Several different takes on the market
October 5, 2006
Several different takes on the market this AM from articles around the financial
world. Speculation is beginning to increase that OPEC will announce a
cut soon, formally or informally. The real key is that OPEC producing
countries have been running at what is believed to be nearly 100% of their
production capacity. This can't continue. Without putting on my
geologist or engineering hat for too long...oil fields are fickle things. If
you push them too hard, too long, they'll exhaust their reserves much quicker
before they give you all the oil and gas that's in them.
Also, the GLD ETF is finally set to launch in Asia. This means more shares
will be bought in a new stock market that previously could not invest in the
ETF and therefore have to be backed by more gold reserves. This is a real
positive as the ETF moves into more stock markets who previously did not have
access to the ETF and a great way to take more and more bullion off of the
market, constricting supply.
On the SLV ETF front, Barclay's has filed with the SEC to have a new share
offering that would potentially remove nearly 150 million ounces of silver
from the market. Buying
up of the silver to back new SLV ETF shares hasn't happened yet, but this is
the first step towards making that happen. NYMEX silver inventories are
less than 150 million ounces. If Barclay's has any success in removing
even 50% of the inventories from supply, we could see a massive spike in silver
prices in the next few months.
Finally, Morgan Stanley's commodity analysts are saying, contrary to the
belief of their chief economist, the commodity bull is just taking a rest.
* * *
Gold Rises as Oil Gains on Speculation OPEC to Cut Output
By Julie Tay
Oct. 5 (Bloomberg) -- Gold snapped five days of declines in London as crude oil
rebounded from a seven-month low on speculation OPEC will trim production, stoking
concern inflation will accelerate as energy prices increase.
The metal, which is bought as a hedge against inflation, rose to a 26-year
high of $730.40 in New York in May as energy prices rose to records. Crude
oil gained today after the Financial Times reported that the Organization of
Petroleum Exporting Countries informally agreed to curb production by at least
1 million barrels a day.
"We're very dependent on what happens to the price of oil and that's not
just true for precious metals, but also for base metals," said Gerry Schubert,
a director of metals at Fortis Bank in London. "We expect prices to rise
above $580 today and we don't exclude prices rising above $600 next week."
* * *
Singapore's gold fund trading starts next week
Thu Oct 5, 2006 3:52 AM ET
SINGAPORE, Oct 5 (Reuters) - StreetTRACKS Gold Shares, the world's largest gold
exchange-traded fund, would be cross-listed in Singapore next week in a move
to capitalise on Asia's growing fondness for bullion.
It will be listed on Oct. 11 on the Singapore Exchange and would be Asia's first
gold-based ETF.
StreetTRACK is the World Gold Council's New York Stock Exchange-listed product,
with an average daily volume of around $400 million and assets in excess of
$7 billion.
"The target audience that we have in mind are retail investors,
institutional investors, not only in Singapore but regionally, as well as the
very strong and thriving private banking sector that exists in Singapore," said
Hon Cheung, managing director of State Street Global Advisors.
* * *
Commodity 'Supercycle' Not Over, Morgan Stanley Says
By Saijel Kishan
Oct. 5 (Bloomberg) -- The commodities "supercycle" isn't over and prices
may rise because of production shortages next year, said Morgan Stanley, the
world's biggest securities firm by market value.
Global supplies, which are three to five years behind demand, may test record
lows in 2007, the New York-based bank wrote in a report today. "The next leg
upward in the commodities cycle" will happen in the next 12 months, it said.
"The best-ever fundamentals for the sector remain fully in place," analysts
led by Wiktor Bielski said in the report. "We believe that we may not
yet have seen the highs for commodity prices and therefore the commodities
supercycle is just pausing for breath."
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