Commodities
High Oil Prices: Worries Escalate Over $200 Oil and $6 Gas
Could new sanctions against Iran spark a crisis that drives oil prices to $200 a barrel?
The leaders of the Group of Eight (G8) economies certainly hope not.
Even still, they recently unveiled plans to tap into global emergency strategic oil reserves — just in case.
Citing their "grave concern" over Iran's nuclear program and the "likelihood of further disruptions in oil sales" G8 leaders put the International Energy Agency (IEA) on standby to tap the reserves at a moment's notice.
"Looking ahead we…stand ready to call upon the IEA to take appropriate action to ensure that the market is fully and timely supplied," said the statement summing up their meeting last weekend.
But the G8 may just be trying to calm the markets before the storm. History shows that tapping into the reserves won't do much to prevent higher prices.
And there's no reason to believe this time will be any different.
Gold Prices and the "Grexit" Effect
Lately gold prices have been affected by a strengthening dollar resulting from troubles overseas.
On Tuesday, Greek Prime Minister Lucas Papademos told Dow Jones Newswires that considerations were being made for a potential exit by Greece from the euro. He also warned that such an exit would be "catastrophic" for the country and that fallout across the entire Eurozone would be severe.
Concerns over what will happen to Greece and the Eurozone if Greece leaves have caused the euro to drop to $1.255, its lowest level against the dollar since July 2010.
These issues have led to a rising dollar as investors continue to move out of gold and into the dollar.
"Not surprisingly, Greece is the biggest single factor behind the move [out of gold and into dollars]," said Money Morning Chief Investment Strategist Keith Fitz-Gerald on May 11. "Traders are concerned that the nation will summarily go its own way, shatter the EU's bailout and potentially sink the euro itself."
Constant worries loom of a "Grexit" as European leaders met in an informal summit in Brussels today (Wednesday) to talk about the debt crisis and how best to spur growth in the struggling Eurozone.
The meeting comes a day after the Organization for Economic Cooperation and Development (OECD) issued a warning that the 17 countries that use the euro risk falling into a "severe recession."
"The crisis in the Eurozone remains the single biggest downside risk facing the global outlook," said Pier Carlo Padoan, chief economist for the OECD.
So just how low can gold prices go?
Gold Prices to Break $2,000: Here's How You Can Profit
Gold prices are still far from last year's record $1,920.30 an ounce.
Given the economic volatility in 2011, last year was a banner year for gold prices. Fears of global market turmoil helped push the yellow metal to record highs.
While the long-term bullish outlook for gold remains, short-term pressures have halted its steady climb.
"Gold has found more support recently, but it doesn't have all of the catalysts in place to be driven substantially higher yet," Suki Cooper, an analyst at Barclays Capital, told Reuters.
Here's why this dip isn't the start of a bearish gold year. Instead, it's a chance to stock up before gold prices head to $2,000 an ounce. (Want to know the best way to profit from soaring gold prices this year? Take a look at our latest special report today. It shows you how to get daily market information and specific recommendations in gold… silver… penny stocks… Asia… and biotech, to name just a few. Find the report right here.)
The Fed, India, and Gold Prices
For the next three months, the U.S. Federal Reserve is focused on a stabilizing U.S. economy and low inflation. In fact, the Fed's most recent forecast cooled talk of more monetary stimulus (or "quantitative easing").
The Fed expects U.S. economic growth to progress at a steady pace throughout the quarter. With moderate expansion rather than rapid growth or deflation, there's no need to curb borrowing, and Federal Reserve Chairman Ben Bernanke plans to keep interest rates near zero.
This bodes well for the U.S. dollar, and what's good for the dollar is often bad for gold prices.
It's no secret that a weakened dollar sends investors running to the real value of hard commodities. A stronger dollar does the inverse: It causes the big investors to be less cautious with regard to investments in liquid capital, creating a dip in gold prices.
Lagging Indian imports have also contributed to lower gold prices at the beginning of this quarter…
Natural Gas Industry: How Legal Troubles Could Derail this Company's Export Plans
Over the last month, we've spent a great deal of time discussing the potential for Cheniere Energy (AMEX: LNG) to export liquefied natural gas out of the Sabine Pass in 2014.
The Sabine Pass isn't the only terminal being eyed for natural gas exports. Applications for seven other exporting facilities throughout the U.S. are pending with the Federal Energy Regulatory Commission (FERC).
That includes Virginia-based Dominion Resources (NYSE: D), which wants to export more than one billion cubic feet of natural gas per day through its Cove Point terminal in Maryland.
Just this morning, The Washington Post highlighted the potential of Dominion Resources' Cove Point facility.
"Just off Cove Point on Maryland's Western Shore sits an array of empty docks. Built to accommodate massive tankers bearing natural gas from abroad, the facility saw only five ships pass through in 2011, reports Dominion Resources, the owner. None have come this year. American firms have increased their production of natural gas from unconventional shale formations so much in the past few years that they are running out of places to store it, the price has plummeted and Cove Point's expensive facilities are all but idle.
On the other side of the planet, in Japan, the price of natural gas has soared. An energy-hungry world is coping with the shutdown of Japan's nuclear reactors after last year's Fukushima Daiichi meltdown, which left the country scrambling to find fuel for backup power plants. Japanese companies are investing hundreds of millions of dollars in natural gas projects and have paid 10 times the American price for imports.
The opportunity here is obvious: The United States should export some of its bountiful stocks of natural gas to Japan and other countries with fewer supplies and high demand."
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The Commodities Bull Market: Insights on Gold, Energy and Agriculture
Despite the setback caused by the 2008 financial crisis, the commodities bull market rolls on. A short four years later, many commodities are trading at or near all-time highs.
And thanks to huge swaths of the developing world moving up the ranks, the current bull market in commodities promises to be one for the history books– both in time and size.
After all, the wants and needs of 7 billion people are an irresistible and monumental force.
Soon virtually every substance vital to modern life will become enormously expensive − and profitable for investors who know how to play it.
In fact, today's scarcity and soaring costs could spur history's biggest gains.
It is one of the reasons why I recently sat down with resource investor extraordinaire Rick Rule.
A leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture, Rick has dedicated his entire life to all aspects of the natural resource industry.
Rick is without question something of a heavy hitter.
At Sprott Global Companies, he leads a team of professionals trained in resource-related disciplines such as geology and engineering. Together, they work to evaluate commodities-related investment opportunities.
I think you'll enjoy what Rick had to say during our recent Q&A.
Insights on the Commodities Bull Market
Peter Krauth: What is your general outlook for commodities – the commodities market over the next, say, one to three years and even beyond that?
Food Prices: Here's the Real Story
The United Nations on Thursday reported food prices eased in April after steadily rising in 2012's first quarter.
However, global soybean price increases remained a top concern at the U.N. Food and Agriculture Organization (FAO).
In a conversation with Reuters, FAO economist and grain analyst Abdolreza Abbassian explained:
"We expect global food prices to remain under downward pressure this year unless there are any unexpected shocks to the supply side, such as unfavorable weather. For such reasons, it is very hard to predict for sure in what direction prices will move.
The only real area that could trigger food price increases would be soybeans which we see in tight supply, then pushing up corn prices as a result."
But Abbassian understates the most important issue in the food markets.
You see, Abbassian implies that food prices remain "somewhat" susceptible to outside volatility in the currency and energy markets.
In fact, this view is focusing on the short-term. It's ignoring the sector's most pressing long-term concerns
To continue reading, please click here…
The Case for Higher Gold Prices
Gold prices had gold bugs giddy in the fall of 2011. In September, the luminous yellow metal touched an intraday high of $1,920 a troy ounce, putting the precious metal up roughly 35% for the year.
At the time it seemed like investors, traders and even the guy at the corner store were all buying, hoarding, and lusting for gold.
But the stellar gains were short lived, and by the end of the year gold prices had fallen by nearly 20%.
Part of the striking decline in gold was due to the fact that the "smart" money that had once been amongst gold's biggest cheerleaders, sold it.
Some booked profits, some sold it to reflect gains in portfolios, others were forced to sell to meet margin requirements, and others wanted to start the New Year with a clean slate.
Gold Prices in 2012
Enter 2012, and gold prices enjoyed a lustrous January, rising some 10%, helped in particular by Chinese New Year celebrations.
Gold has since languished as investors became more willing to take on added risk, delving more into equities. While gold prices foundered, the Dow rose 8% in the first quarter, the S&P 500 gained 12%, and the Nasdaq enjoyed a nearly 19% gain.
And more recently, not even gold's best friend, Federal Reserve Chairman Ben Bernanke, offered up much help.
Following the commencement of the two-day FOMC meeting last week, gold experienced a volatile day, but managed to end virtually flat from the previous trading session. The Fed left interest rates steady and extinguished hopes for immediate further monetary loosening measures.
Without a promise of more quantitative easing, long gold holders headed for the exits.
Nonetheless, many sophisticated gold traders are poised to pounce on gold with every dip.
Among them is the storied and accomplished commodities investor Jim Rogers.
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