Commodity Blog

Archive for May, 2008

The failure of the gold-mining industry to find and exploit large new deposits of the yellow metal was “tragic”, Barrick Gold chairperson and acting CEO Peter Munk said on Tuesday.
“The supply side is tragic…it is the very challenge that keeps a company like Barrick and the remaining few major gold companies totally preoccupied,” he said at the company’s annual shareholders meeting.
“We’re running out of major gold deposits, and the deposits we do have become increasingly difficult to come on stream.”
Opposition from nongovernmental organisations, as well as increasing, “yet understandable” demands from host countries that they receive a bigger share of profits from mines, was making it difficult to develop successful new operations.
CEO Greg Wilkins, who attended the meeting although he is on an extended leave of absence owing to a serious illness, agreed that global mine production was “challenged”.
“Existing mines are maturing, have lower grades and are producing less,” Wilkins said.
Further, despite record levels of spending by the industry on exploration, there had been virtually no major new discoveries in recent years.
Richard O’Brien, who heads the third-largest gold producer by volume, Newmont Mining made similar comments earlier this year.
O’Brien said at the time that discovering big new gold deposits was becoming an increasing challenge for the industry.
Global gold production would likely continue to decline, as fewer large, economically mineable deposits are discovered, he predicted.
Barrick, the world’s biggest gold producer, ousted Newmont from the top spot in 2006 when it bought smaller rival Placer Dome.
The company has budgeted $200-million for exploration this year, compared with the $179-million spent in 2007.

Oil WTI Cushing $ 121.70
Gold N.Y. Spot $ 0867.15
Silver N.Y. Spot $ 16.59
Lead LME Cash $ 1.1249
Copper LME Cash $ 3.9191
Zinc LME Cash $ 1.0138
Nickel LME Spot $ 12.89
Aluminum LME Spot $ 1.3073
Platinum N.Y. Spot $ 1958.50
Palladium N.Y Spot $ 431.50
Natural Gas (Henry Hub)($/MMBtu) $11.10

USD-AUD $ 1.0591
AUD-USD $ 0.9442
CAD-USD $ 0.9965
USD-CAD $ 1.0035
EUR-USD $ 1.5394

Unions at mines throughout Peru are ready to strike next week to demand better labor benefits, the head of the country’s biggest federation of mining unions and local union bosses said on Tuesday.
“We have 33 unions supporting us,” said Luis Castillo, the federation’s leader. “We will go on nationwide strike on May 12 no matter what.”
Peru is the world’s leading silver producer, ranks second in copper and zinc, and fifth in gold, according to government data.
Castillo has said the federation has formally filed documents advising the government about the strike.
Unions expected to strike include those at Southern Copper (SPC.LM) (PCU.N), Antamina, Doe Run Peru, Shougang Hierro Peru (SHP.LM), Atacocha (ATA.LM), and Milpo (MIL.LM), among others.
Unions at the Tintaya and Cerro Verde (CVE.LM) are set to meet later on Tuesday to decide about supporting the walkout.
Twice last year unions went on nationwide strikes, which partially cut output at some mines and pressured international metals prices.
The strike next week, like the previous ones, would aim to pressure the government to would lift caps on profits that mining companies share with workers.
They also want the government to change rules for early retirement, to clamp down on outsourcing by companies, and to give workers the right to enroll in state-run pension funds.
Unions also want work days changed to eight hours a day, instead of 12 hours a day.

With oil prices at record levels we have moved it to the top of the leader board…

Oil WTI Cushing $ 121.60
Gold N.Y. Spot $ 0881.00
Silver N.Y. Spot $ 16.94
Lead LME Cash $ 1.1703
Copper LME Cash $ 3.9091
Zinc LME Cash $ 1.0038
Nickel LME Spot $ 12.84
Aluminum LME Spot $ 1.3066
Platinum N.Y. Spot $ 1924.00
Palladium N.Y Spot $ 421.00
Natural Gas (Henry Hub)($/MMBtu) $10.76

USD-AUD $ 1.0553
AUD-USD $ 0.9476
CAD-USD $ 0.9877
USD-CAD $ 1.0125
EUR-USD $ 1.5552

Futures driven up by fears about oil supplies, weaker U.S. dollar

Oil futures blasted to a new record near $123 a barrel Tuesday, gaining momentum as investors bought on a forecast of much higher prices and on any news hinting at supply shortages. Retail gas prices edged lower, but appear poised to rise to new records of their own in coming weeks.

A new Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years seemed to motivate much of Tuesday’s buying, although a falling dollar and increasing concerns about declining crude production in Mexico and Russia contributed, analysts say.

The Energy Department raised its oil and gasoline price forecasts, but also predicted that high prices will cut demand more than previously thought.

Gold N.Y. Spot $ 0867.10
Silver N.Y. Spot $ 16.70
Lead LME Cash $ 1.1453
Copper LME Cash $ 3.8052
Zinc LME Cash $ 0.9730
Nickel LME Spot $ 12.52
Aluminum LME Spot $ 1.2769
Platinum N.Y. Spot $ 1896.50
Palladium N.Y Spot $ 417.50
Oil WTI Cushing $ 119.40
Natural Gas (Henry Hub)($/MMBtu) $10.37

USD-AUD $ 1.0585
AUD-USD $ 0.9447
CAD-USD $ 0.9820
USD-CAD $ 1.0183
EUR-USD $ 1.5478

Copper prices should see a bump up with the on-going labor strikes in Chile.

Gold N.Y. Spot $ 0854.85
Silver N.Y. Spot $ 16.37
Lead LME Cash $ 1.1453
Copper LME Cash $ 3.8052
Zinc LME Cash $ 0.9730
Nickel LME Spot $ 12.52
Aluminum LME Spot $ 1.2769
Platinum N.Y. Spot $ 1871.00
Palladium N.Y Spot $ 412.50
Oil WTI Cushing $ 113.70
Natural Gas (Henry Hub)($/MMBtu) $10.68

USD-AUD $ 1.0673
AUD-USD $ 0.9369
CAD-USD $ 0.9815
USD-CAD $ 1.0189
EUR-USD $ 1.5403

Trade on the news

A majority of the big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is also when the big players adjust their positions and prices change resulting in a serious currency flow. An example, is when the Fed announces a cut or increase to interest rates.