Is This The Reason Why Gold Is Suddenly Surging?

Total Gold ETF physical holdings rose 0.85% on Friday (following Thursday's 0.78% rise) combining for thebiggest 2-day rise since Nov 2011 (adding 843,000 ounces of gold in 2 days). Of course these moves came right after the SNB decision ands are the largest since the peg was announced in 2011. GLD - the largest gold ETF - saw holdings surge 1.9% on Friday, the biggest single-day surge in almost 5 years.

TotalGold ETF Holdings surged 1.65% in the last 2 days

SPDR GLD ETF Holdings spiked 1.9% on Friday and 3.3% in the last 2 days - the biggest 2-day rise since May 2010...

Of course, once again this shows that only paper gold matters for price determination... physical is irrelevant (until of course, physical is all that matters).

Midwest aluminum premium to dip but stay near record highs –analysts

The U.S. Midwest aluminum premium will drop but remain near record highs in 2015 as warehouse queues are reduced, two analysts said on Tuesday in a panel discussion at the Platts Aluminum Symposium.

 

The premium , or the price aluminum users pay on top of the benchmark London Metal Exchange (LME) futures price <0#AL> for physical delivery, could fall 2-1/2 cents off the current record-high level of 24.15 cents a lb by March or April, said Timothy Hayes, principal at metals researcher Lawrence Capital Management.

 

Ed Meir, senior commodities analyst at brokerage INTL FCStone, said the premium would begin to fall in the second half of 2015 and would trade between 19 and 22 cents a lb.

 

The Midwest premium, along with regional premiums in Europe and Japan, soared to record highs in 2014 as queues to receive aluminum from LME warehouses have grown to more than 500 days due to financing deals that have drawn intense scrutiny from lawmakers and regulators.

 

In response to the criticism and complaints from users, the LME will implement a rule requiring that warehouses link load-in and load-out rates beginning Feb. 1.

 

The expected decline in wait times will pressure premiums, Hayes and Meir said, though they emphasized that other factors were just as if not more important.

 

A decline in Japan’s regional premium, which is currently around $110 a tonne less than the Midwest premium, would spill over to pressure U.S. markets, Hayes said, forecasting an average premium of 21 cents a lb in 2015, 18 cents a lb in 2016, and 15 cents a lb in 2017.

 

However, he said a widening trade deficit would underpin premiums and cause an increase in the medium term. He added that the premium could ultimately find a floor around 10 cents a lb, the cost of shipping aluminum from the Gulf of Mexico to the Midwest, a level Hayes called “a beacon of where premiums should be.”

 

Economic weakness around the world will hamper U.S. growth in the second half of the year, weighing on the premium, Meir said. In addition, a flattening forward price structure, coupled with major banks’ exits from physical commodity financing, will reduce the attractiveness of storing aluminum.

 

“I don’t know who has the deep pockets to replicate these deals assuming the spreads come back,” Meir said.

 

He added that surging demand from the U.S. automotive sector would prevent the premium from falling further, though the possibility that top producer China would reduce export duties on ingots remained a “wild card” and had the potential to drive premiums down sharply.

Global zinc market in 255 kt deficit during Jan-Nov '14: ILZSG

The latest statistics published by the International Lead and Zinc Study Group (ILZSG) indicates that global refined zinc market was in deficit of 255,000 tons during the initial eleven-month period in 2014. The total reported zinc inventories declined by 326,000 tons during the same period.

The zinc mine output reported declines in Australia, Canada, India, Ireland and Namibia. However, the fall in output was covered with the increased mine output from other countries including China, Mexico, Peru, Sweden and the United Sates. Overall, the zinc mine output grew by 1.9% during the initial eleven months of 2014, in comparison with the previous year.

The refined zinc metal production during the eleven-month period totaled 12.296 million tons, 4.16% higher when compared with the 11.805 million tons output during corresponding eleven-month period in 2013. The rise in refined zinc metal output was mainly due to increased output from China.

The global demand for refined zinc metal increased by 5.4% to 12.551 million tons during the initial eleven-month period in 2014. The Chinese apparent usage increased by 10.5%. The US reported a demand rise of 3.9%. On the other hand, apparent consumption in the Europe region declined by 1.6%.

The global mine production during the month of Nov ’14 alone totaled 1.213 million tons. The refined zinc metal output during the month totaled 1.207 million tons. The global demand for the metal totaled 1.190 million tons during the month.

Copper expects to run short

This metal which is economically sensitive declined by 14 percent, by the end of last year, has forced the crowd to jump on the downward action. The Futures contracts are anticipating on the further falls for the metal at multiple month highs on the London Metal Exchange, has seen that the similar contracts hike by 180 percent, since the beginning of the month December, stated the Financial Times

The decline of the commodity will hike by the expected decline in the Chinese Economy, which accounts for 45 percent of the global demand and there is also a forecast of the increase in the supplies in the mine this year and also in the year that follows.

The estimates of Wall Street show that, the increase in supply might be off the base. The mining giant Glencore PLC, also agreed with the estimation. The company is the biggest supplier of copper in the world.

The company also stated that, forecast of surplus in the year 2015 will be very small, based on the past surplus, and the chances are less that, the decline will move further outward. The company also added that, it wouldn’t be surprised to see a deficit in the year 2015.

LME Changes Select Tick Sizes

Is Aluminum The Next Commodity To Crash?

Remember that when it comes to industrial metals, two of the most notorious banks in the US, Goldman and JPM as well as the world's biggest commodity trader Glencore, tried to corner the market and became a supply-controlling syndicate a la De Beers, controlling how much metal hits the market - most notably aluminum - and creating an artificial scarcity in the process. We covered this first in 2011, but few people noticed even if the data was staring everyone in the face.

They failed, when this story became mainstream two years later following an article in the NYT which led to numerous congressional hearings, lawsuits, guilty pleas, and so on, in the process crushing the big banks' scheme to corner physical commodities. As a consequence, most banks have spun off are in the process of selling their physical commodity divisions.

However, one thing did not change: aluminum was still largely locked up in warehouse inventory, with little if anything of the underlying product, i.e., supply, hitting the market (and market price).

And as the charts below show, while copper has plunged in recent weeks, aluminum has been surprisingly stable, even though like copper aluminum is one of the key metals behind Commodity Financing Deals.

That is about to change, because according to a source at Metal Bulletin the aluminum trickle (at first, then flood) out of warehouses and into the market, is about to be unleashed.

Does this mean that the one industrial commodity which so far was spared carnage is about to be "coppered"? And if so, how many hedge funds and prop desks who have aluminum-collateralized loans will have to struggle even more to pretend they can keep pushing that margin call into voicemail forever. We expect to find out shortly.

China’s GDP Release to Trigger Further Copper Price Falls?

Market focus has shifted to the China Q4 GDP figure due for release next week, which is expected to slow significantly.

Bloomberg predicts that China’s growth will slow to 7.2% in the final quarter of 2014. Will copper prices present a renewed decline on poor data from China?

“Copper prices are likely to slide should the GDP data turn out poor, but the impact will be limited as the result is somewhat within market expectation,” an analyst from Shanghai CIFCO told SMM.

Analyst from Jinrui Futures also reckons that copper market may not be significant affected even if the economic indicator proves weak, as market prediction is for the economy to slow. “The bad data might have been priced in,” the analyst explains.