,394.25/oz, a gain of $2.45 or 0.18% as of 10.39 AM IST. Silver on the Comex for delivery on July 13 was seen trading at $22.433/oz, a loss of $0.020 or 0.09%.

Commodity Sources

Silver prices today: Updates on Silver rates in India

29 May

Spot silver prices of 999 purity were trading weak in major metros of India. However, silver prices on MCX were trading slightly higher.

At 14:50 hrs MCX Silver July contract was trading at Rs 43352 up Rs 90, or 0.21 percent. The Silver rate touched an intraday high of Rs 43468 and an intraday low of Rs 43126. So far 12100 contracts have been traded. Silver prices have moved down Rs 21658, or 33.31 percent in the July series so far.

Mumbai

Spot silver 999 prices shed by Rs 145 at Rs 45000 per one kilogram.

Ahmedabad

Spot silver 999 prices fell by Rs 85 at Rs 43750 per one kilogram.

Chennai

Spot silver 999 prices advanced by Rs 200 at Rs 43900 per one kilogram.

Delhi

Spot silver 999 prices were down by Rs 60 at Rs 43940 per one kilogram.

Jaipur

Spot silver 999 prices slipped by Rs 100 at Rs 43800 per one kilogram.

 

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Trading tips for nickel, copper, crude & silver

28 May

Commodity-trading

Sumeet Bagadia of Destimoney Commodities recommends selling nickel. “Rise in prices till Rs 830 per kilogram in MCX should be used as selling opportunity with a stop loss to be placed at Rs 845 per kilogram on higher side for initial target of Rs 810 per kilogram and if prices are able to break and give close below Rs 810 per kilogram then further selloff can be seen till Rs 790 per kilogram in next two-three days,” Bagadia adds.

Priyank Upadhyay of SSJ Finance & Securities suggests buying silver around Rs 43,300 per kilogram with stop loss below Rs 42,700 per kilogram and target around Rs 44,000 per kilogram followed by Rs 44,500 per kilogram.

Hitesh Jain of IIFL advocates selling copper June contract around Rs 407.50 per kilogram with target of Rs 402 per kilogram and stop loss of Rs 411 per kilogram.

Sreekanth Jha of PJ Commodity Ventures advises selling crude at Rs 5,250 per barrel and look at covering at Rs 5,100 per barrel.

 

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MCX Silverm June contract trades lower

28 May

MCX Silverm prices have moved down Rs 22892, or 34.54 percent in the June series so far. At 11:04 hrs MCX Silverm June contract was trading at Rs 43393 down Rs 237, or 0.54 percent.

SILVERM prices on MCX slipped. At 11:04 hrs MCX SILVERM June contract was trading at Rs 43393 down Rs 237, or 0.54 percent. The SILVERM rate touched an intraday high of Rs 43585 and an intraday low of Rs 43300. So far 8148 contracts have been traded. SILVERM prices have moved down Rs 22892, or 34.54 percent in the June series so far.

MCX SILVERM August contract was trading at Rs 44035 down Rs 226, or 0.51 percent. The SILVERM rate touched an intraday high of Rs 44118 and an intraday low of Rs 43938. So far 368 contracts have been traded. SILVERM prices have moved down Rs 13127, or 22.96 percent in the August series so far.

 

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Moving out of the Dollar into Gold and Silver

27 May

Remember, only fifteen or so primary silver mines remain after decades of artificially low prices created by what, in effect, was a massive lobby to off load cheap silver into the market and the use of paper futures contracts that can be easily manipulated by money printers to maintain low commodity prices.

By Dr. Jeffrey Lewis
In terms of silver’s investment demand, the bullish metric at Sentimenttrader.com is currently at 39 percent. This is a low point that has not been seen since the mid-1990’s.

Furthermore, The Hulbert Gold Stock Newsletter Index or HGNSI recently fell to a new low of 43.8 percent, which is a record by a long shot. What that low reading indicates is that, of the stock newsletters that include coverage of mining stocks, 43.8 percent of them are now recommending short positions in gold stocks.

If these indicators are not yet signaling a bottom in precious metal prices, it really has to be close.

These lows are further exacerbated by undervalued market prices that are pushing suppliers of precious metals to sell their stocks below the current cost of production, there by resulting in further destruction of an already devastated mining sector.

Remember, only fifteen or so primary silver mines remain after decades of artificially low prices created by what, in effect, was a massive lobby to off load cheap silver into the market and the use of paper futures contracts that can be easily manipulated by money printers to maintain low commodity prices.

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The macro confidence picture

Confidence dipped considerably in the wake of the MF Global disaster, Peregrine Financial bankruptcy, and the LIBOR scandal. Confidence in the Obama administration is now also challenged by recent controversies, such as the IRS’s added tax scrutiny for conservative groups and the Justice Department obtaining several months of phone records for Associated Press journalists.

Failing institutional confidence often leads to political turmoil, which in turn can spark up the hyper inflationary tinder box. Exceptionally loose monetary policy is the set up for this scenario, but a political crisis will probably trigger the loss in confidence that will set inflation alight.

Despite a notable preference among the mainstream investing public for looking the other way, rather than facing such coming financial disasters head on, confidence in financial institutions is slowly being chipped away at by the inconvenient reality of what a fractional reserve banking really means for the security of one’s wealth.

This worrying backdrop is further exacerbated by the present state of currency warfare, as countries print money to debase their paper currencies, as well as by regular scandals and what appears to be a false equity rally based on little more than thin air.

Moving out of the Dollar into Gold and Silver

A trend has been established toward major countries like China off-loading huge dollar-denominated foreign exchange reserves. Few people know much about this because no official announcement has come out since 2009, although China has very likely accumulated a large quantity of gold.

Also,China has been a net importer of silver for a few years now, which was a major turn of events. It now seems safe to say that the BRICS are attempting to buy whatever hard assets they can with the substantial amount of intrinsically worthless U.S. Dollars they have accumulated without upsetting the commodities market and/or fomenting a political crisis. Nevertheless, recent tensions between Japan and China seem like a classic example of how this could be unavoidable.

Also, the united States have been, and will likely continue to be, very protective of their own industries. This coddling of U.S. businesses partly involves incubating and protecting them with tariffs, but this artificial life support is also being done to prevent the virtually inevitable flood of paper Dollars from returning home.

In other words, it would not be welcome for China to start purchasing large portions of major U.S. producers or even buying them outright. Of course, you can be quite sure that the Chinese are doing that just about everywhere else, including buying companies located in Australia, Africa, South America and the Middle East.

What’s fascinating about this process is that the Chinese have been setting up swap or currency trade agreements whenever they go shopping for assets among the places mentioned above. This seems like the real fly in the ointment, largely because it is the U.S. Dollar’s predominant and historical reserve currency status that provides the last remaining leg of support underpinning its value.

Mining production and supply factors

The great challenge facing miners involves verifying and proving enough ore through drilling that they are finally able to risk the construction, mining and stockpiling of overburden that is required before they finally turning the rocks they mined into tangible, real income and long lasting storable value.

Another persistent worry for miners operating in foreign jurisdictions, as many of them need to, is that their findings and operation may be nationalized once production starts in earnest. Also, if the foreign country fails to provide adequate police protection for safe operations, the end result may be nothing at all or just a big deficit where a profit was anticipated and money was spent.

Furthermore, inflation can be a two edged sword since mining and processing costs tend to go up faster than the end price of finished gold and silver does. Delivery delays for key construction and production supplies and equipment also start to arise when prices are moving sharply upward.

Most miners and investors would probably rather see a gradual long term price rise in the precious metals than all of these sudden up and down price swings, but those significant price swings have now become a fact of life in this business that miners simply have to deal with.

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