Commodities enjoy stellar week

By Chris Flood

Commodity markets enjoyed an extraordinary record breaking week with new price peaks being achieved in energy, precious metals and agricultural products.

Investor inflows into commodity markets appear to be gathering pace. Standard & Poor’s expects assets benchmarked to the S&P GSCI commodity index to increase by more than 20 per cent this year from an estimated $80bn to $85bn at the end of 2007.

Exchange traded products, one of the fastest-growing sectors for commodity investments, saw a strong start to 2008 with net inflows of $3.4bn in January, more than three times the monthly average for 2007, according to Barclays Capital. Barclays estimates total assets under management in commodity ETPs have swollen to almost $40bn.

“There is a growing awareness that natural resources are getting scarce,” said Professor Lex Hoogduin of Robeco, the Dutch asset management group: “The combination of demographic trends and rising global welfare will result in rapid growth in the consumption of commodities, energy, food and water in the decades to come.”

Oil hit a record $101.32 a barrel on Wednesday, staging a strong rally over the past two weeks from a low of $86.24 on February 7, as hedge funds put aside concerns over a possible US recession and significantly reduced their bets via short positions that prices would fall.

Nymex April West Texas Intermediate rose 77 cents to $99.00 a barrel yesterday, up 3.7 per cent this week while ICE April Brent gained $1.11 at $97.35 a barrel, up 2.9 per cent this week.

US petrol prices hit a record $2.6169 a gallon on Tuesday, helped by talk that physical players were tightening the market by sending gasoline cargoes from New York to Mexico where demand growth is stronger. Nymex March RBOB unleaded gasoline slipped 3 cents to $2.4916 a gallon yesterday, off 0.1 per cent this week.

Gold hit a record $953.60 a troy ounce on Thursday, helped by disapointing US inflation data and mounting concerns that the US economy could be heading for a period of stagflation. Gold eased 0.1 per cent to $943.20 a troy ounce yesterday, up 4.5 per cent this week .

Platinum slipped 0.1 per cent to $2,148 a troy ounce after hitting a record $2,192 in yesterday’s session, with a significant supply deficit expected this year due to production problems in South Africa. Over the week, platinum gained 4.8 per cent, helping tow palladium up 12 per cent to $498 a troy ounce.

“Insufficient power generating capacity in South Africa means the domestic mining industry is set for production growth constraints for the next 4 to 5 years with immediate repercussions for the prices of its key commodity outputs, platinum, ferro-chrome, gold and thermal coal” said Tama Willis of Deutsche Bank

Copyright The Financial Times Limited 2008
www.ft.com

Getting Started in Forex Trading

interested in joining the world of forex trading? here are some tips:

The web is absolutely full of ways in which you can make money for doing no work. Or so it is claimed.

If you have been around as long as I have then you have probably come to view these claims with a degree of scepticism. You just don't get something for nothing. You will probably agree with me when I say, "You get out of life what you put into it".

Nowhere are these claims more exaggerated than in the sphere of foreign currency trading, otherwise known as the forex market.

In simple terms trading on the forex market involves buying and selling foreign currency and banking on a change in the prevailing exchange rate.

A few companies have been using the promise of high returns to drive customers to their sites. Clients are advised of the risks beforehand, but even so, many clients are not prepared for the rapid market movements and they find that within a short time their discretionary trading money becomes someone else's profits and they are out of the game!

This leaves a trail of dissatisfied customers with empty pockets and gives the forex industry a bad name. And this is not how it should be.

In fact investing a proportion of your money in the forex markets can be a very good way to diversify your investment portfolio. This is because there is very little correlation between the stock markets and currency markets.

But you need to know what you are doing if you are to survive. And by that I mean you should have some basic knowledge of how the market works, a strategy for getting into and out of your trades, some money management techniques and above all a reputable broker.

You wouldn't try and sell Real Estate without training, (the government wouldn't let you anyway).

You wouldn't open a car repair shop without training, (your friends wouldn't let you).

So don't start forex trading without getting some education and training so that you minimise the risks I talked about above.

Submitted by: Zymark Nelson
http://forex.spaces.live.com/Blog/cns!89B738DE95AE3F53!125.entry

a weak dollar does not mean doom for the us

i read an article from www.npr.org from eric weiner that says the a weak dollar does not necessarily translate to a doomed dollar and economy. mr. weiner states that It's difficult — impossible, some economists say — to tease out the effects of a weak dollar from all of the other variables affecting the economy at any moment. But one thing is clear: The weak dollar creates ripples around the world. Some of those ripples are good, some bad. But that, too, is relative. Where you stand on the weak dollar depends largely on where you sit.

The most obvious effect of a weak U.S. dollar is its impact on American tourists traveling to Europe. In Paris, $7 cups of coffee and $50 taxi rides are suddenly de rigueur. A weak dollar affects even those American consumers who never leave home. If you have a penchant for German cars or French wine, expect to pay more, as European manufacturers raise prices to compensate for the weak dollar.

In fact, some economists warn of an "umbrella effect" — the tendency for the prices of all goods and services to rise once a few do. Other economists, though, say the risk of inflation is exaggerated. The core inflation rate, they point out, remains low — about 2 percent — despite the dollar's recent slide.

A weak dollar is also good news for American manufacturers. Their products are now less expensive, so they can sell more. That's why companies such as Boeing and Caterpillar like a weak dollar. It's also why many economists like it: As these big U.S. manufacturers sell more, the U.S. trade deficit shrinks.

There is one downside, though, especially for smaller American manufacturers. The weak dollar means that the firms themselves are cheaper and, therefore, vulnerable to a hostile takeover by foreign companies.

but then again, i guess every country goes through ups and dows economy-wise. let's just hope the us bounces out of this one soon.

how's the dollar doing?

rght now, the dollar is weakening. this is a fact. we all know this. but the question is how bad will the dollar slide?

Kathy Lien, Chief Strategist of the www.dailyfx.com has this in her column.

With the exception of producer prices, we expect more dollar bearish news and would actually be surprised if Bernanke had anything positive to say about the US economy. The Federal Reserve has cut interest rates by 225bp since August and it will be interesting to see if this has helped existing or new home sales in the month of January. According to the NAHB housing market index, bottom fishers are slowly beginning to sniff out the inventory, but just because they are sniffing do not mean that they are buying. Durable goods, fourth quarter GDP, personal income, personal spending and the Chicago PMI reports are also expected to be released, which means that a volatile week is in store for the currency market. There is a good chance that another round of weak US economic data could drive the US dollar to a record low against the Euro. We continue to believe that the next 2 months of retail sales and non-farm payrolls data will be particularly weak because the last time that we have seen service sector ISM fall to the levels that it did back in January was in 2001 and at that time, non-farm payrolls dropped 300k. In some ways, the latest crisis to the US economy is worse than 2001 which means that the 17k job loss that was reported by the Labor Department in January could pale in comparison to the losses that we could see in February and March. The same can be said for retail sales.

according to eric weiner of www.npr.org

The dollar is in free fall, or so it seems. In 2002, you could buy a euro for 86 cents. Today, it will cost you $1.40. You'd have to go back at least a decade to find a time when the U.S. dollar was so weak. Against some currencies, such as the Canadian dollar (the "loonie"), you'd have to go back 30 years. It sounds ominous, but is a weak dollar really so terrible?
Not necessarily. A weak dollar can be good for the U.S. economy, because it makes American exports cheaper and, therefore, helps close the trade deficit. But over the long term, the value of a country's currency is seen as a verdict on the overall health of its economy.