Commodities Archives - Page 7 of 29 - Money Morning - Only the News You Can Profit From
Silver Prices Ready for QE3
Recent economic data might be enough to get the U.S. Federal Reserve to finally commit to more stimulus measures, which in the past has delivered a good run for silver prices.
The United States last week reported economic growth of just 1.5% for the second quarter of 2012, down sharply from the rates posted for the previous two quarters.
As a result, the Dow Jones Industrial Average jumped as traders anticipate more economic stimulus from the Federal Reserve, either at the Federal Open Market Committee (FOMC) meeting this week or when Chairman Ben Bernanke speaks at Jackson Hole in late August.
Investing in Silver: States Support Move to Metals as Dollar Weakens
Fears over where the dollar is headed – especially with continued money printing from the central bank – has pushed safety-seekers into investing in silver and gold. Demand has also pushed gold and silver prices to new highs.
The idea of using gold and silver as an alternative currency has spread as the metals have grown more valuable.
In fact, worries that the U.S. dollar is on the cusp of a collapse have lawmakers from more than a dozen states (up from just three in the past few years) seeking approval from their state governments to either issue their own alternative currency or use gold and silver as a currency for settlement of state-related transactions.
Rep. Glen Bradley, R-NC, who introduced a currency bill in 2011, told CNN Money, "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System… the State's governmental finances and private economy will be thrown into chaos."
Silver Prices: Metals Rise on Hopes of QE3
Fresh weak economic data and comments from Federal Reserve Chairman Ben Bernanke have stoked hopes that another round of quantitative easing is on the horizon. Those expectations gave gold and silver prices a boost this week.
Glum retail sales numbers released from the Commerce Department on Monday and high initial jobless claims on Thursday fueled optimism of QE3 despite the lack of hints from the central bank chief earlier in the week. But, Bernanke and his team have clearly left the option of QE3 on the table and stand ready to intervene when they see fit.
The markets' recent spate of lackluster financial reports and escalating concerns over the waning global economy are suggesting a pressing need for QE3 – sooner rather than later.
Four Things Suppressing Crude Oil Prices Today
The collapse of talks between Iran and the "Big 6" (the five permanent members of the UN Security Council plus Germany) should have accelerated international crude oil prices.
And yes, they are higher.
But the real spike hasn't hit. Not yet.
The rising crisis atmosphere in the region and the genuine possibility that a fourth round of talks between the two sides will not even take place should have renewed the upward movement.
That hasn't taken place yet, either.
Oil prices are caught between the normal dynamics of geopolitical concerns – which push prices north – and continuing concerns over a global economic slowdown – which results in lowering expectations.
Now, this limbo is a delicate balance; it could change in a matter of hours.
We are likely to see a short-term rise Monday evening if the Norwegian oil and gas sector strike is not averted. Labor negotiations between Norway's oil workers and employers over pay and pensions failed – yet again – yesterday. The country is now just hours away from the first complete shutdown of its oil industry in decades. (Already, the strike has cut oil output by 13%, according to Reuters.)
Then there are the figures coming out from the Energy Information Administration (EIA) on Wednesday, which will almost certainly show a drawdown on U.S. inventories. Normally, that would also push up prices.
However, absent an Iranian move against the Strait of Hormuz or a major refinery accident somewhere in the world, the rise will be less than usual.
That's because right now, four things are tempering the oil price rise:
Higher Gold Prices Triggered by Europe
In early trading Friday, it was like old times again – gold prices soared and it was well overdue.
The yellow metal glistened in early trading, with gold for August delivery rising 3%, propelled above the key $1,600 level. Fueling the strong gains in gold and other markets were encouraging words out of the European Union summit.
As the pivotal two-day meeting in Brussels wound down, global markets and commodities rallied after EU leaders struck a "breakthrough" deal to ease the recapitalization of banks. The plan was aimed at pulling the Eurozone back from the edge of its debt crisis.
While Banks Crumble, The Next Leg Up For Gold Prices Draws Near
Something's afoot in the world of high stakes finance.
The Basel Committee for Bank Supervision (BCBS) is about to decide something crucial to bankers, sovereign nations, and gold investors alike.
As part of the Bank of International Settlements (BIS), the BCBS is reviewing the upcoming new Basel III rules. That may sound arcane to you but I promise it's not.
Though rarely discussed in the mainstream press, the all-important Bank of International Settlements is essentially a global central bank to the world's central banks.
Its goal is ostensibly to provide global stability to the monetary and financial systems.
And in a surprise twist that only a few years ago would have been considered preposterous, the BCBS is entertaining whether gold should qualify as a full-fledged Tier 1 capital asset.
Currently, the precious metal is relinquished to a Tier 3 status, deserving no more than a 50% weighting at that.
Here's why that distinction is important and potentially astonishing.
Achieving Tier 1 status would credit gold with the recognition it's been denied ever since Nixon closed the gold window on August 15, 1971.
In essence, it would mark the official recognition that gold is real money.
But that's not the only reason gold is gaining respect. Other factors are brewing that will set the stage for the next leg up in gold prices.
As Banks Teeter, Gold Gains Respect
One of them is the crumbling state of world's banks. Once unwavering, the trust in these financial ivory towers is precarious at best.
In the last couple of months alone, Greek depositors have withdrawn billions of euros in deposits, as the fear of a "Grexit" looms large.
Not to be outdone, Spain banks have been emasculated by the Iberian nation's own bursting real estate bubble. After denying for weeks that a bailout would be required, officials finally caved to a "Spailout", giving Spain's banking system a 100 billion euro rescue package.
This phenomenon is not exclusive to the Eurozone either.
The Glory Days for U.S. Farms are Far From Over
Many Americans view farming as one of the last bastions of low tech.
How on earth could crops ever compete with that?
Well, as it turns out, there's some pretty cool stuff going on out at the farm, too.
Today's tech-centric farms use remote sensors that "talk" to satellites. They have robots milking the dairy cows. They even rely on unmanned planes that can fly over their fields to help create 3D maps and improve crop output.
Welcome to the future of U.S. farming…
There's a lot going on in the field of precision farming.
All this activity makes me optimistic that high-tech can solve one of the most pressing concerns of our time: feeding the world.
Then again, we are living in the Era of Radical Change. An endless stream of high-tech breakthroughs will greatly improve life for millions of people over the next few years.
I put farming at the top of the list for a very good reason – it clearly defies the "food crisis" doomsayers out there who predict the world will soon outgrow its resources.
They claim that, with population slated to grow from the current six billion to 10 billion by the end of this century, we'll simply run out of food.
I've been hearing these predictions since I was in high school. (And that was a long time ago.) But in actual fact, high-tech has helped farmers greatly increase output for livestock and crops over the last few decades.
The industry is poised to adopt a wide range of cutting-edge high tech that will prove a further boon to farming.
Fact is, this spending occurs at what is already a great time for the sector. U.S. ag exports are booming.
For the fiscal year 2012 that ends this month, exports will total $134.5 billion. You can pretty much bank on that estimate – it comes from the USDA. Consider that in fiscal 2007, U.S. farm exports stood at only $82.2 billion. That means we've seen five-year export growth of 63%.
There's a lot of money to be made in high-tech ag.
Now wonder these hungry startups want in on the action…
Why Crude Oil Prices are in Steep Retreat
Oil prices sank to their lowest level in eight months Wednesday and the trend continues.
Crude oil for August delivery fell yesterday (Thursday) below the $80 line to $78.20 a barrel on the New York Mercantile Exchange.
Oil prices breaking the $80 line can have a psychological impact on traders, which could send oil spiraling even further.
"Oil is participating in the broad decline of equities and commodities," Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago, told Bloomberg News. "We broke an extremely key level for oil, the previous monthly low around $81."
Oil prices fell more than 3.5% the day after the Fed announced a disappointing extension of Operation Twist.
The commodities market, measured by the S&P GSCI Spot Index, entered into a bear market yesterday, off 22% from its highest close of the year on Feb. 24.
Many experts think oil is reaching a bottom – but there are other factors still in play.