WTI is up $0.06 @ $107.09

Brent is down $0.36 @ $125.39

Source

“Gold is likely to bust through its previous nominal highs and hit $2,250 before, according to Canadian investment advisory firm Macquarie Private Wealth.

Gold touched $1,923.70 per ounce in September of last year and since has retrenched. It trades now at $1,685, up about 1 percent on comments from Federal Reserve Chief Ben Bernanke that suggested further monetary easing is ahead.

It’s just getting started, Macquarie is telling clients, according to a report from Business Insider.

Among the reasons cited: A weak recovery will keep the Fed at virtually zero rates through late 2014, as it has promised; more easing is likely; and various trading and seasonal indicators suggest that investors have oversold the metal.

Expect Indian and Chinese demand — which accounts for 42 of total gold consumption — to recover, mining executives tell Reuters.

“Those are two economies that are likely to grow at a significant pace, certainly relative to the West,” Nick Holland, chief executive of miner Gold Fields, told the news service.

“They have a strong affinity for gold, and they also have an increasing number of the population who are being urbanized. Of the extra income they get, some will find its way into gold.”

The uptick in buying could be felt quite soon, according to a report in the Indian daily The Hindu Business Line.

A five-day strike among jewelry shops in protest over the doubling of duty on gold imports has ended. Reopened shops and lower prices should spur consumer buying, the newspaper suggested.”

Source 

Oil was little changed in New York, halting a two-week slide as an unexpected jump in Germanbusiness confidence stoked hopes that fuel demand will be supported.

The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, increased to an eight-month high of 109.8 from a revised 109.7 in February. Crude fell as much as 0.6 percent earlier, after Italian Prime Minister Mario Monti warned that Spain may reignite the European debt crisis, while euro-area ministers prepared a deal to strengthen the region’s financial firewall.

Oil for May delivery was at $106.78 a barrel, 9 cents lower in electronic trading on the New York Mercantile Exchange at 12:24 p.m. London time. It had slipped as much as 68 cents to $106.19 a barrel. Prices are up 8 percent this year after advancing 25 percent in the last quarter of 2011.

Brent for May settlement was at $125.30 a barrel, up 17 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $18.54.

Australian Bullion Dealer ABC Bullion has contacted SD to advise that one of its suppliers has provided them photographic evidence of a tungsten filled 1 kilo gold bar discovered this week.  The bar passed a hand-held xrf scan which showed 99.98% pure AU.  The tungsten was only discovered when the bar was physically cut in half.

 

After numerous reports of 400oz tungsten filled bars being discovered in Hong Kong, this is the first documented and verified report with photographic evidence that has been made public.

Source

PeterLBrandt

Continuation H&S pattern would have target of $2,042

The daily Gold market chart has been forming a possible continuation inverted H&S pattern. If this interpretation is correct the only question is if the right shoulder low has been established or if further right shoulder construction is needed.

The decline on Thursday appeared to wash out weak longs. An advance and close above the Mar. 21 high would complete a  candlestick hikkake buy signal. This would give some credance to the change a right shoulder low is in place.

A decisive close above the Feb. 28 high is required to complete this H&S pattern and establish a target at $2,042.

Go here to read the rest of the analysis and see some nice charts.

(AP) – Americans have pumped less gas every week for the past year.

During those 52 weeks, gasoline consumption dropped by 4.2 billion gallons, or 3 percent, according to MasterCard SpendingPulse. The decline is longer than a 51-week slide during the recession.

The main reason: higher gas prices. The national average for a gallon of gas is $3.89, the highest ever for this time of year, and experts say it could be $4.25 by late April. As a result, Americans are taking fewer trips to restaurants and shopping malls. When they take a vacation, they’re staying closer to home.

But the decline in gas consumption is also a sign that efforts to push carmakers to produce vehicles with better gas mileage are paying off. The average new car now gets nearly 24 miles to the gallon, compared with about 20 mpg just four years ago, according to the University of Michigan Transportation Research Institute.

“I’d expect to see lower gasoline consumption for several years to come,” Rice University energy expert Ken Medlock says.

Americans have cut back on fill-ups for extended periods before. In 2008, gas spiked from $3.04 to $4.11 per gallon in seven months. It wasn’t until January 2009, when the national average for gas had dropped to $1.86 that consumption increased. Drivers bought more gasoline for 23 weeks in a row.

“The spike in 2008 was a real shock to the system,” Medlock says. “There’s still a residual impact on people’s driving behavior.”

There were other stretches of reduced gas use, notably two into the 1970’s and one in the early 1980’s. But in those cases, Americans eventually went back to driving big cars and trucks that guzzled gas.

This time may be different. Medlock thinks economic growth will be too modest and gas prices will stay too high for Americans to start driving more anytime soon. Economists expect the U.S. economy to grow 2.5 percent in 2012. The government estimates that gas will average a record $3.79 per gallon for the year.

Lynne Peeples

If everything goes as planned, Angie Nordstrum’s son may look out the window of his second-grade classroom at Red Hawk Elementary this fall and see a full-scale natural gas drilling operation.

He and his classmates, Nordstrum noted, will then have no choice but to breathe emissions of volatile organic compounds (VOCs), benzene and other toxic pollutants — even while they tend to a 1,500-square-foot organic garden at their LEED-certified school.

“This is so disturbing on so many levels,” said Nordstrum, of Erie, Colo.

Natural gas production is rapidly increasing across the country — from Pennsylvania to Colorado. According to many public health experts, the natural and manmade chemicals released during drilling, hydraulic fracturing (or fracking) and reinjection steps are making more and more people sick. Adding to the concern are new findings showing the associated air pollution, and the dangers of exposure to very small doses of certain chemicals. Developing fetuses and young children can be the most vulnerable to these effects.

In addition to the pollutants, and the intense noise, a natural gas operation looks like a “Christmas tree on steroids,” noted Nordstrum, a member of the grassroots group of parents, Erie Rising, which is battling the gas wells.

“So much is being said in news about how this is the new clean fuel,” she said. “It’s not.”

Water pollution has been the focus of the fracking debate on the East Coast, however, air pollution may be the main source of exposure in many areas. According to a new study in Colorado that sampled air quality over the course of three years, people living within a half-mile of an oil or gas well were exposed to a number of toxic chemicals including benzene, a known carcinogen. VOC levels measured five times the safety limit set by the U.S. Environmental Protection Agency.

“For children, the potential cancer risk is a serious consideration. They are more sensitive, exposed at younger ages and for longer periods of time,” said Lisa McKenzie, lead researcher on the study at the Colorado School of Public Health.

McKenzie said the results also pointed to potentially significant respiratory and neurological effects. For children, this could mean more headaches, sore throats and asthma. “Children are more sensitive to all of these pollutants, whether traditional ozone, dust or particulates caused by hydrocarbons leaking out of the wells or the diesel trucks carrying the materials,” added Sonya Lunder, a senior analyst at the nonprofit Environmental Working Group, whose goal is to protect public health and the environment.

Lunder called the new findings “sobering” and emphasized the need for further study. “There are an incredible number of other industrial chemicals involved,” she said. But research is complicated by the fact that these chemicals tend to vary from well to well, with names and quantities not always disclosed by the fracking company.

But, not everyone is convinced of the associated airborne risks. “It is important to put this paper into context,” said Tom Amontree, executive vice president of the America’s Natural Gas Alliance. “Not a single human being’s health was evaluated here.”

“Natural gas companies take seriously the health and safety of their workers and the communities in which they operate,” he added.

Read the rest here.

Markets pared losses on higher commodities & energy stocks….

I think the data shows that prices are crushing the wallet of Americans…..

A whole lot to digest here….

WTI is up $0.23 @$105.58

“Copper traders extended a bearish streak into a second week on mounting concern that demand is weakening after manufacturing contracted from China to Europe.

Twelve of 29 analysts surveyed by Bloomberg expect the metal to decline next week and seven were neutral. Inventories at bonded warehouses in Shanghai more than doubled since the fourth quarter, a survey of seven traders and analysts showed. Separate stockpiles monitored by the Shanghai Futures Exchange are near the highest in at least nine years, bourse data show. China consumes 40 percent of the world’s copper.

Factory output in Germany and France unexpectedly shrank in March, adding to signs Europe is sliding into recession, and a measure of China’s manufacturing fell to the weakest since November, reports showed yesterday. Chinese Premier Wen Jiabao cut the country’s annual growth target to 7.5 percent earlier this month, the lowest since 2004. Europe accounts for about 18 percent of global copper demand, Barclays Capital data show.

“A slowdown in Europe and China is not good for the long- term outlook,” said Jeffrey Sherman, who helps manage about $30 billion of assets for DoubleLine Capital in Los Angeles. “It feels that we could repeat 2011, where we had a good first half and then there was a correction.”

Copper rose 10 percent to $8,379 a ton this year on the London Metal Exchange. Prices were little changed through most of the first six months of 2011 and then plunged 26 percent in the third quarter. The Standard & Poor’s GSCI gauge of 24 commodities climbed 8.5 percent this year and the MSCI All- Country WorldIndex (MXWD) of equities advanced 11 percent. Treasuries lost 1.6 percent, a Bank of America Corp. index (MXWD) shows….”

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High-frequency traders have caused U.S. commodity futures prices to disconnect from market fundamentals of supply and demand since the 2008 financial crisis. An extensive and detailed analysis by the United Nations Conference on Trade and Development just confirms what we have shown again and again (most recently here in Silver) that HFT’s impact on the world is not all unicorn-tears and liquidity-providing. Markets are more exposed to ‘sudden and sharp’ corrections, and as Reuters notes “The strategy of those involved in high-frequency trading tends to reinforce the correlation between equities and commodities“. In a somewhat stunning conclusion from an academic treatise, the authors find “We are not saying that it’s all about speculators and (that) fundamentals don’t matter. But we are saying that they tend to matter less, except in extreme cases,”. Unlike other studies on the linkages, the UNCTAD study uses tick-data and finds correlations rising and trade size dropping as frequency increased dramatically since the crisis in 2008. Critically, one final consequence is that investors seeking to diversify or hedge against other investments in their portfolio are often disappointed as the increased HFT creates a destabilizing effect on commodities (increasing volatility) and can often create bubbles.

The number of Ticks (trades) has risen exponentially faster than the volume – as the black (ratio) line indicates – for WTI in this case.

And on a rolling 5-minute correlation basis – it is abundantly clear that there has been a regime shift in the relationship between US equities and WTI (in this example)…

WTI is down $2.17 @ $1.0510….briefly breaking $104.88 which was support and a 50% retracement of the recent rally.

“As if we haven’t head enough of this commodity/ iron ore/ steel super-cycle thing in the past few days, Citi is acknowledging that the end will come.

While some point to the fact that the apparent intensity of use for steel (in terms of kg per capita) for China is still well below some of other countries at their peak, Citi reckons that in terms of “value in use”, China has already above most of the developed world.  In other words, while consumption of commodities in terms of volume still lags behind many countries, the value of the commodities China is consuming has already been higher than most countries.

The structural story — The bulls on the sector point to intensity of use charts for commodities on a kg/capita basis and extrapolate this into the future.  This ignores one vital component which is price, as it assumes that developing economies will continue to consume ever increasing quantities of commodities regardless of the price.  If we look at value in use rather than intensity of use this changes the argument and suggests China has already overtaken most of the developed world.  Arguably for commodity consumption to increase globally then prices need to come down.

Margins have peaked — Mining margins peaked around 2007 and since then the industry has faced higher depreciation costs, higher operating costs, higher oil prices, higher exchange rates, higher capex costs and higher salaries – all these factors are continuing and margins will continue to come under pressure.

Returns have peaked —On an EVA basis (ROIC – WACC) the peak returns for the sector occurred in 2006, yet earnings momentum peaked two years later in 2008 and has subsequently moved higher.  In our view the mining sector bought earnings momentum through M&A, and the mining sector is now buying earnings momentum through unprecedented capex spend.  Importantly ROIIC is falling.

And arguably, China’s investment boom in the recent years have been getting less and less efficient.

Read more: 

“European wheat and rapeseed crops are at risk of drought that may further hurt yields after freezing weather last month destroyed some fields, analysts and forecasters said.

France, Spain, England and northern Italy got less rain than normal since the start of January, European Union weather data show. They will probably stay drier and warmer than usual in the next 30 days, said Joel Burgio, an agricultural meteorologist at Telvent DTN.

The 27-nation EU typically grows about 20 percent of the world’s soft wheat. A cold wave in February may have lopped 5 million metric tons off this year’s harvest, and a lack of rain might further harm EU output, according to Alexandre Marie, an analyst at French farm adviser Offre et Demande Agricole.

“The situation in Europe is alarming,” Marie said by phone yesterday from Bourges, west of Paris. “That will remain a factor of support for the market in coming weeks.”

Paris-traded milling wheat for November delivery was priced above the grain for December delivery in Chicago for the first time in the contracts’ lifetime on Feb. 7. Buyers now need to pay $14.29 a ton more for French wheat.

“We’re already starting to see a market reaction,” Marie said. European wheat has gained on U.S. grain because of concern about frost damage to the crop, and drought is an additional risk, he said.

Less Than Average

Rainfall in northern France, England and the north of Italy this year was 23 percent to 47 percent below the long-term average, data from the EU’s Monitoring Agricultural Resources unit show. In Spain and France’s Mediterranean region, amounts were 59 percent to 78 percent lower….”

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“Oil in New York for the second time in three days after France said industrialized nations are considering a release from strategic stockpiles and a report showed Chinese manufacturing may contract.

Futures dropped as much as 1.5 percent after French Industry Minister Eric Besson said the country is “studying with its partners all possible options,” including the supply of oil from emergency reserves. Manufacturing in China, the world’s second-largest oil consumer, may decline for a fifth month in March, according to a report today from HSBC Holdings Plc and Markit Economics.

“There is no motivation for buying,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “People are becoming a bit cautious because it is more or less clear that Iran doesn’t want to get into war with anyone, and talk of releasing strategic stocks is bearish.”

Crude for May delivery slid as much as $1.60 to $105.67 a barrel in electronic trading on the New York Mercantile Exchange. It was at $106.04 at 11:21 a.m. London time. The contract gained $1.20 yesterday to $107.27, the highest close since March 19. Prices are 7.3 percent higher this year.

Brent oil for May settlement on the London-based ICE Futures Europe exchange declined as much as $1.22, or 1 percent, to $122.98 a barrel. The European benchmark contract was at apremium of $17.25 to New York futures. The difference was $16.93 at yesterday’s close, the smallest in three weeks….”

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“Gold dropped to the lowest price since January in London after reports showed manufacturing may contract from China to Germany and a stronger dollar curbed demand.

China’s manufacturing may contract for a fifth straight month in March, a report showed, hurting the outlook for commodities and sending the Standard & Poor’s GSCI Index of 24 raw materials to a one-week low. The U.S. dollar rose to the highest level in almost a week against a six-currency basket including the euro and the yen. About half of jewelry stores in India remain closed as owners protest against higher taxes.

“At the moment gold is looking weak, investors are coming out of it,” David Govett, head of precious metals at Marex Spectron Group, said today by phone from London. “Data out of Chinais weaker, so you are going to look for gold imports there to drop. And with the Indian tax increase, the two major buyers of gold got reasons not to buy it. With the stronger dollar and everything else that’s going on in the world, why buy gold at this moment in time?”

Gold for immediate delivery fell 0.8 percent to $1,636.88 an ounce by 10:05 a.m. in London. It fell as much as 1.1 percent to $1,632.45, the lowest price since Jan. 16. The April-delivery contract dropped 0.8 percent to $1,636.50 an ounce on the Comex in New York….”

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“WASHINGTON — Two economists at the St. Louis Federal Reserve have published findings that indicate that Wall Street speculation is responsible for 15 percent of the increase in oil prices over the past decade, a finding with significant implications for the recent sharp rise in gas prices.

While politicians have little ability to alter the price swings of commodities like oil, regulators have both the authority and policy tools to do so. The Commodity Futures Trading Commission is responsible for overseeing the financial market for oil. The 2010 Wall Street reform bill gave the CFTC new power to limit excessive speculation, but the rule will not go into effect until later this year.

According to St. Louis Fed economists Luciana Juvenal and Ivan Petrella, speculation in oil markets was the second-biggest factor behind the past decade’s price run-up, behind increased global demand for oil, which accounted for 40 percent of the increase.

“Speculation was the second-largest contributor to oil prices and accounted for about 15 percent of the rise,” the economists wrote. “The effect that speculation had on oil prices over this period coincides closely with the dramatic rise in commodity index trading — resulting in concerns voiced by policymakers.”

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“Signs that crude futures may hit much higher levels are converging, say oil traders and analysts, some of whom predict that Brent [LCOCV1  124.22    0.10 (+0.08%)   ] crude could reach $200 a barrel within the next 12 months.

Mark Lennihan / AP

The biggest issue, they say, is that global crude supply remains uncommonly tight — a scenario that’s unlikely to be alleviated any time soon.

Even though Libya’s oil has largely returned online after the political disruptions that took it off the market last year, and Saudi Arabia is generating its highest output in three decades, the available crude is just barely meeting demand. The summer driving season in the U.S., which begins in April, could put further pressure on prices.

The cash, or physical price, of crude — which refers to what’s paid for the commodity when it’s shipped from a producer to a buyer — has largely exceeded the price of Brent futures since mid-February (a situation referred to in oil trading as “backwardation.”).

The effect on the home front is already being felt: In the U.S., gas prices are at $3.86 per gallon, according to OPIS, a stone’s throw from the $4 mark that created big concerns last year.

Still, it’s unclear that releasing oil from the Strategic Petroleum Reserve, a maneuver the White House made last June 23 in hopes of easing prices at the pump, will be much of a fix.

Gas prices were roughly $3.60 when the drawdown occurred, and were depressed for only a few days before climbing back over $3.70 a month later. Because of that, many traders tend to dismiss the recent chatter in Washington about releasing more oil from the SPR as bad politics.

“The seaborne oil market is extremely tight,” says one bullish hedgie. “As much as the politicians love blaming speculators, if the market was up on speculation and not fundaments, the physical market would be trading at a discount.”

Goldman Sachs [GS  126.07    0.05  (+0.04%)   ] commodities analysts agree with him, at least on the first part.

“We expect fundamentals will continue to tighten during 2012,” the firm said in a March 14 report, “pushing prices toward our 2013 Brent crude oil price target of $130 [per barrel]. With OPEC spare capacity and inventories low, the balance of risk to crude oil prices remains skewed to the upside.”