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Commodities, General discussion of commodities
blacksheep
post Posted: Jan 18 2019, 11:26 AM
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China’s slowdown is miners' single biggest fear this year — report
extract
QUOTE
A worsening of the ongoing economic slowdown in China, consumer of about half the world’s commodities, is the single biggest challenge mining and metals companies face this year, a new survey of senior executives shows.

Beijing-related worries have already dragged industrial metals prices along and increased future demand concerns so far this year. This has led some to question whether the country’s government is doing what’s needed to stop the downward trend.

“This really is the big question for the current year, and the jury is still out,” BMO analyst Colin Hamilton said in a note earlier this month. “We anticipate the measures taken will start to yield results towards the end of the first quarter.”

Based on answers from 51 senior executives, lawyers White & Case say that trade tensions, which have ramped up due to US President Donald Trump’s aggressive trade policies with Beijing, are the second largest challenge for the mining industry in 2019, with 20% of the respondents indicating so.

Markets seem to have absorbed the impact of the current raft of trade barriers — US import duties on steel and aluminium, and defensive safeguards from the EU and elsewhere in the world — and there is cause for optimism. But White & Case’s survey results indicate that the main impact of trade tensions this year will be on speculative pressure on commodity prices, rather than any erosion of underlying demand for the hard commodities.

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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

Said 'Thanks' for this post: early birds  
 
blacksheep
post Posted: Jan 16 2019, 11:48 AM
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In Reply To: nipper's post @ Jan 15 2019, 10:46 AM

Predicting the rise/fall of commodities may be a "mugs game", but then so too is predicting the rise/fall of stocks/markets biggrin.gif but we still do it.

Perhaps Rick Mills dad's description below is apt? Anyway, here's Ricks view on commodities heading into 2019 - we won't know until 2020 if he got it right

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The markets are up and down like a bride's nightgown, as my dad used to say, bitcoin is in the toilet, and tech stocks, once as steady as the banks, are as unreliable as an old Apple computer. If you’re reluctant to dip your toe back into the stock market, you’re not alone.

‘The Hunt for Red October’ was a great movie but nobody thought ‘Red October’ would actually happen. In October it did. Anyone that was invested saw their equities turn as red as a Russian submarine commander. The S&P 500 churned. When the calendar mercifully turned to November, the benchmark US stock index had fallen 8.5%, the worst month since February 2009 and the ugliest October since the collapse of Lehman Brothers in 2008. The Dow and the Nasdaq were equally pummeled.

And then it kept going. December was the worst month since the Great Depression. The financial talking heads couldn’t decide what was going on. The trade war with China, speculation that the Federal Reserve would raise interest rates in December (it did) and slowing global growth, were all trotted out as culprits. Algorithmic trading and end-of-the-year tax selling also played a role, as did good old profit-taking by retail investors, who figured it was as good a time as any to exit a nine-year bull market

A recent post-mortem pointed the finger at retail bearish sentiment, the partial US government shutdown, and a weakening Chinese economy. Despite improvement so far in 2019, some equity strategists are tempering expectations, thinking that companies’ soon-to-be-reported fourth-quarter-earnings and 2019 outlooks will be anemic.

So where is a smart investor, cash account flush after having sold all their 2018 underperformers, to park their capital in 2019? In a word: commodities. Forget about trendy cryptocurrencies, blockchain and marijuana. We like investing in tangible things that create real jobs, real money and real wealth..


Commodities are the right story for 2019

QUOTE
Conclusion

After an ugly end to 2018, stock market investors are understandably cautious in where they go next. Despite a better start to the markets in 2019, there is still a lot of uncertainty. But investors can get behind a good narrative, and we believe the theme for 2019 is commodities

We have pinned our thesis on three key points: 1/ Commodities are cyclical, and the timing is right to get in now; 2/ The US dollar is falling, and will likely continue to fall or be range bound going forward. A resolution to the trade war between the US and China, and a looser monetary policy by the Federal Reserve (both of which are likely) would weigh on the dollar and be good for commodities; 3/ The need for infrastructure spending is not going to let up. Despite the Chinese economy weakening, Beijing will continue to demand iron ore and base metals for its Belt and Road Initiative and other ambitious megaprojects. India and other developing nations are also in the mix.

The electrification trend we outlined as key to our investment thesis calls for a slew of battery metals - lithium, graphite, nickel and cobalt - along with tonnes of rare earths and copper. And we haven’t forgotten about how we’re going to get all that extra energy needed to make the shift from fossil fuels to electric vehicles: nuclear energy. For this we need uranium.

Put it all together, and 2019 looks to be an excellent year for commodities.

Richard (Rick) Mills


http://aheadoftheherd.com/Newsletter/2019/...ry-for-2019.htm



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Jan 15 2019, 10:46 AM
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In Reply To: blacksheep's post @ Jan 15 2019, 10:06 AM

One way of thinking about commodities (being a mug's game, especially for late arrivals hoping to make a few $$s):
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In a famous 1980 wager, Julian Simon bet an author of The Population Bomb, Stanford University's Paul Ehrlich, that resources would actually become more plentiful, not less, as the population grew.

....[In a] paper published last month by the ...Cato Institute, Gale Pooley and Marian Tupy extend the results of the bet a quarter-century to the latest data available, while offering a more sophisticated tool for measuring what they call the Simon Abundance Index. In brief, they calculate the cost of commodities by how much time it takes a typical global worker to earn enough money to buy them. The index determines prosperity or shortage at ground level: in the lived experiences of actual human beings.

Measured by global average hourly income, the price of a representative basket of 50 key commodities – food, energy, minerals and so forth – fell by nearly two-thirds between when the bet was made and 2017. Measured by the time it takes to buy the basket, the earth's resources became 380 per cent more abundant as the human population grew by 69 per cent.

My gloomy human reflex almost had me write that resources grew more abundant "despite" the rise in population. In fact, resources grew "because" of the rise in population. We think we know the limits of our resources until human brains discover ways to burst those limits......
by David Von Drehle; The Washington Post

https://www.afr.com/news/economy/why-the-po...20190109-h19vcc



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Jan 15 2019, 10:06 AM
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Macquarie outlines the commodities most likely to slump or soar in the period ahead
DAVID SCUTT
JAN 14, 2019, 9:15 AM

Read more at https://www.businessinsider.com.au/macquari...ChP7yhezTQom.99



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Dec 12 2018, 07:32 PM
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Posts: 5,259
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Australia plans deal with U.S. on 'critical minerals', hopes to boost its exports
QUOTE
“This week I will sign a letter of intent with my counterpart ... on critical minerals,” resources minister Matt Canavan said at a mining industry event in Melbourne.

“(This) will mean Geoscience Australia and the United States Geological Survey (USGS) will work closely on exploration, extraction, processing and research and development,” he added, referring to the arms of the respective governments that handle minerals exploration.

Australia hopes to supply more minerals to the United States in the wake of the agreement, said Canavan. He expects to speak with U.S. Interior Secretary Ryan Zinke on Thursday.

“For 14 of those 35 critical minerals, we are in the top five (holders) of world reserves, so they are the ones we’d like to focus on,” he told press at the Melbourne Mining Club event.

That list of minerals includes lithium used in batteries, along with rare earths such as neodymium, used in industrial magnets, and gallium, used to make semiconductors. It also includes bauxite and alumina, which make aluminum.


https://www.reuters.com/article/us-australi...s-idUSKBN1OB0J7



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Dec 5 2018, 02:35 PM
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Interesting read - Ivan Glasenberg places a dirty $36B bet: Chris Bryant

QUOTE
With international delegates meeting in Poland this week to debate the unfolding planetary climate emergency, it’s tempting to view the market’s thumbs down on coal as ethical. Glencore talks a lot about the copper and cobalt it will supply for electric vehicles, but it’s made a huge bet on carbon. Some sustainability-minded investors won’t touch Glencore's shares for this reason, but that’s probably not why the coal business has been marked down. Rather, investors worry that high thermal coal prices aren’t sustainable. It’s possible they’re wrong about that. Glasenberg certainly thinks so.

Corporate boards and banks are increasingly unwilling to sanction or finance new coal mines, meaning there’s a dearth of new supply. That’s a huge advantage for miners that refuse to quit the coal game. In particular, Glencore profits from the premium that utilities pay for higher grade coals. With India and China constructing lots of new coal capacity, demand isn’t about to fall off a cliff either, whatever climate campaigners hope.

In the long run, high prices may end up dooming coal, as my colleague David Fickling has argued. But Glencore’s coal business should be a license to print money for several more years. If Glasenberg is right, his shareholders will be swimming in cash, even as our oceans creep higher.

http://www.mining.com/web/ivan-glasenberg-...t-chris-bryant/
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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 


blacksheep
post Posted: Nov 27 2018, 10:43 AM
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In Reply To: bg99's post @ Nov 27 2018, 06:52 AM

QUOTE
do the opposite then


Probably - or DYOR biggrin.gif Pretty much the same goes for all the other "expert" investing advice. Interesting to read what the "experts" say, but one has to keep in mind their "self interest" in why they say it.



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Nov 27 2018, 08:58 AM
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Posts: 5,133
Thanks: 1901


In Reply To: blacksheep's post @ Nov 26 2018, 09:01 PM

Sounds like 'pairs trading' (rather than predictions)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
bg99
post Posted: Nov 27 2018, 06:52 AM
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In Reply To: blacksheep's post @ Nov 26 2018, 09:01 PM

do the opposite then


Said 'Thanks' for this post: nipper  blacksheep  
 
blacksheep
post Posted: Nov 26 2018, 09:01 PM
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Goldman Predicts Commodities Will Soar in 2019

QUOTE
Here are some of Goldman’s top ideas for next year, as listed in the report:-

Oil: Goldman expects an OPEC supply cut and its announcement will lead to a recovery in prices. It advises going long on short-dated Brent.

Oil: There’ll be a return to backwardation. The bank recommends selling an $50 a barrel December 2019 WTI put option, which is currently worth $7.25 a barrel as of Friday
.
Gas: The recent rally in winter contracts, driven by a cold start to the winter, has dislocated the April 2019 natural gas contract, leaving it significantly backwardated versus October. The bank says this spread will continue to narrow.

Gold: The market has priced in 10 out of 12 of the Federal Reserve’s hikes that the bank expects, and the strong dollar trend is seen reversing. “If U.S. growth slows down next year, as expected, gold would benefit from higher demand for defensive assets,” Goldman said, adding that there may be additional support from central bank buying.

Agriculture: Go long Chicago soybeans, short on corn, bank says. “The upcoming G-20 talks in Argentina are likely to be as important to the near-term direction of U.S. grain prices as summer weather normally is,”

Goldman says. “Our view on the likely outcome of the meetings for the ongoing trade war (most likely a pause, but with some chance for normalization) is more optimistic than currently priced in by markets.”

https://www.bloomberg.com/news/articles/201...-oil-gold-climb



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
 


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