Commodity Trade Mantra

market insights

Why "Supply & Demand" Doesn't Work For Oil Prices

The costs of producing oil continue to rise, as a result of diminishing returns, so this fall in oil prices is clearly a problem. Low oil prices make future production unprofitable; it also leads to an increasing number of debt defaults. It is also inevitable that the price of oil must stop rising at some point because of the adverse impact on spendable income of consumers.

Can Investors Really Trust The New Gold Price Fixing?

The discontinuation of the previous gold price fixing doesn’t mean that price manipulation has ended. The modern procedure definitely represents progress though. Gold market manipulations are in any case mainly performed in the futures markets. They are merely more frequent and stronger during the fixings. Gold price manipulation continues.

Commodities Plunge To New 16 Year Low; Oil Slides On Venezuela Warning

The Bloomberg Commodity Index is set for its worst year since the financial crisis, plunging 23 percent. It’s not just the metals though: crude oil also started the session off on the wrong foot, following this weekend’s comments from Venezuela that oil prices may drop to as low as the mid-$20s a barrel unless OPEC takes action to stabilize the market.

Shanghai vs Comex: Opposite Moves In Silver Inventories

COMEX silver inventories peaked in the beginning of July at 184.5 million oz (Moz) and then continued to decline, reaching a low of 159.9 Moz presently. Shanghai Futures Exchange silver inventories bottomed on August 18th at 233 metric tons (mt), then continued to grow over the past three months to the present 528 mt.

Is a $13 or $15 Handle, The Next Level for Silver?

The fundamental price of gold is about $150 over the market price, in other words, at about a 12.2% discount. Silver is trading below its fundamental price also, but only at a 4.2% discount. If it were to go to its full fundamental value, and assuming that doesn’t change, it would be up near $15. If it follows gold, at a discount of 12.2%, silver prices would be down near $13.

Is This How the Next Global Financial Meltdown Will Unfold?

As emerging market currencies decline, income streams needed to service the dollar debt declines: as income & valuations fall, capital flees, pushing the relative value of the currency down even more, which further raises the risk premium which triggers even more capital flight. The sums in play are so staggering, even the Fed won’t be able to stop the financial meltdown.

Copper Prices Decline To Levels Below Cost of Production

There are various estimates for what the Marginal Cost of getting Copper out of the ground is before supply is taken offline completely. But it is reasonable to assume that Copper is currently being priced well below the long term Production Cost of Processing the Industrial Metal. The $2 Copper could well be setting up for an ample short covering rally before 2015 ends.

Gold Prices Nearing a Secular Support

The long term chart of gold shows that we are very close to secular support, which goes back several decades. Old resistance becomes support, so the 1980 and 2008 peaks will be acting a strong support. Moreover, support coincides with the psychological level of 1,000 USD. In sum, we believe the downside is limited. We have reached huge support areas in 3 leading assets.

Rate Hike Or No - The Fed Will Not Kill Gold

The Fed either raises rates by 25 basis points in December, or it doesn’t. Both scenarios are actually bullish for gold. Doing nothing is good for gold for obvious reasons. But if they actually do hike, the gold market has already discounted the rate increase, likely factoring in substantially more than 25 basis points.

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  • What is the Fair Value of Gold? Ounces Over Dollars, P2