Where are commodities heading to?
any thoughts?
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From a technical stand point, Crude Oil has been in a consolidated pattern for a while now, so I think once Crude breaks 101.50 or 98.50 you're going to see a huge outbreak. In any event, I really have no clue what the fuck I'm talking about and I've never invested in commodities in my life. That's my disclaimer.
Higher on a weak dollar
Get that technical nonsense out of here.
What commodities are you taking about specifically. The market between pork bellies, OJ, gold and Crude Oil are all driven by different fundamental factors that are specific to each market.
Revolution, do you have any good blogs/articles/books to recommend on commodities in general?
All I know is energy
I meant gold and crude oil, basically.
I follow gold daily, and I'm bullish on it. Gold has had a remarkable run over the past few years but the rally is just getting started. Gold is going to continue to gain as the western world prints more and more money to paper over their problems. The Fed is keeping rates at 0% until the end of times and expect additional easing and inflation. The Fed wants inflation badly and they are going to do everything in their power to get it, I expect it to be about 3-5%, with the real number much higher. Everyone is trying to devalue their currencies against each other, which is not always easy, but they can all devalue against gold. Gold isn't becoming more valuable, it just takes more dollars to buy it.
Who know what happens in the short term, but I expect gold to trade above $2,000 in 2012 and will eventually move to about $6,000-$9,000 by 2015.
Many people don't understand gold, and it's reserve currency status, so expect to get a lot of mixed messages. And also, stay away from GLD, all paper ETFs will collapse when the time comes.
theyll move inversely seen as most commodities are being driven by the risk on risk off narrative; i.e/ major funds reallocating their weights in risky assets (commodites, equities) vs safe assets (bunds, t bills, precious metals).
So yeah, you need to specify
Personally, I see commodities (except for precious metals) edging up further another week as market digests new positive Chinese PMI, and then receding all through feb as people take in profits from the January rally; which i think was kind of unwarranted on a fundamental level and based on low volumes (chinese new years).
Like others said though, fundamentals vary per commodity class ....
theyll move inversely seen as most commodities are being driven by the risk on risk off narrative; i.e/ major funds reallocating their weights in risky assets (commodites, equities) vs safe assets (bunds, t bills, precious metals).
So yeah, you need to specify
Personally, I see commodities (except for precious metals) edging up further another week as market digests new positive Chinese PMI, and then receding all through feb as people take in profits from the January rally; which i think was kind of unwarranted on a fundamental level and based on low volumes (chinese new years).
Like others said though, fundamentals vary per commodity class ....
OIl/Energy
http://fuelfix.com
Scroll to the bottom left and you will find every trade journal/website on the industry
JeffSkilling why do you think the Fed wants inflation? If your answer is to inflate the debt away, that's inaccurate. Our debt is a result of profligate spending on Medicare, Medicaid, and Social Security, much of which is indexed for inflation.
If there is one thing the Fed does well it's inflating away the value of the dollar. There are several reasons why the Fed wants inflation, but yes, the most important one is the debt. There is no viable combination of growth and taxes that will come even close to paying down the $16 Trillion we owe (Plus the roughly $80 Trillion in unfunded liabilities) but crushing the dollar is a good place to start. Also, think of GDP=C+I+G+NX. First 3 are nonexistent, gota boost NX somehow, might as well kill the dollar.
Once we get these LNG terminals approved and built for liquification and exportation then we will be able to increase our net exports, and the sky is the limit on that. Japan and Europe are still paying $16-20 per Mmbtu of NG, while over here its 2.60-70 and only going lower. As the price of oil continues to increase, which these international NG prices are linked to, we stand to make tons of money as well as protect our national energy security and increase net exports
Also, its only a matter of time before the Keystone XL pipeline gets approved and we increase the amount of Oil coming from Canada, which Athabasca Oil Sands proven reserves represents TWICE as much proven reserves than what we currently have IN THE WORLD.
What happens when export terminals are built, the Keystone XL is approved, announced ethylene cracker capacity comes online, public buses move to nat gas, etc. Syngas projects were announced in the 80's and all scrapped when crude prices plummeted. Not quite analogous, but things don't always work out when everyone is betting they will.
Short brent/WTI spread
A little late on this trade. Should of put this one on before the Seaway sale by Conoco. The spread is here to stay, Brent is the international benchmark crude and will thus be bid up along with fundamentals and fear
Seaway did open up Cushing to maritime markets, but that shit is operating at capacity, there is still quite a glut in OK that could be reduced by further pipeline capacity...
Further, supply side volatilty affects brent far more than WTO in terms of geographical proximity to the Mid East/Nigeria, not too mention long only commodity indexes cotniuuing to icnrease their weighting away from wti and towards brent
Also, I don't see tanker rates going up any time soon (which are a big component of the theoretical minimum for the wti/brent spread)
delete
From a metals perspective: down on a tightening of chinese credit mkt / govt removing implicit support of financial & industrial sector (see Shanghai Chaori Solar default). Nickel might avoid this because of Indonesia ore export ban. Aluminium might grade sideways, because it is so close to marginal cost of production for many smelters.
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