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from Breakingviews:

Gold’s geopolitical ledge won’t hold up

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The Ukrainian crisis and Middle Eastern conflict have provided a respite for the price of gold. After going over a cliff and dropping from heights of $1,700 an ounce during 2013, it has found a ledge at around $1,300. The ledge is eroding.

The 25 percent plunge was precipitated by investors fleeing exchange-traded funds. In 2013 they sold 880 tonnes of gold, equivalent to about one-third of the annual demand for use in jewellery. Holders of gold bars and coins dismissed the ETF crowd as lemmings without conviction, but the true believers themselves now look less confident. Their second-quarter purchases of 275 tonnes were 56 percent below the level of a year earlier. Total investment demand in the year to June was 893 tonnes - the least since 2007.

The reality is the ETF lemmings were prescient. The outlook for gold remains bad. Its appeal is hurt by a rising dollar, the imminent end to Federal Reserve money-printing and the eventual approach of higher U.S. interest rates. More investors are likely to leap.

from Breakingviews:

BHP spin-off won’t appeal to commodity players

By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

BHP Billiton plans to spin off unwanted parts of its business into a new company. Aluminium and nickel, whose prices are rising, are among assets which will be parked in the yet-to-be-named organisation. A potentially more focused and nimble mining company might sound like an ideal vehicle for investors who want to follow a rising market. Not so fast.

from Breakingviews:

Triple financial mystery remains unsolved

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The world of finance is ensnared in a triple mystery: falling bond yields, falling inflation and rising debt. The ignorance is dangerous.

from Breakingviews:

China’s vanishing metals corrode confidence

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Faith in metal-backed lending in China is corroding – and so is confidence in the country’s giant credit system. Authorities and banks including Standard Chartered and CITIC are investigating whether traders at Qingdao port used the same lot of copper and aluminium to back multiple loans. Vanishing collateral isn’t a new problem, but could prove to be China’s weakest link.

from Breakingviews:

Review: China gives Africa handy investment lesson

By Stephanie Rogan

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

In the last decade nearly a million Chinese citizens have taken up residence in Africa. In his vivid new book, “China’s Second Continent,” Howard French tells stories of these migrants and the Africans whose lives they affect. The book weaves anecdotes and interviews with historical and geopolitical background to tell a larger tale of the PRC’s economic engagement in the continent. The result is an unflattering portrait of China’s involvement.

from MacroScope:

El Niño may not give Brazil much to worry about on food prices

File photo of loaded soybean truck for BRAZIL SOY.

Now that Brazilian food prices are finally settling down, it looks like El Niño will strike back in a couple of months to throw the world's weather into disarray.

Bad news for Brazil's Finance Minister, Guido Mantega?

Not necessarily.

It could just as easily be a blessing, economists say. The changes in climate patterns caused by warmer Pacific waters could actually be a boon for Brazilian soy and corn producers while not necessarily disrupting other crops.

from Breakingviews:

Blythe Masters could chair Glencore

By Christopher Hughes
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Blythe Masters’ exit from JPMorgan with the sale of its physical commodities business could solve Glencore’s longstanding search for a chairman. The brains behind the credit default swap has the expertise to join the trading house’s board, whose all-male roll makes it an anachronism in the FTSE-100. But there is one big obstacle to her leading this or any board – she has never run a company before.

from Breakingviews:

Noble China joint venture still faces market test

By Una Galani

The author is a Breakingviews columnist. The opinions expressed are her own.

Noble Group’s joint venture with China still faces a test from market forces. The Singapore trader is selling 51 percent of its agricultural business to a consortium led by state-backed COFCO for around $1.5 billion. China’s desire to control its food supply should guarantee volumes for the joint venture. But it’s less clear that will translate into healthy margins.

The precise size of the COFCO’s investment depends on how the unit, which processes everything from grains to coffee, performs over the next nine months. The final price will be equivalent of 1.15 times its book value in 2014. The headline price implies a valuation of $2.94 billion for the business, which accounted for 16 percent of Noble’s revenue last year.

from Breakingviews:

JPMorgan commodities sale shows trading’s opacity

By Kevin Allison and Antony Currie

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

JPMorgan’s $3.5 billion sale of its physical commodities business is a perfect example of just how opaque trading is. The bank is selling what is probably a low-return business with regulatory headaches to Mercuria, a privately held firm that does not have to make its financials public. The dearth of details does make it hard to judge, but applying some statistics from both the industry and some rivals suggests Mercuria may be paying top whack.

from Breakingviews:

Market adjustment is not over yet

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The golden fear gauge is rising. Gold is up to a six-month high of $1,383 an ounce. A more serious equity and commodity meltdown threatens as markets grow more uneasy about Ukraine, China, emerging economies and global growth. Gold may go a bit higher still - but its rally too may soon prove vulnerable.

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