| Market Nuggets: Harbor Intelligence Foresees Tight Aluminum Market In 2011-2013 | |
| (Kitco News) -- Harbor Intelligence says it anticipates a tighter aluminum market in 2011-2013 than many expect. "Our analysis indicates prices heading toward $2,650 (per metric ton) before February ends and as high as $3,000 per (metric ton) within the next 18 months," says a Thursday research report from Harbor. Analysts say aluminum demand is accelerating in every region of the world. Meanwhile, there is tightness in the scrap market. Also, primary output is suffering from frequent disruptions, structural changes in China that will imply a "gradual but increasing net importer position." Western World producers are also canceling or postponing expansion projects, unwilling to bring back idled capacity. "Our data robustly indicates the market is tighter than what some market participants are willing to acknowledge and that we will probably experience in 2011-2013 surprising tightness," said Harbor.
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| Market Nuggets: SEB: QE2, European Debt Issues Supportive For Gold | |
| SEB Commodity Research anticipates more investment demand for gold after the FOMC announced a second round of quantitative easing (QE2) Wednesday. "After the QE2 announcement, the field is open for further dollar weakness and higher gold prices as printing presses warm up. The next big issue for the dollar and in the gold market is the G20 meeting and what direction the devaluation war will take from that point," SEB says. "If negotiations fail, we can expect further loss of confidence in paper money and additional demand for gold." Meanwhile, there is a worrying development in the European debt crisis, as borrowing costs for nations such as Greece, Ireland and Portugal have risen over the last week and Germany suggested a permanent debt crisis mechanism, SEB says. "The fact that both Europe and the U.S. appear to make emergency measures permanent (QE2 and the permanent debt crisis mechanism) and thereby push problems into the future strengthens our bullish strategic view on the gold market, both from an uncertainty and inflation perspective," SEB says. "Indications of strengthening long term Chinese demand also add to the bullish picture."
4 November 2010, 10:51 a.m. The gold/silver ratio fell from around 67 in mid-August to 55 at the end of October, meaning silver was outperforming. However, there is potential for this to reverse should risk appetite abate, says BNP Paribas. BNP says the ratio tends to rise in times of higher aversion to risk, given gold's role as a safe haven, and the ratio declines when risk appetite resumes. The bank cites two key gauges of risk appetite – the widely followed VIX Index, a measure of implied volatility on options of the S&P 500 index, and the U.S. dollar/Australian dollar exchange rate. When both fall, suggesting higher risk appetite, the gold/silver ratio tends to decrease as well. The VIX fell from around 40 to near 20 over the summer. And with a lag, the gold/silver ratio fell, BNP says. However, euro-zone credit spreads between core and periphery countries are widening again and could ultimately lead to a reversal in risk appetite. "While there may be some upside to the silver price post the Fed's announcement, we would like to draw attention to the risks associated with a reversal in risk appetite," BNP concludes. "Past experience suggests that silver prices can correct strongly, realized volatility can surge significantly as a result and the gold/silver ratio would start rising again, notably given gold's safe-haven properties."
4 November 2010, 9:58 a.m. Comex silver prices have hit a fresh 30-year high as precious metals all soar amid U.S. dollar weakness. At 9:36 a.m. EDT (1336 GMT), Comex December silver was up $1.074 to $25.51 an ounce and peaked at $25.635. "It almost seems like silver is starting to lead the way now. For a long time, gold was stealing the spotlight. But we're looking for silver to steal some of the stage now," says Craig Ross, vice president with ApexFutures.com. For some time, there was market talk about how silver was lagging and was the better bargain, he says. "That talk is coming to fruition with action, and people are starting to buy silver," Ross says. December gold was up $40.70 to $1,378.30.
4 November 2010, 8:56 a.m. (Kitco News) -- Platinum and palladium rose with gold and a number of other commodities overnight in the wake of a Wednesday Federal Reserve's announcement on quantitative easing that initially prompted wide gyrations in markets but ultimately pressured the dollar and lifted metals, says one trader. However, there are other factors supporting platinum group metals as well. This includes rising light-vehicle sales in the U.S., which last month exceeded an annual rate of 12 million for the first time since August 2009, the trader says. Also, labor-related supply issues remain a concern in South Africa, as 21,000 members of the National Union of Mineworkers plan to strike one day this week to protest the death of a miner on Monday and call attention to safety issues. As of 8:40 a.m. EDT (1240 GMT), January platinum soared $49.40 to $1,746.60 an ounce on the New York Mercantile Exchange, while December palladium jumped $29.30 to $672.
4 November 2010, 8:40 a.m. After extreme market volatility following an FOMC statement Wednesday, "sensibility" has returned and markets are beginning to understand that the Federal Reserve will do what it can to deal a "death blow" to deflation and that inflation is the better choice, says newsletter writer Dennis Gartman. Some longs were forced out of positions in base and precious metals as the markets fell sharply at times, he says in his daily The Gartman Letter. "With the 'decks' having been cleared of late longs, the path is more evidently upward than it was..." Gartman says. 4 November 2010, 8:26 a.m. -- Gold, copper and oil have benefited from the movement in the currency market since the Federal Reserve announced its $600 billion quantitative easing program late Wednesday, says Janet Mirasola, managing director for metals at R.J. O'Brien & Associates. "The dollar remains weak against a basket of currencies, which in turn is helping to support robust commodity prices as the Shiny One tracks back over $1,350 (per ounce), the Red One climbs towards $8,500 (per metric ton) and the Black One finds new friends over $85 (per barrel)," she says. "After the long wait for the FOMC results, markets now need time to digest and analyze the outcome as it affects individual asset classes. To run everything in one knee-jerk direction may not be the smartest move and investors should look to decide which assets are more deserving of the boost in confidence than others ." Of Kitco News | |
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