No other company received more global acclaim prior to its initial public offering (IPO) last month than Glencore International plc (London-GLEN). The massive multi-billion dollar commodity trading house earned a fortune for its partners over the last decade and beyond. In May, the company went partially public and its CEO made billions.
From its high this year the benchmark Reuters-CRB Index is down 9%. That’s the good news. The bad news is commodities are likely to suffer another hit this summer as the Fed exits QE II and global markets test longer term moving averages.
Oil, the single largest constituent in all commodity benchmarks, is losing support as the $90 level approaches for WTI crude. In “risk-off” sell-off, oil will head lower.
The next phase of the gold bull market will take prices to levels unfathomed by the bears as a full-fledged currency crisis rocks the financial system. This is already happening before our very eyes as the debt-infested West grapples with the debt super-cycle amid austerity in Europe and out of control spending in the United States.
From an all-time high of more than $50,000 per ton, nickel prices have crashed 57% since hitting a peak in 2007. Fears continue to grow that Chinese supply will hit the market this year as more mines boost production.
The base metals ranks as one of the worst performing commodity sectors in 2011 along with several soft agricultural commodities like cocoa and cotton. But nickel takes the booby-prize in the base metals arena sporting an 11.5% decline this year.
- Dugald Malcolm, Montreal, Canada
As the S&P 500 is poised to end its seventh consecutive week of losses, the question is begged as to whether or not we are in store for a full-fledged correction of the markets. A correction, of course, is defined as a drop in the market of between 10 to 20%. Currently, at an 8% decline, we are not far off.
Climate change is here and it’s bad news for consumers.
Increasingly, a barrage of weather phenomena has adversely impacted crop yields just about everywhere over the past four years. No region has been spared. Crop inventories are now at their lowest levels in years – especially corn and canola.
Corn is King these days but prices have been falling over the past two trading sessions as traders fear an end of the U.S. ethanol tax credit. The credit is worth about $6 billion dollars to the energy industry and the powerful ethanol lobby wants the credit extended.
Approximately 38% of America’s corn crop is diverted to ethanol production. Proponents of the renewable fuel claim it makes the country energy efficient while the opposition believes it steals potential food supply and drives corn prices higher. Both sides are right.
Investors who purchase distressed gold stocks at these bombed-out levels might earn big double or triple-digit gains over the next 12-18 months, according to the gold-to-XAU ratio below.
The performance differential between physical gold and the gold mining shares hasn’t been this out of whack since early 2009.
Investors venturing into foreign mining companies must be vigilant in mid-2011. Increasingly, more governments are proposing to get a slice of the mining pie as corporate profits boom.
As markets continue higher for things like copper, gold, nickel, lead, zinc and other metals, more countries are violating contractual agreements and rewriting terms for foreigner investors.
En Route to Montreal on Swiss
One of the biggest bull markets over the last few years lies in the price of salmon and tuna. It’s getting harder to find wild fish species as humans continue to overfish and drain the oceans for consumption purposes.
You’ll find a sushi shop on almost every block these days as consumers crave for a high protein, low fat alternative to red meat.
Blue fin tuna ranks as one of the most over-fished species. The Japanese consume more blue fin tuna than any other country.