Commodity Trade Mantra

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Will Less Supply in the Very Near Future Mean Higher Oil Prices?

The strategy, promoted by Saudi Oil Minister was meant to keep oil prices low temporarily & starve many non-OPEC oil producers of profits & restore the cartel’s global market share. The primary target of the OPEC plan was oil production from shale in the United States, which relies on hydraulic fracturing that can’t make money unless oil sells for at least $60 per barrel.

A Stealth Bull Market in Gold and Silver Is Underway

Low prices for gold and silver have absolutely decimated the mining industry. Will Q4 produce more explosive demand figures for gold and silver bullion? It’s possible. In the meantime, bullion investors will be looking for evidence that the bull market on the physical side is stimulating a bull market in the spot prices set by highly leveraged futures exchanges.

A Key Indicator Low Oil Prices Are Lifting Demand

Strong shipping demand out of China suggests that currently-low global oil prices are lifting demand. With the pricing numbers in fact showing that Chinese oil users still need a lot of supply — so much so, they’re willing to pay top dollar to bring it in. Market sources are also saying strong buying interest for VLCCs is also coming from places like Japan.

After a Collapse in Commodity Prices, What Next?

It is true that commodity prices may remain under pressure for a long time to come. But for companies in the resources space from E&P firms to miners, commodity prices don’t matter – margins do. If costs of extraction come down and commodity prices do as well, a company can still earn a substantial profit.

Can The Fed Raise Interest Rates In An Election Year?

While many economic and market factors may influence when and how often the Fed hikes in the upcoming months, we do not expect the timing of US elections to play any meaningful role in the Fed’s policy deliberations. Expect the Fed to gradually tighten policy in a data dependent manner during 2016 — regardless of how the political winds may blow.

This Month Could Make Or Break The Oil Markets

October could be a crucial month for struggling drillers. With drillers undergoing credit redeterminations, October could see a wave of debt restructuring and cuts to credit lines, potentially forcing deeper cuts in the shale patch. More will be revealed about the trajectory of the U.S. shale industry – and by extension, the trajectory of oil prices – in the next few weeks.

A “Perfect Storm” Is Brewing in the Silver Market

By deciding not to raise rates, the Fed signalled that the U.S. economy still needs extremely cheap credit. Investors who bought silver likely took this as a sign that the U.S. economy isn’t healthy enough to stand on its own, without easy credit. Cheap credit makes it easier for businesses to grow, and that supports industrial demand for silver.

The Silver Market Disconnect Continues - Must See Silver Charts

The current surge of physical silver investment demand, whether it be from India (silver bar) or North American (Official coin), continues to put stress on the silver market. This stress is forcing a disconnect in normal supply-demand forces that will likely get worse if the world experiences more financial turmoil or stock market panics in the future.

India Issues Its First Sovereign Gold Coin… to Curb Gold Imports

It’s estimated that less than 10% of all Indian gold demand is in bars & coins. That might change this month as the India Government Mint will issue its first-ever sovereign gold coin, just in time for the fall festival season, which kicks off Nov 11. The gold coin will reportedly feature the Ashoka Chakra, the traditional 24-spoked symbol that appears on India’s national flag.

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