Showing posts with label copper. Show all posts
Showing posts with label copper. Show all posts

Friday 9 December 2011

Central banks top up gold reserves

Central banks have used gold's recent plunge to top up their holdings of the precious metal.

Central banks have used gold's recent plunge to top up their holdings of the precious metal.
The International Monetary Fund has been selling gold to boost its war chest for lending. Sales stopped in December last year. 
Bolivia, Kazakhstan, Tajikistan and Thailand spent a collective $1.52bn (£942m) buying 26.7 tons of gold. However, the Mexican central bank was a seller, reducing its holding by 0.1 ton, according to data compiled byBloomberg.
Thailand's gold reserves rose 11pc to 152.41 tons and Bolivia's bullion reserves increased 17pc to 49.34 tons. Bolivia increased its holdings by 5pc to tons and Tajikistan's bullion stockpile increased 26pc to 4.74 tons.
Over the past 20 years, central banks have been reducing their holdings of the precious metal, but concerns about paper money and global debt has turned them into net buyers. Also, the gold price has increased every year for the past 11 years. The price is up 23pc in the year to date, closing at $1,743.75 an ounce on Friday.
"Central banks, especially in emerging markets, have been diversifying their gold reserves," said Michael Widmer, head of metals research at Bank of America Merrill Lynch . "We would expect this to continue as gold can have a positive impact on smoothing the risk-return profile of reserve portfolios."
The International Monetary Fund has been selling gold to boost its war chest for lending. Sales stopped in December last year.

Copper enjoys biggest weekly gain on record

Ailing Copper has finally had some medicine, in the form of Europe agreeing a rescue package and positive data on the US economy.
The metal, a barometer of global economic health, had its biggest weekly gain on record, rallying 15pc in London. Goldman Sachs analysts said copper prices could be "unimaginably" high in three years on the back of Chinese growth. Still, the patient is not fully recovered at 20pc off its February peak, which signals a bear market.

Friday 15 October 2010

Copper reaches 2-year high, then dips

October 15, 2010 - 7:10AM

Copper touched its highest in more than two years on Thursday, underpinned by a softer dollar and expectations of renewed demand from emerging markets, but it dipped as pausing equity markets helped temper gains.

Benchmark copper eased back from a 27-month peak of $US8490 a tonne to close at $US8400 a tonne, versus Wednesday's close of $US8362 a tonne.

"Metals track equities... and given the rally we've had over the last few weeks, it wouldn't be a surprise if metals paused for breath at the moment," Societe Generale analyst David Wilson said.
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"But I still think there is enough momentum to still see new highs."

European shares slipped while US stocks were little changed on Thursday.

Copper has rallied by around 40 per cent since hitting a low in June and is only about $US500 away from an all-time high of $US8940 a tonne struck in July 2008.

The talk of quantitative easing in the United States to give a boost to the world's largest economy has been knocking down the dollar and benefiting commodities. On Thursday the dollar's tumble against a basket of currencies sparked a rally across major commodities such as gold and base metals.

"The (softer) dollar is massively supportive and it's expected to continue to weaken through the first half of the next year, and that will remain a supportive factor," Wilson said.

Fundamentally the market remains tight for metals such as copper and tin with miners struggling to keep up with demand from developing markets in particular.

"Emerging markets have been proven to be more than capable of being the locomotive when it comes from commodity demand," said David Thurtell of Citi.

"People are wondering why copper is above $US8000 when the US, UK, Europe, Japan are still in a hole, but the bigger picture is a pretty strong emerging market."

China, the world's top consumer of base metals, will release its third quarter and September economic indicators next week, which are expected to show growth continues at a robust pace of 9.5 per cent.

US data showed rising food and energy prices pushed inflation at the wholesale level up twice as fast as expected last month. Initial jobless claims rose to a higher than expected 462,000 last week.

Tin continues to print historic highs amid dwindling supply from the world's top exporter Indonesia due to heavy rains that have disrupted production and dwindling grades of ore.

"The production problems in Indonesia, the world's second largest producer and largest exporter of tin, are increasing," Commerzbank said in a note.

Indonesia's state miner PT Timah Tbk accounted for over 40 per cent of Indonesia's total tin production last year, it said.

"The company has... stopped its tin sales on the spot market for now and is currently trying to negotiate new supply contracts with its long-term customers. This should mean further headroom for tin prices in the near term, despite the new record high of over $US27,000 a tonne," Commerzbank said.

The latest LME data showed that tin stocks held in LME-bonded warehouses rose by 135 tonnes net today, but they remain close to their lowest in almost one and a half years.

Three month tin closed at $US26,950 per tonne, having printed a new high of $US27,338.50 earlier.

Energy-intensive metal aluminium hit its highest since April at $US2459 per tonne before closing at $US2410 per tonne versus $US2417 on Wednesday's close.

Zinc, used in galvanising, closed at $US2415 per tonne, against a $US2410 close on Wednesday, having rallied to $US2444 also its highest in nearly six months earlier.

Sister metal lead was untraded at the close but bid at $US2411 versus $US2435 per tonne at Wednesday's close. It printed its highest since January at $US2473 earlier.

Nickel, used in stainless steel, closed at $US24,305 per tonne against a $US24,400 close on Wednesday.

Reuters

Sunday 19 April 2009

Will copper outshine gold and silver?

Will copper outshine gold and silver?
All the talk of metal investing in recent months has focused on the safe-haven and inflation hedge of gold. Yet other metals, notably copper and silver, have been starting to attract investor attention too.

By Paul Farrow
Last Updated: 7:55AM BST 18 Apr 2009

The copper price has risen by more than 50pc this year Photo: GETTY
All the talk of metal investing in recent months has focused on the safe-haven and inflation hedge of gold. Yet other metals, notably copper and silver, have been starting to attract investor attention too.

It is only a year ago that the commodity bull run was still in full swing. The wheels fell off in August, since when the price of metals has nose-dived. Orders for metals dried up overnight and the subsequent price falls have been deeper than during the worst years of the Great Depression.

But could there be glimmer of hope for a metals revival?

John Meyer, a mining analyst at Fairfax, the investment bank, thinks so. He is revising many of his metal forecasts upwards because of several factors, including a weaker US dollar, inflation fears and the renewed demand from China.

"The ratio of the copper price versus gold is at its lowest level since 1990 – people forget that many metals, not just gold, are a hedge against inflation. China is buying up copper and, while some see it as strategic buying, it also has to buy metals simply to maintain its economic growth," said Meyer. "Copper is our principal focus, although lead, zinc and tin may fare well too."

The revelation that China's State Reserves Bureau (SRB) has been buying copper on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons has caught many investors' imagination. There's even talk of China creating a 'copper standard' for the world's currency system.

Nobu Su, the head of Taiwan's TMT group, which ships commodities to China, said the next industrial revolution was going to be led by hybrid cars - and that needs copper. "You can see the subtle way that China is moving into 30 or 40 countries with resources," he said.

The SRB has also been accumulating aluminium, zinc, nickel and rarer metals such as titanium, indium (used in thin-film technology), rhodium (catalytic converters) and praseodymium (glass).

Evy Hambro, who runs the BlackRock World Mining investment trust, said the key question for metal commodities was whether the renewed demand for metals was due to companies restocking inventory levels which had been run down, or whether they were turning the capacity tap back on. If it is the former, the commodity revival could be short-lived.

He remained unconvinced that it was the latter.
"We are not seeing a pick-up in demand in Europe or the US – and demand for commodities tends to slow in the summer in the northern hemisphere anyway. But we remain overweight copper, which has some of the best fundamentals."

Investors looking at copper ought to be aware that its price has risen by more than 50pc this year, so late joiners have missed some of the recovery already.

Hambro is still positive on gold, but is less convinced that aluminium will shine. Aluminium's price has fallen by more than half since last summer, but there is still a huge oversupply, which is unsupportive of a sharp price rise if demand turns.

The central banks' stimulus to kick-start the flagging car industry could also provide a fillip to metals. For example, more than 80pc of lead is used for car batteries, while 53pc of a car is made from steel.

Fairfax pointed out that sales of cars rose sharply in Germany in February after its government introduced a stimulus plan which allows consumers to trade an old car for a new one with state aid of €2,500. "That's a pretty huge increase – sales had fallen 14pc year-on-year in January," said Meyer.

Hambro agreed that fiscal stimulus would boost many metals involved in car production, but that it was difficult to judge when it would be seen to filter through. "If a car plan is announced in next week's Budget, will orders for aluminium rise sharply? Unlikely."

But early signs that the economic downturn may be reaching a floor have led many analysts to believe that silver could outperform gold. The debate about the relative merits of gold and silver was triggered because the world's largest consumer, India, did not import any gold in March for the second month running.

"In India you have people who can only afford silver and people who will only buy gold, but there are a large number of people in the middle who will rotate from gold to silver," said Ashok Shah, the chief investment officer at London & Capital.

That phenomenon is likely to be repeated in other countries as unemployment, salary cuts and potential tax rises take their toll on consumer spending. Eugen Weinberg, an analyst at Commerzbank, said: "Silver over the past 30 years has been the poor cousin. In the first half of the last century gold and silver were on a similar footing in terms of monetary value and their roles as safe havens."

Just as with copper, a measure of value is the ratio of gold to silver prices, which in the last century fell as low as 14 and compares with levels of around 70 now – suggesting gold is overvalued. Since the early 1980s the ratio has averaged about 65 and mostly ranged between 30 and 100.

Weinberg added: "The ratio could drop to between 40 and 50 in the medium term. People who cannot afford to buy gold for jewellery will buy silver."

Industrial demand for silver, including from the photography industry, is reckoned to be about 65pc of total global supplies, estimated at 895 tonnes. For gold, industrial and dental demand is about 11pc of supplies estimated at around 3,880 tonnes, according to consultants GFMS.

Part of the boost for silver will come from investment demand. With gold prices still near $900 an ounce, holdings of exchange- traded silver funds are expected to rise.

The iShares Silver Trust, the largest silver-backed exchange-traded fund listed in New York, holds a record 8,413 tonnes, a gain of more than 20pc since early January. That compares with a rise of more than 40pc in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund.

Metal commodities have become a staple part of many portfolios, as investors look for diversification and assets that are not correlated to the performance of shares. There are several ways you can get exposure to individual metals – one of the most popular is exchange-traded commodities (ETCs), which you can buy through most stockbrokers or online share dealers.

London-listed ETCs last week experienced net inflows for the fifth consecutive week, with precious metals ETCs seeing the largest inflows. They included ETFS Physical Gold ($38m), ETFS Physical Platinum ($14m) and ETFS Nickel ($2m).

The other option is to buy a unit or investment trust that invests in a spread of equity-related commodities. Popular funds include BlackRock World Mining, Investec Resource Enhanced or JPM Natural Resources.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/5165209/Will-copper-outshine-gold-and-silver.html



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A 'Copper Standard' for the world's currency system?

A 'Copper Standard' for the world's currency system?

Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

By Ambrose Evans-Pritchard
Last Updated: 2:41PM BST 16 Apr 2009
Comments 83 Comment on this article

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

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"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

"The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources," he said.

The SRB has also been accumulating aluminium, zinc, nickel, and rarer metals such as titanium, indium (thin-film technology), rhodium (catalytic converters) and praseodymium (glass).
While it makes sense for China to take advantage of last year's commodity crash to restock cheaply, there is clearly more behind the move. "They are definitely buying metals to diversify out of US Treasuries and dollar holdings," said Jim Lennon, head of commodities at Macquarie Bank.

John Reade, metals chief at UBS, said Beijing may have a made strategic decision to stockpile metal as an alternative to foreign bonds. "We're very surprised by Chinese demand. They are buying much more copper than they will need this year. If this is strategic, there may be no effective limit on the purchases as China's pockets are deep."

Zhou Xiaochuan, the central bank governor, piqued the interest of metal buffs last month by calling for a world currency modelled on the "Bancor", floated by John Maynard Keynes at Bretton Woods in 1944.

The Bancor was to be anchored on 30 commodities - a broader base than the Gold Standard, which had caused so much grief in the 1930s. Mr Zhou said such a currency would prevent the sort of "credit-based" excess that has brought the global finance to its knees.
If his thoughts reflect Communist Party thinking, it would explain the bizarre moves in commodity markets over recent weeks. Copper prices have surged 49pc this year to $4,925 a tonne despite estimates by the CRU copper group that world demand will fall 15pc to 20pc this year as construction wilts.

Analysts say "short covering" by funds betting on price falls has played a role. But the jump is largely due to Chinese imports, which reached a record 329,000 tonnes in February, and a further 375,000 tonnes in March. Chinese industrial demand cannot explain this. China has been badly hit by global recession. Its exports - almost half GDP - fell 17pc in March.

While Beijing's fiscal stimulus package and credit expansion has helped lift demand, China faces a property downturn of its own. One government adviser warned this week that house prices could fall 50pc.

One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America's debt by printing money. Premier Wen Jiabao issued a blunt warning last month that China was tiring of US bonds. "We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets," he said.

This is slightly disingenuous. China has the world's largest reserves - $1.95 trillion, mostly in dollars - because it has been holding down the yuan to boost exports. This mercantilist strategy has reached its limits.

The beauty of recycling China's surplus into metals instead of US bonds is that it kills so many birds with one stone: it stops the yuan rising, without provoking complaints of currency manipulation by Washington; metals are easily stored in warehouses, unlike oil; the holdings are likely to rise in value over time since the earth's crust is gradually depleting its accessible ores. Above all, such a policy safeguards China's industrial revolution, while the West may one day face a supply crisis.

Beijing may yet buy gold as well, although it has not done so yet. The gold share of reserves has fallen to 1pc, far below the historic norm in Asia. But if a metal-based currency ever emerges to end the reign of fiat paper, it is just as likely to be a "Copper Standard" as a "Gold Standard".

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html