Monday, June 7, 2010

Falling Commodity Prices Suggest Ongoing Recession

The ongoing drop in commodity prices implies the recession continues on, as the decline in prices tell us demand has plummeted.

I say an ongoing recession because I've never believed we've left the recession, but only the government stimulus plans and unprecedented printing of money has kept it from being exposed for what it is.

But whether you want to call it a double-dip recession, , u-shaped recession, or something else, the fact is we're set to face more economic difficulty, and after spending trillions around the world, it has done nothing to stop the recession we've been in for several years, and now has been made worse because of the government spending that has hidden and masked the reality.

There is only one reason commodity prices will drop, and that's based on supply and demand. In this case it's all about demand, which has simply dried up.

That drying up comes from the emerging narrative of slowing demand in China, the European Union, and the United States.

The frantic attempts to spin the situation by the U.S. governments and other governments around the world are no longer believable, and we need to be ready as it hits the fan again.

If spending trillions has ended with nothing, we can be sure spending trillions more will do nothing as well, other than continue to decimate people and their spending power.

Consequently gold prices will continue to rise, as well as quality gold mining stocks, as it becomes the only place of safety that can be counted on going forward.

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