Posts filed under “Commodities”

Commodity Bubble

Source:
Focus.com, The Commodity Concern

Category: Commodities, Digital Media, Economy

The IEA Does QE3?

Category: Commodities, Video

Look Out Below, Part II: Crude Oil!

Here is the other half of today’s Look Out Below – the US release of Crude from the Strategic Petroleum Reserve. The DoE announced a release of 30 million barrels of oil, ostensibly due to Libyan supply disruptions over the next 30 days. ~~~

Category: Commodities, Energy

Economic & Copper Advisory Services: Economic Report – June 2011

Economic & Copper Advisory Services: Economic Report – June 2011 By John Mauldin June 19, 2011 ~~~ This week’s Outside the Box is from one of the more interesting thinkers and observers of the markets I know, Simon Hunt. When we get together in London, conversations are lively, as we don’t always see eye to…Read More

Category: Commodities, Think Tank

Production Numbers All Argue for Investment in Precious Metals

As legendary investor Jeremy Grantham notes, copper production is falling:

http://static.businessinsider.com/image/4df61ad4ccd1d5c919090000-590/the-story-for-metals-by-the-way-is-the-same-as-for-oil-the-low-hanging-fruit-has-been-picked-despite-the-use-of-new-technologies-the-yield-per-ton-of-metal-ores-continues-to-drop-heres-the-yield-on-a-ton-of-copper-ore-for-example.jpg

As I’ve previously noted, gold production has also been falling:

Reuters India noted on March 29th:

China’s gold demand is expected to double over the next decade due to jewellery consumption and investment needs, the World Gold Council (WGC) said in its first report on the world’s fastest growing consumer of the metal.

***
If the central bank boosts gold holdings to 2.2 percent of forex reserves, a peak level seen in 2002, from the current 1.6 percent, China’s total incremental demand would rise by 400 tonnes at the current gold price, the WGC report said.

China’s share of global gold demand doubled from 5 percent in 2002 to 11 percent in 2009, and the council predicted that China’s domestic gold mines could be exhausted within six years.

“The Chinese gold industry is simply not responding fast enough to bring in new supply,” it said.

***

China is not the only country facing declining gold production.

The world’s biggest gold producer – Barrick – says that the relatively easy-to-reach gold supplies are gone, and so supplies are getting more and more expensive to locate and extract:

Aaron Regent, president of the Canadian gold giant [Barrick], said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

“There is a strong case to be made that we are already at ‘peak gold’,” he told The Daily Telegraph at the RBC’s annual gold conference in London.

“Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore,” he said.

Mining-Technology.com stated in March 2008:

Global gold production has been in steady decline since 2002. Production in 2007 was around 2,444t, down 1% on the previous year.

Analysts note that virtually all of the low-lying fruit has now been picked with respect to gold, meaning that companies will have to take on more challenging and more expensive projects to meet supply. The extent to which the current high price of gold can translate into profits remains to be seen…

According to Bhavesh Morar, national leader of the mining, energy and infrastructure group with Deloitte Australia, frenzied exploration activity over the last few years has seen virtually all of the easy harvest been picked with respect to gold…

The high price of gold is however encouraging more adventurous projects, be they more challenging financially, geologically, geopolitically or all three. New projects for gold and other resources are mushrooming throughout Africa, China, the Middle East and the former Soviet Union; all areas where sovereign risk is potentially very high.

Zeal Speculation and Investment wrote last July:

Miners have the same geological landscape to work with today as those miners thousands of years ago. The only difference is the low-hanging fruit has already been picked. Gold producers must now search for and mine their gold in locations that may not be very amenable to mining. Many of today’s gold mines are located in parts of the world that would not have even been considered in the past based on geography, geology, and/or geopolitics.

And these factors among many are attributable to an alarming trend we are seeing in global mined production volume. According to data provided by the US Geological Survey, global gold production is at a 12-year low. And provocatively this downward trend has accelerated during a period where the price of gold is skyrocketing.

You would think that with the price of gold rising at such a torrid pace gold miners would ramp up production in order to profit from this trend. But as you can see in this chart this has not been the case, at all. Not only has gold production not responded, but it has dropped at an unsightly pace that has sent shockwaves throughout the gold trade.

Read More

Category: Commodities, Think Tank

Ryan’s Notes Metal Conference

This morning, I will be giving a Macro overview to a group of metals and commodities investors at 10:00am at the annual Ryan’s Notes Conference at the NYAC in New York. If you are attending, please swing by to sat hello . . .

Category: Commodities

Hours of Labor Required to Buy One Unit of Gold or Oil

These three charts are pretty cool (courtesy of The Chart Store) — they show many hours you need to work in order to buy one unit of each of these — Oil, Gold and the4 CRB Commodities Index. This introduces another element to commodity pricing — relative wage gains. > click for larger charts

Category: Commodities, Gold & Precious Metals, Wages & Income

Lumber Prices: Leading Indicator for Private Nonfarm Payrolls?

In the chart below we take a look at the relationship between lumber prices and private nonfarm payrolls.   Clearly they tend to move together on a monthly basis.  One of the transmission mechanisms of monetary policy is the impact of interest rate changes on the  construction sector, which has historically been a leader of…Read More

Category: Commodities, Employment

Fun with Gold Bugs . . .

An old friend swung by the office today to chat. She is a rather well known in certain circles, a savvy investor who has done very well with miners and precious metals. We discuss the economy, inflation, markets, oil. Near the end of her visit, she proceeds to tell me that the paper money I…Read More

Category: Commodities, Currency, Gold & Precious Metals

Reuters/Jefferies CRB Index 1749-2011

I love this CRB chart via Jim Bianco of Bianco Research: >

Category: Commodities, Technical Analysis