Archive

Reuters blog archive

from Breakingviews:

Market adjustment is not over yet

Photo

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.

The fear begins in Ukraine. Russian stocks are down by 17 percent in the year to date as investors cast a get-me-out-of-here vote. In Asia, generally softer Chinese data is stirring fears of a slowdown. The latest tinkering with exchange rate policy, Saturday’s widening of its trading band, may take the yuan down further. That slide adds to the competitiveness worries in other emerging economies, as import demand in Europe remains weak.

The shift in sentiment on emerging economies has big implications. At first, EM fears pushed developed markets up. Now the damaging global impact of weaker EM growth is beginning to hit home. Last week’s developed market wobbles may be a harbinger of deeper falls.

from Counterparties:

MORNING BID – Losses continue, and other concerns

The ructions in China have had an interesting effect on commodities prices – good for gold, crappy for copper. And more developments in this area should be expected as the market deals with growing weakness and the threat of a deflating credit bubble coming from the massive lending to various sectors in the world's second-largest economy. Copper has been rather weak of late, but the broader CRB commodities index is actually much higher on the year. This is the biggest divergence since the eurozone debt crisis in 2011, points out Ashraf Laidi, the chief global strategist at City Index in London.

Again, the recent selling has had to do with the Chinese companies using the metal (and iron ore, too) as collateral for cheap dollar financing. So we've hit a weird storm here – weak yuan that makes those loans more expensive, and copper falling too, and again, that also messes with those loans. Put that together and you have a few markets moving in directions that are not beneficial to a major counterparty in several of them, for one, and resulting in the kind of activity that tends to turn into a vicious cycle.

from Expert Zone:

Is gold a good investment once again?

Photo

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The increase in gold prices in the last two months has rekindled interest in the yellow metal as a vehicle for investment. It was after the 2008 global financial crisis that gold became the most preferred asset, with prices doubling in four years.

Why was gold preferred? It was not so much as a hedge against inflation but as an insurance against uncertainty. When the economy is faltering and the future looks bleak, gold becomes a preferred asset.

from Global Markets Forum Dashboard:

Better year for commodities?

We quizzed Gavin Wendt, Founding Director & Senior Resource Analyst at MineLife, on the impact of Fed-taper on commodities, base metals, precious metals, nat-gas, Indonesia's ban on mineral exports and China.

Gavin is positive on soft commodities as hard commodities in the medium to longer-term. "The world's population is 7 billion and growing - and demand for energy, hard and soft commodities will only grow," he said.

from Global Markets Forum Dashboard:

Better year for commodities?

We quizzed Gavin Wendt, Founding Director & Senior Resource Analyst at MineLife, on the impact of Fed-taper on commodities, base metals, precious metals, nat-gas, Indonesia's ban on mineral exports and China.

Gavin is positive on soft commodities as hard commodities in the medium to longer-term. "The world's population is 7 billion and growing - and demand for energy, hard and soft commodities will only grow," he said.

from Global Markets Forum Dashboard:

Better year for commodities?

We quizzed Gavin Wendt, Founding Director & Senior Resource Analyst at MineLife, on the impact of Fed-taper on commodities, base metals, precious metals, nat-gas, Indonesia's ban on mineral exports and China.

Gavin is positive on soft commodities as hard commodities in the medium to longer-term. "The world's population is 7 billion and growing - and demand for energy, hard and soft commodities will only grow," he said.

from Global Markets Forum Dashboard:

Better year for commodities?

We quizzed Gavin Wendt, Founding Director & Senior Resource Analyst at MineLife, on the impact of Fed-taper on commodities, base metals, precious metals, nat-gas, Indonesia's ban on mineral exports and China.

Gavin is positive on soft commodities as hard commodities in the medium to longer-term. "The world's population is 7 billion and growing - and demand for energy, hard and soft commodities will only grow," he said.

from Global Markets Forum Dashboard:

Better year for commodities?

We quizzed Gavin Wendt, Founding Director & Senior Resource Analyst at MineLife, on the impact of Fed-taper on commodities, base metals, precious metals, nat-gas, Indonesia's ban on mineral exports and China.

Gavin is positive on soft commodities as hard commodities in the medium to longer-term. "The world's population is 7 billion and growing - and demand for energy, hard and soft commodities will only grow," he said.

from Felix Salmon:

10 Reasons Barry Ritholtz Is Wrong About Gold

Barry Ritholtz has been receiving a lot of praise for his 2,500-word Bloomberg listicle "10 Reasons the Gold Bugs Lost Their Shirts". Which is weird, because it's deeply flawed. Here, then, are the top ten places he goes wrong:

1. The title. Ritholtz frames his entire piece as a "post-mortem" examining a "debacle" which resulted in certain investors losing their shirts. But he never identifies a single such investor. The rest of the article is effectively moot if people haven't lost a lot of money on gold. And so it's telling that no sooner is the concept raised than it is dropped. Yes, the gold price has fallen from its highs. But without knowing where people bought, and whether they have sold, it's a case of overstretch to thereby deduce that many gold investors have lost most of their money, as Ritholtz's headline implies.

from Breakingviews:

Commodities set to distinguish themselves

Photo

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

Commodity prices look set to distinguish themselves in 2014. From gold to grain, raw materials will trade less in line not only with equities, but with each other – and are likely to fall, to boot. Thank a calm euro zone and the prospect of the U.S. Federal Reserve cutting back its bond purchases.

  •