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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (1051)	5/1/2013 9:13:47 AM
From: Goose94	Respond to of 202922

Credit Suisse published a report on commodities on Monday April 27, 2013 - Stay Bearish was the Theme. They are cautious on commodities, given that: i) Elevated prices have triggered a significant capex response, leading to excess supply in many instances; ii) Chinese risks are high: the investment-share of GDP, at 48%, must fall, total debt is now 230% of GDP and quantitative tightening has started; iii) Global macro momentum is slowing (they think until mid-year); iv) Credit Suisse believes the dollar trade-weighted index has the potential to continue strengthening (typically bad for commodities); v) Commodity prices are still high relative to their long-run averages (in real terms) and producers’ break-even (especially for iron ore and oil); vi) Equities are a better inflation hedge than commodities, in their view. With respect to gold, while cautious, Credit Suisse thinks gold and gold-related equities are preferable to the industrial commodities and related equities. Credit Suisse highlights gold stocks now appear clearly oversold. On the one previous occasion when gold stocks were this oversold (in October 2008), the gold stocks outperformed by 109% and 91% over the following three months and six months respectively. Credit Suisse also notes that the relative earnings momentum of global gold stocks is already at historical trough levels. Why is it so hard to value gold? Credit Suisse says partly because the stock outstanding is around 200x greater than the annual supply. If, say, the iron ore price fell to $50/t, then no miners would cover their break-even, triggering a quick supplyside response. If, on the other hand, the gold price fell to $1,000/oz, then even if all mine supply were to stop (which is unlikely) there would still be a lot of inventory. ETF selling in Q1 was, for example, equivalent to the size of the entire South African production volume.