Commodities

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Chart of the Day: Roll over CRB

Today’s chart will be very simple and illustrates what is happening on risk markets around the world. Its an index I’ve followed previously, the CRB Index – which measures a basket of 19 commodities, split amongst the energy, base metals, agricultural etc. And what is the chart saying? Rollover and stay down. The QE effect

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The commodities crash

No doubt you will have noted the collapse in commodity prices that accelerated on Friday night, even as equity markets remained flat. Just in case you are unaware, here are a couple of quick charts. First the CRB: And its more volatile cousin, the CCI: The crash is across the commodity spectrum but is especially

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Red gold rush

So, BHP has announced a profit of epic proportions. The Age sets the scene nicely: BHP Billiton has vaulted into the ranks of the world’s top 10 earning companies – and sparked fresh debate over how much tax Australia should collect from its booming mining sector – after the resources giant posted a staggering $A22.46

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RBA Commodities Index

Sorry we missed this one on Friday. RBA reports commodities are still heading for the moon Preliminary estimates for June indicate that the index rose by 1.3 per cent (on a monthly average basis) in SDR terms, after rising by 3.7 per cent in May (revised). The largest contributors to the rise in June were

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Charting Commodities

On news of the 4.6 percent decline in crude oil yesterday, in response to the International Energy Agency’s announcing a release of supplies from strategic reserves, and after my look at gold yesterday (which also fell last night) I thought I’d have a closer look at where we stand with commodities. First, the two major

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ABARE bets on US stimulus

The ABARE quarterly update of commodity prices for the year ahead is out today. First, the key macroeconomic assumptions:   God knows, it’s no easy job putting that lot together but let’s unpack a couple of assumptions. US growth projected at 2.9%, hmmm…well, maybe. The first quarter of this year was 1.8% and the economy

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The commodity bubble

In its recent Bulletin, the RBA has a new piece of research that questions the role of financialisation in commodity prices. The research has some spectacular charts and ultimately concludes that new financial instruments “short-run price dynamics for some commodities, the level and volatility of commodity prices appear to be primarily determined by fundamental factors.”

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Can the oil stabiliser work?

So, last night oil got thumped, down 2%. Given the fall, and the prospect for further weakness, I thought it might be useful to ask, where oil might head to and what the implications are for this price trajectory. The stakes could not be higher. There’s an opinion at large that the current slowdown in

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China’s great iron ore pile

I won’t lie, the iron ore price has been making a goose of me for almost two years. At various points my forecast for big falls has almost been right but in total I have been clearly wrong. My prediction has been frustrated by tear away fixed asset investment in China, new market dynamics and

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Commodities hit new record

Missed this one yesterday. From the RBA’s Index of Commodity Prices: Preliminary estimates for May indicate that the index rose by 2.3 per cent (on a monthly average basis) in SDR terms, after rising by 7.3 per cent in April (revised). The largest contributors to the rise in May were increases in the estimated export prices of

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Correlated risk is off

Stock markets around the world are either in full flight correction (Australia) beginning, or wobbling along. Yesterday we had the Asian stock markets, with the ASX200 down 1.88%, Japan (Nikkei 225) down 1.52%, Hong Kong (Hang Seng) over 2.11% and Singapore 1.83%. This action was continued through to Europe, with the German DAX down 2%,

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The silver highway to regulatory risk

Silver is not probably one of the metals you watch. While we hear about the price of gold all the time Silver is in many ways the poor cousin. But if there was ever going to be a useable metallic standard it would probably be silver rather than gold. This fact has been picked up

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Commodity boom gets bigger

The RBA has released its monthly commodity index and its up substantially again. Even with the dollar, there is another 3.8 rise for April. Preliminary estimates for April indicate that the index rose by 7.6 per cent (on a monthly average basis) in SDR terms, after rising by 0.8 per cent in March (revised). The

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Silver’s Unrelenting March Higher

Another great guest post from The Bullion Baron. The current Silver rally is exhilarating. Even as I write this the chart I’ve used below is basically out of date with Silver having soared higher to almost US$42 during Asian trade today, only around $8 below it’s all time nominal high of $50 set in January

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The mad, bad commodity rally

There’s something wrong with this rally. To be honest, beyond some vague notion of Japanese reconstruction demand, I can’t find any real cause for it. With China clearly not done with tightening, QE2 about to cease, the ECB hiking rates, global growth past its prime and oil punching through $1.10 on Gaddafi’s scorched earth policy,

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Boom and bust is back

With Brent and WTI crude both surging to post-GFC highs Friday, I’m beginning to suspect that the world has entered a new era of oil price and growth volatility that spells the end of the Great Moderation. Why so? Supply and demand are the key to all things economic.  Previously at this site, the Unconventional

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Rio has a whinge

Some days rent-seeking is a challenging business. Take Tom Albanese, CEO of Rio Tinto, who today held forth on the evils of government intervention in mining. According to Reuters: Besides, technical constraints, we are also seeing human constraints. We are seeing a combination of resource nationalism in some cases,” he said, citing “difficult governance” in

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Gotti is wrong on oil

But should be congratulated for staking out a position, a rare event in today’s world of commentary flip flopping. As Deus Forex Machina likes to say, disagreement makes a market so let’s rip in. Gotti asks: Why should oil prices rise in response to the latest turn of events in Libya? We are already seeing

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House prices, gold, and long-term investing

One thing I’ve always believed about investing (as opposed to speculating) is that it’s important to step back and take a look at the long-term picture. In the shorter term, markets are subject to periodic “manias, panics and crashes”, as Charles Kindleberger put it in his classic study of financial crises. But in the long-term,

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Gold, Silver and Oil Ratio

As part of my “Crashlist” I regularly follow the spot price (in USD) for gold, silver and oil as they are the three benchmarks that measure the strength of the global economy, the value of the US dollar and the speculative excess inherent in modern global markets. Bullion Baron has some great insight into these

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ABARE’s endless growth

Clearly ABARE does not heed RBA maverick, Warwick McKibbin. In its latest report , the national commodity tracker offers forecasts for the next four years of Australian commodity exports: Uninterrupted growth. And if we look at the economic assumptions underpinning this bonanza, we find a nice illustration of just how seamless it will be: The

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The end of cheap oil?

The oil price may be about to soar, at the very least the events in the Middle East will have some effect. A Macquarie Equities report notes that worries about oil and gas transition through Egypt has turned into more concrete disruptions of supplies from Libya, which exports one third of the world’s spare capacity. The period of low oil

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Super cycle or bust

BHP has reported its much anticipated mega profit, showing just how much better it is to be leveraged into the developing world than the developed world. The market predictably sold off on the news. As for what happens next, most brokers are bullish: Deutsche Bank, Goldman Sachs, Merrill Lynch, UBS and Royal Bank of Scotland all had buys. Morgan

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MRRT WTF

From today’s AFR: The Gillard government’s revised mining tax will collect $60 billion less over 10 years that the resrouce super profits tax, raising questions about whether it can fund higher superannuation tax concessions and infrastructure spending. New figures released under the freedom of information (FOI) laws reveal that the mineral resource rent tax will

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Kloppers, Marius Kloppers…

As this blogger keeps saying, not all markets are created equal. In strategic commodity markets, where governments are big players, the dynamics are not as simple as the balance of supply and demand determining equilibrium. In strategic commodities, when prices go up, demand does not fall. Rather, it increases as governments panic about security of