Commodities

Managed Futures

Managed Futures closed the first half of the year with a strong down month in June. Only one CTA in our index selection managed to return a positive performance. The year is now in negative territory for Managed Futures.

Please find below the detailed performance of the top CTAs that we follow in our index. It is composed of a list of 16 representative managers. These are some of the largest CTAs in terms of Assets Under Management.

Managed Futures Performance

  • March average return: -3.79%
  • YTD average return: -1.97%

Managed Futures June 15

Manager Perf. YTD
Aspect Capital -4.59% -7.26%
Campbell & Company -9.27% -6.91%
Cantab Capital Partners -8.64% -5.97%
Crabel -3.47% -1.84%
Dunn Capital -10.47% -4.67%
FORT L.P. -3.53% -1.02%
Graham Capital Mgmt. -3.37% 1.56%
ISAM -5.36% 0.88%
Lynx Asset Mgmt. -6.18% -5.1%
Man Investments -7.44% -6.49%
Millburn Ridgefield -3.04% -1.32%
Quantitative Inv. Mgmt. 3.95% 10.72%
Quantica Capital -4.00% -3.62%
SEB Asset Mgmt. -3.16% 2.41%
Transtrend BV -5.63% -7.16%
Winton Capital Mgmt. -3.22% -1.96%

Main Indices Returns

As a comparison, please find below the returns for several indices tracking the managed futures/CTA industry as a whole:

Index Perf. YTD
Barclay CTA Index -1.72% 0.04%
BTOP50 Index -4.38% -3.16%
Newedge CTA Index -4.19% -2.27%
Newedge Trend Index -4.86% -2.49%

Track Managed Futures Performance

Want to keep updated on the performance of the managed futures sector?

Follow the sector by receiving monthly email updates via our “Managed Futures Report”. This is a “straight-to-the-point report”, giving you the performance of the largest managed futures programs and main index returns every month (check a sample report).

To receive the updates, simply subscribe here.

Managed Futures: How To invest – Contact Us

Whether you are interested in adding exposure to managed futures as:

  • Portfolio diversification
  • Standalone source of alpha
  • Way to seek aggressive performance

A good managed futures program is one of the best options. Contact us to discuss your requirements. We will be happy to recommend the programs that are best suited to meet, and hopefully exceed, your needs.

Disclaimers

Index Construction / Manager Selection

The performance in this monthly report is composed of a representative list of 16 CTAs, chosen for their size in terms of Assets-Under-Management, comprising most of the largest in the industry. This is not a complete database of CTAs. The returns are actual trading results reported by the CTAs and sourced from CTA databases/websites (including AutumnGold, IASG, Altegris and individual manager websites). The calculations are updated every month and are net of fees and commissions.

Risk Disclosures

Commodity Trading involves substantial risk of loss and is not suitable for all investors. Any performance results listed in all marketing materials represents simulated computer results over past historical data, and not the results of an actual account. All opinions expressed anywhere on this website are only opinions of the author. The information contained here was gathered from sources deemed reliable, however, no claim is made as to its accuracy or content. Different testing platforms can produce slightly different results. Our systems are only recommended for well capitalized and experienced futures traders.

CFTC-required risk disclosure for hypothetical results

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.

One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

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Gold fell -4.70 to 1143.80 on moderately heavy volume, while silver dropped -0.12 to 14.94 on moderately light volume.  Once again, a strong dollar is giving gold heartburn.

Gold made a new low today at exactly 08:30 EDT, at the time of the jobless claims report.  The report didn’t look that interesting to me, but it appeared to cause gold to spike down and the dollar to start rallying.  Gold’s violation of the prior low at 1141.60 is a bad sign, and suggests we will probably test 1130 in the not too distant future.

Silver continued dropping too, appearing as though it is destined to re-test the 14.62 low it made on Monday of last week.  Silver downtrend remains intact.

Miners fell as well, with GDX off -0.98% on light volume, while GDXJ dropped only -0.23%, once again outperforming the seniors.  GDX is down 23% over the past eight weeks – compare that with the Shanghai composite, which is off 26% from its high.   At some point, traders will once again start to show interest in the mining shares, but its probably best to wait for some visible evidence of this happening before buying.  Low prices can always get lower.

Platinum: down -1.14%, palladium down -1.73%; both metals made new cycle lows.  Copper actually rose +0.16%.

The dollar rose +0.53 to 97.81, making another new closing high and apparently preparing to break above its previous high of 97.88.  The strong dollar is causing no end of trouble for commodities.

Gold in euros actually rose on the day.  This supports my thesis that gold’s weakness is still all about currency movements.

SPX (US equities) opened higher, and just continued rising all day long, climbing +16.89 to 2124.29.  SPX needs a close above 2130 to violate the “lower highs” downtrend now in place – that’s less than 6 points away.  From there it is not far to SPX making yet another new all time high.  US equities are looking strong at the moment – they apparently like the whole concept of a new Greek bailout.  VIX dropped -1.12 to 12.11.  That level in the VIX is usually a good buy point, but I think I’d wait until SPX showed some signs of slowing down before buying any puts.

Bond ETF TLT rallied +0.69%, climbing right alongside SPX.  Money is flowing into US assets right now – both stocks and bonds.

The CRB (commodity index) dropped again, falling -0.49%.  Most commodities I watch were down today.

WTIC (oil) fell once again, dropping -0.70 to 50.92, moving to the lower end of its recent trading range.  Oil is looking like it might break lower once again.  The shale drillers are really suffering, but then so too are the services companies.  Nobody in the industry seems to like oil down around $50/barrel.

Same story, different day.  PM continues to look weak – along with most commodities.  Strong dollar pushes commodity prices lower.  As I have said many times, if the buck continues to rise, commodities including PM will most likely continue falling.  I wish I had better news.

Note: If you’re reading this and are not yet a member of Peak Prosperity’s Gold & Silver Group, please consider joining it now. It’s where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the “Join Today” button.

Source: PM Daily Market Commentary – 7/16/2015

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Silver News

There are two kinds of constraints when it comes to supply in the physical markets, and anyone building a position in physical metal needs to know the difference.

The first type is temporary. The other signals a sea change, the rush for physical metal going mainstream. When it happens, it’ll be “go time” in the physical markets. The time get your hands on products widely available at low premiums will be over.

Some bullion investors are wondering if it is “go time” now. The events in Greece, the stock market sell-off in China, and silver prices falling to near $15/oz spiked demand for manufactured rounds, coins, and bars.

Premiums jumped almost immediately for one-ounce and smaller silver products.

Anyone involved in these markets over the past 7 years has been through this drill a handful of times.

The drop in silver prices drove up demand, and the U.S. Mint cried “Uncle” (Sam) last Tuesday. Bureaucrats opted to stop taking new orders and instead clear up the existing backlog.

Such a move would have been considered extraordinary a decade ago. But the government-run Mint is pressed to its limit these days, setting new records for silver Eagle sales nearly every year since the 2008 financial crisis. Nowadays, surges in buying activity quickly overwhelm them. The Mint has “turned off the phones” three to four times since 2011.

Silver American Eagles are still the single most popular product in the U.S. When the Mint stops selling them, the effects sweep through the entire marketplace. Premiums jump in response to a scramble for the remaining inventory of Eagles. Demand spills over to alternative products. The pressure drives premiums higher and shipping times longer. This first occurs with government coins, then in rounds, and finally, if extreme, bars of 100 ounces and smaller.

We’re in the middle of another shortage of fabricated silver in the most popular varieties. This demand spike looks manageable for now. The relatively small, but growing, contingent of people concerned enough about world events to buy physical bullion is driving this surge. They see troubling headlines and lower prices as an opportunity, while the mainstream of investors continues to focus elsewhere.

Supply for coins in particular has fallen behind and has to catch up.

Here are some signs suggesting the silver market is suffering a temporary bottleneck in the fabrication of coins and rounds, rather than something more permanent:

  • Spot prices are falling even as demand and premiums for bullion rise. Traders are actively selling paper silver in the futures markets. They remain wholly unconcerned about taking actual delivery of the underlying exchange-sized bars. Mints and the manufacturers who make 5, 10, and 100 ounce bars can still get 1,000 ounce bars or silver grain to melt. They just can’t process them quickly enough to keep up with retail bullion investors who are clamoring to buy.
  • Bar premiums have not risen yet. Bars are simplest to manufacture, making production easier to ramp up. Premiums are less affected by surges than smaller and more labor intensive one-ounce coins and rounds – at least when raw silver remains in adequate supply.
  • Investors can still buy 1,000 ounce bars inside an exchange vault without paying an increased premium. One way to dodge higher premiums during a fabrication bottleneck is to buy exchange-sized bars and keep them parked in segregated storage until the cost of the smaller items, more suitable for delivery, falls.
  • We continue to lock prices in advance and accept orders for all products, even if we have to quote modest lead times. Responsible dealers won’t take an order unless they are confident they can keep a commitment to deliver when promised. Dealers and their customers can cope with a stretched supply chain, but not one that is broken.

The U.S. Mint expects to resume taking orders on August 1st. That may well signal the end of the current fabrication bottleneck. Premiums may drift lower and lead times may disappear as dealer inventories replenish.

To Capitalize on Low Spot Prices AND Low Premiums, Choose Gold Coins, Bars, and Rounds or Silver Bars

If you ALREADY own a substantial position in precious metals and you are confident spot prices will not rise in the coming weeks, it’s not unreasonable to delay purchases in the interim. Premiums certainly could fall soon.

But don’t delay too long. The contingent of investors with failing confidence in the paper markets for stocks, bonds, and futures is growing.

The day is coming when lots of people respond to increased risk and uncertainty in the financial markets by buying a few coins. Then it is GO TIME. Inventories of above ground metal in any form will dry up, and the market will seek a new equilibrium at much higher prices.

Here is what to expect when a serious supply shortage, rather than a temporary bottleneck, has begun:

  • Premiums would rise across the board – from scrap jewelry to American Eagles. Not only will smaller fabricated products be in short supply, investors and manufacturers will both be bidding aggressively for silver in raw form, including exchange-sized bars.
  • Exchange-sized bars would be hard to find for immediate delivery. The COMEX and other futures exchanges would impose cash settlements on contract holders. Traders would be confronted head-on with a very unpleasant reality when they suddenly decide to stand for delivery. There are 100 times more paper ounces than physical bars to back them. Holders of futures contracts on precious metals would wind up with cash instead of the metal they would much prefer.
  • Bullion dealers would stop locking prices in advance of your payment on orders. If they can no longer be certain of wholesale premiums and/or minting charges for replacement inventory, they will be reluctant to set a price with customers up front. And, if they aren’t certain when inventory will arrive, many will stop accepting orders for a product altogether.

The number of people unnerved by recent action in the paper markets for stocks, bonds, and currencies IS growing. The last couple of weeks have been particularly hard on confidence. Chinese officials now threaten to arrest citizens for selling stocks. Greece is in the vanguard of many nations who can no longer kick the can on unpayable debts. And last week’s surprise shut-down in the New York Stock Exchange highlights just how fragile today’s electronic exchanges are.

“Go Time” in the metals markets may not be here yet, but it’s coming.

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Oil crisis continues

Oil crisis continuesAs the oil crisis continues, more and more major oil companies are really feeling the pain. Recently, low oil prices claimed another 9,000+ victims as the Royal Dutch oil giant, Shell, announced big budget cuts. So, how big are the budget cuts? How are they going to be scaled? Who are the victims? And, what’s going on with this whole oil crisis anyway? We’ll discuss all of those topics today!

Shell’s Budget Cuts Are Huge!

Because the price of oil is trading so low, Shell is having a problem producing the commodity for a profit. As a result, they’ve announced that they’ll be scaling back investments by $15 billion! While the cut in spending was pretty drastic, according to the company’s statement, they have “options to further reduce spending, but (they) are not over-reacting to current low oil prices”.

Knowing that Shell is doing their best not to over react to the low oil price is definitely a bit calming, but $15 billion is still a major cut back. There is a bit more calming news however. Shell won’t be completely slowing spending by $15 billion immediately; that would be devastating to the company. Instead, they’ve outlined a plan to allow for these budget cuts over the next 3 years.

Who Are The Real Victims Here?

Of course, investors aren’t going to be happy to see losses, and the overall idea of cutting a major portion of spending out is hard to swallow for the company as a whole. However, I think the real victims are the workers that are soon to lose their jobs. In the announcement made by Shell, the company stated that they plan to lay off 9,000 workers throughout the course of the budget cuts; hence the mention of 9,000 victims above.

Why Is There An Oil Crisis In The First Place?

As recently announced by the Federal Reserve’s Richard Fisher, Saudi Arabia is responsible for engineering the global oil crisis. Here’s what Mr. Fisher had to say

I’m sure King Abdullah thought to himself, ‘I’ve alson done a favor vis-a-vis Iran… From a budget stand point, [the saudis] have reserves that can handle this.”

Why Would Saudi Arabia Do This?

One theory that just so happens to be the one I like the most is the idea that Saudi Arabia is attempting to maximize earnings over the long haul. The way they see the whole ordeal is this…I have a ton of oil laying around in reserves, I can sell it now, or I can sell it later, but at some point, I’m going to sell it. So, how do I go about getting the most money per barrel over the long term?

So, how can Saudi Arabia get the most money for their oil? One way is to knock out competition. Think of it this way, with oil prices at incredibly low figures, you have to imagine that several big money oil projects are not going to come to fruition. The United States will surely continue to produce oil, but will they be drilling more; probably not! Not to mention the fact that the Brazilian deep ocean drilling project, the Canadian tar sands, and big money arctic oil projects are all at jeopardy. So, in a nutshell, if Saudi Arabia is looking to kick some of the competition out of the way, they’re doing a very good job so far.

There’s no question that knocking out competition is part of the agenda either thanks to a January tweet by Prince Alwaleed bin Talal that read as follows…

Although Saudi Arabia and OPEC countries did not engineer the reduction in the price of oil, there’s a positive side effect, whereby at a certain price, we will see how many shale oil production companies run out of business”

Political Gain

Another side of the equation here is political gain. There’s no shock in the fact that Saudi Arabia has political ground to gain when it comes to falling oil prices. It’s no secret that Saudi Arabia and Iran have a score to settle. While Saudi Arabia has the cash reserve to handle low oil prices, the same can’t be said for Iran. While I believe that the move is both political and to push competition out of the market, some experts believe that the pressure this puts on Iran is enough for Saudi Arabia to be happy with the price drop.

What Do You Think?

Who are the real victims in Shell budget cuts? Do you believe Saudi Arabia engineered the oil crisis? Let me know in the comments below!

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Crude Oil

Crude OilOil has been a major topic lately. As the oil market crashed and the price of crude oil fell below $50 per barrel, many investors have started to see opportunity. As a result, we’ve seen a pretty drastic climb in the price of crude oil over the past few days followed by yet another slump. Today, we’re going to talk about what we’ve seen in the price of oil over the past week, why oil prices rose sharply, why oil fell sharply following its comeback, and whether or not we can expect the price of oil to continue to fall in the near future.

What We’ve Seen In Oil Over The Past Week

The past week in oil started out with a great rally. On January 28th, the price of oil started to rise slowly; followed by steep increases on the 29th, 30th, and February 2nd. Over that short period of time, the price of oil climbed more than $8 per barrel. However, February 3rd wasn’t so great for oil prices as the declines started again; falling from just under $58 per barrel to just under $56 per barrel. Today, oil has started on a decline, but has been relatively after losing about $0.50 per barrel.

This overview was created by viewing charts at Investing.com

What Caused The Climb In Oil Prices?


To understand why oil prices climbed, you’ll have to also understand why they fell. It all boils down to supply and demand. In the oil market right now, supply far outpaces demand. As the basic law of supply and demand tells us, when supply outpaces demand, prices fall.

The reason oil prices climbed early in the week is because Baker Hughes said that US oil rig counts plunged by a record number last month. With oil rig counts down, investors assumed that lower production numbers would soon follow. As a result, supply and demand would become more balanced and the price of oil would rise again.

What Caused Oil Prices To Fall After The Climb?

With oil rig counts down, we have to imagine that production was down as well…right? Not exactly! As a matter of fact, according to Yardeni Research, oil production in the United States actually increased 9.3 million barrels per day during the week of January 23rd; which is record growth might I add.

After more and more data started to become available, investors realized that the crude oil market may not have bottomed out just yet. As a result, we started to see more declines in the market.

Will Crude Oil Continue To Fall Or Start To Make A Come Back?
Why invest in physical gold & silver?

Over the long run, I think that crude has no choice but to make a come back. I don’t think we’ll see the OPEC expectation of $200 per barrel after an explosive comeback anytime soon, but I do think that in the long run, oil has nowhere to go but up. The bottom line is that oil is a commodity that in the long run is worth far more than $55 or $60 per barrel.

However, it’s also important to look at supply and demand. Oil production still outpaces demand for oil by far. Even though we’re seeing small cutbacks in production here and there, I’m not sure we’ve seen anything substantial enough to really drive down production numbers overall. So, over the next month or two, I think we’ll continue to see the price of oil fall.

What Do You Think?

Do you think that the price of oil will increase or decrease over the course of the next month or two? Why? Let me know in the comments below!

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Thought Leader Discussions

Gevo, Inc. GEVO Stock News

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Gevo, Inc. (NASDAQ: GEVO) Before we get into this interview, I'd like to extend a special thanks to my friend Joey who both set up the...