There is a lot more than chinese speculation going on in commodities – central fund of canada (nysemkt_cef) _ seeking alpha

We heard a lot of noise last week about the rise in speculative activity in commodity markets in China. Exchange rate definition business That should come as no surprise from a technical perspective. International currency definition Many raw material prices hit multi-year lows in late 2015 and early 2016 and turned around, with some posting fantastic gains.

The Chinese are notorious action seekers – the reason why gambling casinos in Macau are so popular. Currency exchange risk definition While that’s a gross generalization that will likely encourage critical responses, perhaps it is just that there are so many people in China that the percentage of the population that are thrill-seekers makes the addressable market of Chinese gamblers the highest in the world. Currency definition for kids The Chinese stock market was a popular destination for those seeking action; that is, until the government established rules that made it easy to buy and very difficult to sell. Currency markets definition Those action seekers had to turn somewhere; they always look for markets or vehicles that provide the thrill of victory and the agony of defeat. Definition of currency exchange rate Volatility means opportunity, and few understand that more than Chinese investors and traders.

In early 2016, gold lifted off from multi-year lows. Local currency definition Crude oil rallied 80% from its February lows. Multi currency account definition The Baltic Dry Index moved from 290 in mid-February to 715 on April 27. Stable currency definition Iron ore moved from under $40 to over $60 per ton in 2016, and other commodities have moved 10-20-50% or more over short periods. Foreign currency definition wikipedia It is clear where the action has been over recent months. Cultural currency definition Chinese traders flocked to the commodity markets. Devalue currency definition Now, some analysts are blaming them for the rallies in raw material markets. Term currency definition However, while they may have contributed to price action by exacerbating moves, Chinese speculation is not the reason for rising commodity prices. Currency fluctuation definition In fact, many commodities are moving despite the Asian nation these days.

The Chinese economy remains the strongest in the world, with growth exceeding 6% on an annual basis. Definition of foreign currency The problem is that China and the rest of the world became accustomed to double-digit growth. Home currency definition When economic growth declined, the effects on other nations were dramatic. Foreign currency exchange definition When it comes to commodities, slower Chinese growth has been only part of the problem. Transaction currency definition The maturation of China’s economy has shifted the nation from heavy manufacturing towards an orientation to consumerism. Exchange rate volatility definition Therefore, commodity demand shifted lower, as the nation had built significant stockpiles of raw materials and made investments in production around the globe. Currency conversion definition The Chinese economy remains dicey these days, and slower growth has become a fact of life in the global economy.

The speculation on Chinese commodity exchanges has been the result of money looking for action. Meaning of devaluation of currency Interest rates have been dropping in the Asian nation, and the stock market is now a roach motel, investors can get in, but it has become much more difficult to get out of positions due to new regulations on selling. Meaning of currency devaluation I view the Chinese money following into commodity markets over recent months as transitory. Exposure to currency risk definition and measurement While that buying could have resulted in higher highs than normally would have occurred, the basis of the bounce in raw material prices is low interest rates, a downturn in the dollar and the fact that many commodities fell to or below production cost, causing the output to slow. Foreign exchange account definition As an example, crude oil has rebounded as U.S. Currency account definition production fell below the 9 million barrel per day level and rigs in operation in North America plunged to 318 as of May 13, 2016. Currency rate definition At the height of the oil boom, there were more than 2000 rigs operating in North America.

As the weekly chart of NYMEX crude oil futures illustrates, crude oil rose from $26.05 on February 11, 2016 to highs of $47.02 as of last Thursday – an increase of 80.5% in three months and one day. Currency depreciation definition There are many reasons for the rise in the oil price, but I believe the fall in U.S. Presentation currency definition production and a weaker dollar have been far more influential than an increase in Chinese speculation. Fx risk definition On a technical basis, NYMEX crude put in a bullish key reversal trading pattern on the weekly chart last week.

Fear and uncertainty initially caused the price of gold to move higher in 2016. Paper currency definition The year opened on a sour note when selling in global equity markets, starting in China, drove investors and traders to assets they perceive as safe. Currency spread definition Gold and high-quality government bonds were the beneficiaries of the nerve-wracking market activity.

As the monthly gold chart highlights, the price appreciation in 2016 has been more than a speculative affair. Foreign currency definition The momentum of the long-term trend in gold reversed, turning from bearish to bullish. Currency risk definition Open interest, the total number of open long and short positions in COMEX gold futures recently increased to just under 580,000 contracts – the highest level since December 2010 when gold was on its way to all-time highs at over $1920 per ounce in 2011.

The monthly chart of COMEX silver futures looks similar to gold. Foreign currency risk definition The price trend has turned bullish and open interest at around 206,000 contracts is at all-time highs. Convertible currency definition Open interest in both silver and gold is an important metric as it represents investment demand. Definition of currency in economics The path of least resistance for precious metals is always a function of hoarding or dis-hoarding. Devalue currency meaning The fact that open interest has increased to such lofty levels is a sign that people around the world are hoarding precious metals in 2016. Exchange rate definition wikipedia Low interest rates around the world, negative rates in Europe and Japan, and a general decline of faith in paper currencies has caused investors to go for the gold (and silver). Exchange rate definition pdf The fact is, in 2016, gold and silver have appreciated in every currency in the world. Currency ratio definition That is not the result of Chinese speculation, it is a comment on global central bank policy.

Brazil is one of the world’s largest raw material producers, and the climate of the nation supports the production of many agricultural commodities. Definition of currency risk The country has been suffering from a perfect bullish storm for commodities over recent months. Currency exchange definition First, a political scandal has resulted in the impeachment of the president last week. Currency fluctuations definition Scandal is nothing new in Brazil – many members of the legislature that voted for impeachment are themselves under investigation, as is the successor to the head of government. Currency of information definition The currency of the nation has reflected the problems in Brazil. Euro currency definition More importantly, the weather in the country has been lousy. Third currency definition For agricultural commodities, the weather is the ultimate arbiter of price direction.

The price of sugar has rallied from 10.13 cents per pound in August 2015 to 17 cents as of Thursday, May 12 – an increase of 68% in ten months. Foreign currency account definition Brazil is the world’s leading producer of sugar cane. Domestic currency definition Weather in Brazil and Asia have caused the sugar market to move from surplus to deficit.

Most recently, the price of soybeans have taken off to the upside after reports of drought in Brazil and floods in Argentina have decreased the global soybean crop. Definition of currency devaluation Soybeans have rallied from $8.49 per bushel in March of this year to highs of $10.82 last week – an increase of 27.4% in a little over two months. What is the definition of currency exchange Brazil is a significant producer of the grain. Currency trading insurance definition A shortage of palm oil and bad weather conditions in Asia have also caused the price of beans to take off to the upside.

Many other commodity prices have moved higher in 2016. Functional currency definition Platinum has appreciated from under $900 per ounce at the end of 2015 to over $1050 as of last Friday. What is the definition of currency Lumber has moved from around $250 per 1,000 board feet to over $320 as of last week. Currency position definition There are so many other examples of commodities that have recovered dramatically in 2016, particularly since the middle of February. National currency definition An important thing to keep in the back of our minds when it comes to commodities prices is demographic trends. Definition of depreciation of currency Every 13 seconds, the world’s population increases by one person. Euro currency market definition In 1960, there were around 3 billion people on planet earth, and today, there are over 7.32 billion souls in the world. Currency exposure definition The exponential growth of world population means that each day, more people are competing for raw materials or commodities, which are finite assets. Currency economics definition Demographic trends underpin the fundamental supply and demand equation for commodities.

The price of iron ore has rallied from under $34 per ton to over $60 since the beginning of this year. Data currency definition Last week, the price fell to around the $50 level. International reserve currency definition At the same time, the Baltic Dry Index has been extremely volatile. Local currency fare definition In February, the BDI traded to all-time lows at 290.

The BDI is an important metric when it comes to demand for dry bulk commodities. Currency trading definition By April 27, this shipping index rose to 715 – an increase of over 146% in a little over two months. The definition of currency Lately, the index has been coming back down to earth, closing last Friday at 579 – still double the February level.

Last week, the price of one of the most important barometers for global industrial health, copper, fell to the lowest level since mid-February.

The daily chart of COMEX copper futures highlights the most recent price correction. Definition of currency exchange Last Thursday, copper put in a bearish key reversal trading pattern on the daily chart. Foreign currency exposure definition However, copper fundamentals may not be as bad as the chart would lead us to believe. Currency policy definition The backwardation (nearby price higher than deferred price) on the London Metal Exchange of over $10 per ton in cash to three-month copper is a sign of fundamental market tightness. Single currency definition Additionally, copper, like other commodities, will be highly sensitive to the value of the U.S. Currency exchange rate wiki dollar, which is not exactly looking bullish these days.

The daily chart of the dollar index futures contract shows a market that is making lower highs and lower lows since December, when the Fed raised interest rates for the first time in nine years. Foreign currency exchange rate definition Although they promised another 3-4 rate hikes in 2016, we have yet to see the first.

While some are pointing to an increase in speculation in China for the commodity rally, there is far more to the story in raw material markets. Definition of currency depreciation The bear market in commodities began in 2011/2012. Definition of devaluation of currency In 2015 and early 2016, many of the raw materials in this asset class hit multi-year lows, and in some cases, they moved to or below production cost. Currency depreciation definition economics Commodities tend to trade at higher volatilities than all other assets. Tradable currency definition When they go down, they plunge; when they appreciate, they go through the roof. Common currency definition Therefore, overshooting lows and highs is not an exception for these raw material markets – it is the norm. Currency converter definition I believe commodity prices fell to levels that were blow-off lows late last year and early this year, signaling important bottoms in the bear market cycle. Currency future definition During the first two months of 2016, the commodity ship began to turn north starting with gold, and many other commodities followed.

Commodity prices do not move in a straight line. Definition of currency appreciation In fact, the turn is young, and we are likely to see some brutal sell-offs in these markets. Currency valuation definition As an example, gold, which was trading at $1275 last Friday, could fall to $1176, which would only represent a 50% retracement of the move from the lows in December of last year. Denominated currency definition Crude oil could fall to $36.50 and silver to $15.85, and these markets would still look good on a technical basis. Economic definition of currency However, I do not think this is going to happen. What is currency exchange definition While many blame Chinese speculation on the commodity rally, I would rather point the finger at the world’s central banks. Currency exchange market definition Cheap money policies come with a bill, and the price will be inflation. Foreign currency transaction definition Commodity prices were bound to rise in a global environment where historically low interest rates continue to flood the world with cash. Currency volatility definition Demographic trends continue to provide an ever-increasing floor for prices, and when it comes to agricultural commodities, weather events have created a perfect bullish storm.

Commodities made lower highs and lower lows from 2011/2012, but that ship has turned one hundred and eighty degrees. Definition of currency crisis Higher lows and higher highs are on the horizon for the raw materials on which the world depends. Definition of functional currency There is a lot more to the commodity markets these days than speculation in China.

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