Commodities

Gold shines as inflation fears mount

9 January 2008

Asian growth can t explain the alltime high price of gold. Noninvestment demand for the metal has dropped since 2005. But gold is still the ultimate inflation hedge; a 33% price rise since August indicates investors are afraid central banks have lost monetary control.

Job cuts underline how Big Oil doesn’t love big oil prices

2 January 2008

Shell s costcutting is getting into gear as the black stuff touches a record $100 a barrel. High prices don t boost the majors profits that much. Instead, they squeeze margins and force up costs. Shell s cuts may not be enough to counter rampant cost inflation.

Opec could come to regret a production hike

28 November 2007

The oil cartel is under pressure to push up production quotas by 2%. But this highly speculative market is already wellstocked. Additional supply could push the price down sharply, as happened a decade ago. A repeat would cripple some Opec members oildependent economies.

Amaranth’s lawsuit against JP Morgan reveals two botched bets

14 November 2007

The defunct hedge fund lost a bundle on a huge natural gas wager. It now alleges that JP Morgan exploited its role as its broker to block white knights. The suit s merits are debatable. But the debacle illustrates a second bad bet: leaving a fund at the mercy of a single broker.

Crude benchmark distorts economic reality

17 October 2007

Oil market bulls say $90 oil is due to tight supplies. But the only place that has seen a big drop lately is the futures market s delivery point. This has driven the price of oil futures to record levels. But oil tanks worldwide are overflowing. The price of oil should be a lot lower.

Why are commodities bucking the credit squeeze?

16 October 2007

The price of oil briefly hit a record $89 on Wednesday. Mining shares and wheat are flying high. One reason is that there's still a lot of liquidity in Asia and the Middle East. Another is that last month's sharp cut in interest rates has given speculators new life.

China should be bold in revaluation

18 May 2005

The expected 510% would only attract more hot money. If the government loses control of the renminbi, it could easily rise by over 30%. A 20% move would calm both speculators and US critics.