Monday, June 7, 2010

Copper Falls on Renewed Recession Fears

Copper prices fell even further today, dropping by 5 cents to $2.7660 a pound, or 1.9 percent, as recession worries return as macro-economic data confirms what a number of economists and investors have thought, the we had never left the recession, or there was going to be a double-dip recession.

However you want to describe it, there is little positive happening economically to justify anyone saying we're in a recovery, even if they want to say it's a slow recovery. How about a "no" recovery, which is closer to the truth.

All that has happened is the Obama administration and Federal Reserve spent hundreds of billions with literally no effect.

What had been hoped of course was they would buy time so the economy would recover, but that has failed, and the idea of pumping hundreds of billions more into the economy hopefully won't even be considered, as we are already under water as a nation (referring to the U.S.) and further debt will bring up past the point of no return, if we're not already there.

The nail in the coffin was the jobs report, which finally revealed the faux job number being reported as a reason to justify saying we were in an economic recovery. Now that those that were unconvinced have to face the reality that the private sector isn't producing any jobs to speak up, and the props of hundreds of billions has left us in worse shape, and nothing to show for it except the assertion things would have been worst if the government hadn't taken those steps.

That's an unprovable theory, and in fact a small number of economists have stated from the beginning that it wouldn't work and the government and politicians needed to keep their hands off the economy and let it adjust and fix itself.

Of course they couldn't resist spending our children's and grandchildren's future away, and focused shortsightedly on the present, disregarding the consequences they were warned about.

Either way, we're going to experience difficult times ahead of us, and as copper prices show, there is already a cut in demand, and more to come.

This doesn't mean all commodity prices will fall, as iron ore prices were upped again today for Japanese steelmakers by Rio Tinto (NYSE:RTP) and BHP Billiton (NYSE:BHP); although it's questionable as to the sustainability of that move.

But other than gold, and to a lesser degree, possibly silver, most commodity prices will be under strong downward pressure in the near future, as the U.S., China and Europe are all slowing down, and there are really no places to go to make up for that.

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