Tue, 19 Oct 2010


VIVAnews - The prices of crude palm oil and gold in the market are rising quite unexpectedly. Gold is now tagged at US$1,372 per troy ounce, a 30 percent increase within this year. "Analysts predicted that gold prices will be at US$1,450 per troy ounce until the end of 2010," said Indonesian Commodity and Derivatives Exchange CEO, Megian Widjaja.

Data of US Geological Survey (USGS) shows that gold production rose by 2.26 tonnes to 2,350 tonnes in 2009, 9.6 percent lower than its highest production in 2001.

Thomas Chaize, gold analyst from Goldseek.com told VIVAnews that the decrease in gold production has caused gold's prices to skyrocket. Within a decade, gold's price has improved from US$275 troy ounce to more than US$1,300 this month.

Meanwhile, world's CPO prices has gained the level of US$890 tonnes. "Up until the end of the year, [gold] prices will be at around US$900-950 per ton," said Nico Omer Jonckheere, Vice President of PT Valbury Asia Securities in Jakarta.

There is an increase of around 40.11 percent compared to average CPO prices last year (2009) at US$678 per ton, higher than the estimates set by the Indonesian Association of Oil Palm Entrepreneurs at 12 percent.

The price increase is caused by the imbalance between CPO demand and supply.

The OSK Investment research increases the target of price earning ratio (PER) for plantation shares from 15 times to 18 times for the year 2011.

The minimum production of world's CPO is due to climate change, high precipitation, and La Nina.

Market playes consider the situation as bullish.

Megian Widjaja also viewed that this is a good chance to make better investment portfolios. "Despite the soaring stock prices at the Indonesia Stock Exchange, shifting some investment to commodities will also be a good idea," he said.

Gold, he said, is more stable than other investments. Data of the Indonesia Commodity and Derivatives Exchange shows that gold volatility within a year reaches 18.7 percent. "This causes CHina to switch investment to gold," said Megian.

As for CPO, according to Megian, its yield reaches 13.75 percent, given a price of Rp 7,235 per kg in October. Meanwhile, the yield in the same period of last year was minus 20 percent.