Commodities going up ?

[Supercilious]

http://www.ft.com/cms/s/0/8c03f6bc-f...077b07658.html

Goldman warns on commodity returns

ByJavier Blas in London
Published: February 18 2009 16:10 | Last updated: February 18 2009 16:17

Goldman Sachs, Wall Street’s largest commodities dealer, yesterday told clients to bet on falling returns from commodities, including crude oil, warning that the shape of the futures curve will trigger further losses to investors in the asset class.
The shape of the futures curve is crucial to the profitability of commodities indices. In addition to the spot return, commodity index investors obtain a separate return – the roll yield – as they roll trades over each month, just before the futures contract expires. That return is positive when futures prices are lower than the prevailing front-month price – a backward-dated market – and negative when futures prices are higher – a contango market.

“While we remain long-term bullish on direct commodity investments, it is this large cost of holding the position [rolling] that drives our underweight recommendation on direct commodity investments,” Goldman Sachs said.
The contango in many markets has widened to record levels, causing hefty losses due to the roll even with stable spot prices.

Well, ... if Goldman advices its clients to get out of commodities and if one believes the current contango is artificially produced by the synthetic derivatives (and the guys at Goldman probably don't understand how that works ) then one may think the price of oil is going spike up.


According to GRG's first principle of oil futures thermodynamics :

"What Goldman wants, Glodman gets."

[D-Mack]

Re: Commodities going up ?

Global investors see Chinese green shoots
The world's fund managers have begun to glimpse the first green shoots of recovery and are betting that a powerful rebound in China will revive demand for commodities and lead global industry out of slump.

...

The OECD's leading indicators still point down, raising the risk of fresh disappointments for the over-eager. Merrill said oil and industrial commodities are coming back into favour as "a pure way" of playing China's growth without having pick through company balance sheets. But there is a rising suspicion that gold has risen too far, too fast.

http://www.telegraph.co.uk/finance/f...en-shoots.html

lots of opinions out there

[aaron]

Re: Commodities going up ?

Oil shot up today and wholesale prices increased last month. Gold has also gone up a lot in recent days.

Is Poom beginning, already?

[Starving Steve]

Re: Commodities going up ?

I am almost always right long-term but usually wrong short-term. That has been my track record. So, I tend to buy and hold and go deeply red until someday I bonanza.

My forecast: Go long ENERGY, and I don't mean solar power and wind mills. I mean real ENERGY like energy from atomic power, oil, natural gas, dams, and coal-fired power plants.

I am deeply in the red on my oil and gas trusts, but I am being paid handsomely to wait. And I plan to wait.

Long-term: The future is CHINA and INDIA, all of Asia, even Russia.

The worldwide depression is likely to last for years, but the world will not come to an end. China and India will develop and move ahead to enjoy something like the standard of living that the West has enjoyed. Sadly, the West will decline, especially America.

[phirang]

Re: Commodities going up ?

Considering that the money markets are about to collapse, I'd keep the hell away from anything other than gold at the moment.

[Starving Steve]

Re: Commodities going up ?

So long as paper money keeps buying more each day, especially the U.S. dollar keeps buying like crazy, the world money markets are not going to collapse. I know this seems hard to believe, but the problem right now is a shortage of paper money, especially U.S. dollars, free and available to pay-down debts.

[mercerbear]

Re: Commodities going up ?

My forecast: Go long ENERGY, and I don't mean solar power and wind mills. I mean real ENERGY like energy from atomic power, oil, natural gas, dams, and coal-fired power plants.

I completely agree with your point of view. Also, I am curious how much further the dollar price of oil can possibly fall. We're talking about pricing arguable the world's most precious resource in worthless paper money.

I have considered taking a position in energy but I just can't decide. It makes me nervous that EJ hasn't recommended it yet. I guess I am still waiting for the "go ahead" before poom.

[Starving Steve]

Re: Commodities going up ?

I think that we have seen the bottom on energy prices, but I am almost always too early in my forecasts.

I just keep watching the eco-frauds waste money on non-solutions and total nonsense, and I get more and more bullish on energy.

The wild card is that this worldwide depression could grow more severe and force prices for everything even lower. That is hard to believe, but it could happen. And so far, that is what has happened: commodities like energy have been over-produced in order to pay debts. The over-production has forced prices even lower. Sales of most commodities have been at a loss to the cost of production.

Logic would dictate that producers would soon shut-down and call it quits. But this world is not always logical, and there are long lag times in making decisions like closing operations.

Interesting times, indeed!