Asset management, Behavioral finance, Commodity price, Commodity risk, Economics, Hedging, Market research, Market trends, Psychology, Risk management, trend following

Harnessing market trends to manage commodity price risk

On 24th September 2015, David Stein (M Sc., CFA, President and CEO of Aberdeen International[1]) wrote a compelling article analyzing the expected effect of last year’s VolksWagen emissions scandal on palladium and platinum markets that should be of great interest to commodity traders and industry. Continue reading

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Asset management, Central banking, Economics, Market research, Policy, Politics, Stock market, Uncategorized

Investing in the age of unprecedented monetary experiments

Since the 2008 financial crisis, world’s largest central banks have unleashed a program of monetary stimulus that dwarfs anything we’ve experienced in history. With no historical precedents, how should investors navigate the risks and events that will likely exert extreme stress upon political, economic and social fabric of nations across the world. Altana Wealth’s founder Lee Robinon offers some unorthodox insights in a 45 minute interview with Real Vision TV with Grant Williams. You may not hear similar thinking from academics or CNBC-vetted pundits. Lee has the remarkable capacity to keep a mind-bogglingly detailed mental map of what’s going on in the world of business, finance and politics within a clear historical perspective and isn’t shy about laying it out as he sees it. The video is below: Continue reading

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Commodity price, Economics, Energy crisis, Hedging, Market psychology, Oil market, Uncategorized

4/5: Sources and quality of oil market information

This posting is part 4 in the 5-part series on the future energy crisis we are likely facing. Here are parts one, two, and three. My research to try and establish facts about oil supply and demand led to many dead-ends where you must take the information at face value and hope that it is true. For example, we’ve all heard (again) about tanker-fulls of unsold crude oil floating around the world. Ultimately, this information is based on hearsay. For example, Bloomberg reported how oil companies are seeking supertankers to store 20 million barrels of crude oil [i] (that sounds like a lot, but it represents only a few hours’ worth of global demand). Continue reading

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Commodity price, Energy crisis, Market research, Oil market

3/5: Revisiting the peak oil hypothesis

As we discussed in part 1 and part 2 of this series, the world is facing a dire energy predicament; world oil reserves are fast dwindling and new extraction technologies won’t be able to reverse global production declines. By all accounts, it appears that we are past the point of peak oil and today we take another look at the peak oil hypothesis. One of the key thoughts in this report is that, as oil production becomes more expensive in real terms, it must also become more expensive in nominal, or dollar terms. That it has recently become cheaper in dollar terms can only be a temporary aberration. Continue reading

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Commodity price, Energy crisis, Market research, Oil market

2/5 Oil production and the evolution of drilling technologies

Technology is another element comprising the happy talk about the world’s inehxhaustibly abundant oil supplies. As with Saudi Arabia (and other nations’) reserves, the reality is quite different from what is commonly presented. The argument is that oil reserves calculus changed in the last decades as drilling technologies iproved. That, in part, is how the mushrooming oil reserves numbers are justified even in absence of large new oil field discoveries. Unfortunately, experience hasn’t borne out this optimism and the idea that drilling technologies may have turned Saudi Arabia’s 110 billion barrels of proven reserves into 790 billion barrels is unrealistic, to put it politely. Continue reading

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Commodity price, Economics, Energy crisis, Hedging, Market research, Oil market

1/5: Making sense of Saudi Arabia’s oil reserves and production capacity

So, the question is, why did oil prices suddenly collapse in 2014 and continued slumping into 2016? Neither U.S. fracking boom nor the slow demand growth can explain the event’s timing. We’ve known about fracking since at least 2009 and the “boom” part became quite apparent by 2011. The weakness in global demand wasn’t news either, so what did happen in June 2014 when oil prices collapsed? Supposedly, this had something to do with Saudi Arabia’s refusal to curb excess production for whatever reason – there has been no shortage of explanations. Saudi Arabia is the world’s biggest oil producing powerhouse endowed with virtually inexhaustible reserves of the black gold and the capability to switch the taps on or off and move global oil supply and prices at will. That, at any rate is what the mainstream media narrative would have us believe. However, if we scratch the gloss off that narrative, the situation appears starkly different: Continue reading

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Commodity price, Energy crisis, Hedging, Market trends, Oil market

$500 per barrel: could oil price rise tenfold?

In 2012 a report produced by the UK Ministry of Defence  predicted that oil prices would rise significantly out to 2040, and by “significantly,” they meant to $500 per barrel. Today, after nearly two years of low oil prices and much talk about an oil glut this may seem farfetched. But we shouldn’t dismiss UKMOD’s warning. This could turn out to be the most important development facing humanity for decades to come. Continue reading

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