Commodities News

Now that Gold has broken out to its all-time nominal high, we have a Showdown with Great Opportunities enabled by, but at the same time threatened by, Great Challenges. Consider: “On June 30, QE2 ended with a whimper. The Fed’s second round of “quantitative easing” involved $600 billion created with a computer keystroke for the purchase of long-term government bonds. But the government never actually got the money, which went straight into the reserve accounts of banks, where it still sits today. Worse, it went into the reserve accounts of FOREIGN banks, on which the Federal Reserve is now paying 0.25% interest. Before QE2 there was QE1, in which the Fed bought $1.25 trillion in mortgage-backed securities from the banks. This money too remains in bank reserve accounts collecting interest and dust. The Fed reports that the accumulated excess reserves of depository institutions now total nearly $1.6 trillion. Interestingly, $1.6 trillion is also the size of the federal deficit… If the intent of “quantitative...

Oil supply will be “critically tight” in 2012 and prices are likely to surpass their recent highs as spare production capacity and inventories are “effectively exhausted,” analysts at Goldman Sachs said in a research note Thursday. Goldman also reiterated a recommendation that its clients buy some forward oil contracts now, before prices move higher later. This advice underlines the influential bank’s skepticism at the ability of the Organization of Petroleum Exporting Countries to meet rising demand. It also sets it at odds with the view of other important players in the oil market, notably the International Energy Agency. Goldman said it expects the expanding global economy to drive oil-demand growth that outstrips production growth, meaning, “the oil market continues to draw on inventories and OPEC spare capacity in order to balance.” “It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices,” Goldman said. “We recommend opening a long position in the ICE Brent December...

August Crude has advanced nearly $7/barrel in just over the last week but the next hurdle will be the 40 day MA at $98. On a settlement above $98 we see little in the way of resistance until $102. The resiliency in the distillates should keep Crude moving higher in the short run…in my opinion. Natural gas closed lower by 3% today near its lowest level in one week. As long as $4.18 holds on a closing basis in August we still suggest bullish exposure. Our favored play with clients has been purchasing September call spreads anticipating a trade 6-8% higher than current levels. Today's lower close in stocks will be the first negative session in the last eight days as is looks like a 6% appreciation in one week the bulls need a rest. Aggressive traders can sell into this strength as we feel a trade back to 1275 is in the cards in the September contract. We started initiating this...

Horizonte Minerals (LON:HZM), the AIM and TSX quoted exploration and development company working in Brazil, has begun a 3,000m diamond drilling programme at its Falcao gold project in the southern part of the Carajas mining district in northern Brazil, in joint venture with industry giant AngloGold Ashanti (NYSE:AU). The news pushed the Horizonte share price up by 2.5% to 15.5p. Broker FinnCap said it expected the results of the drilling to be announced towards the end of Q3 and reiterated its valuation of 36 pence per share. Falcao lies over a structurally complex window on the eastern end of the Serra da Inaja Greenstone Belt. The initiation of the 3,000m drilling programme follows detailed soil sampling, geologic mapping and an aeromagnetic and radiometric survey conducted in October 2010, which confirmed a 300m to 600m wide zone at greater than 50ppb with isolated results as high as 13.5 grams per ton of gold. The current drilling programme has the objective of testing the...

Equities China’s surprise hike in reserve requirements sent China’s markets lower, as the Shanghai Composite fell .9% and the Hang Seng slid .7%. Korea’s Kospi gained .5%, and in Japan, the Nikkei edged up .3% as Honda Motor rallied 2% despite a weak profit forecast. European markets sank as the market focused on Greek’s debt troubles. The FTSE fell 1%, and the DAX dropped 1.3%, while the CAC40 tumbled 1.5% after Moody’s placed several leading French banks under review for a downgrade, due to their exposure to Greek debt. On the political front, Greece’s prime minister offered to resign to allow for the formation of a unity government. US market tumbled, as the debt concerns combined with weak economic data sent investors running. The Dow dropped 179 points to 11897, the Nasdaq fell 1.8%, and the S&P 500 lost 1.7%. The VIX rose to 21.7, the highest level since March, as the ‘market fear’ indicator jumped 16.8% S&P 500 is Approaching March Lows Pandora’s IPO...

Equities Strong industrial production data from China help lift Asian markets. The Nikkei gained 1.1% to 9548, the Kospi climbed 1.4% and the ASX 200 rose .5%. China’s Shanghai Composite rose 1.1%, but the Hang Seng closed down .1%. Inflation data from China showed inflation rose to 5.5% in April, the highest level in nearly 3 years. After the close, China’s central bank raised reserve requirements by .5% in an attempt to slow inflation and growth. European markets bounced, as the upbeat Chinese data reassured investors that the global economy’s recovery is on track. The DAX rose 1.7%, the CAC40 rose 1.5% and the FTSE rose .5%. In the US, the markets rallied, as the Dow rose 123 points to 12076 and the Nasdaq climbed 1.5%. Best Buy shares rose 4.6% after beating earnings estimates, and GT Solar surged 9.5% after raising its outlook. Nasdaq Jumps 1.5% as Equities Rally JC Penney named Ron Johnson, former head of Apple’s retail operations, as CEO.   The...