ECB's Praet Says Stimulus Losing Effectiveness

It has never been a question of whether or not the stimulus from the ECB has ever been effective, because it hasn't been.

ECB Executive Board member Peter Praet confirms this over the long term, as he said the longer the European Central Bank attempts to stimulate by throwing money at banks, and keeps interest rates at below-market levels, the less effective the measures become.

The longer we carry on with a highly accommodative monetary policy, characterized by extremely low interest rates and excess liquidity in the banking system, the more we will see a phenomenon manifesting itself with greater and greater evidence.

I am referring to what used to be known as 'instrument instability' in policymaking: the need to apply larger and larger doses of the same policy interventions only to see their macroeconomic influence becoming more and more tenuous.

Praet added the low interest rates also removes the incentive of governments to lower their deficits.

It's interesting to see Praet take on the role of the minutes read from the latest Federal Reserve meeting, where the markets were rocked after it was revealed that some of those in attendance questioned the stimulus policy of the Federal Reserve, just as Praet appears to be in Europe.

That was undoubtedly orchestrated, as are these statements by Praet. What appears to be happening is the central banks of the U.S. and Europe are using the media to manage the movement of various markets in response to the unrestricted quantitative easing.

More than likely it's an attempt to keep commodity prices in line, and inflation down. This is why the illusion of economic recovery and reporting continues to be asserted, even though there is almost nothing to reinforce the wishful thinking of those trying to blur the terrible global economy we still face.

Bernanke Confirms Fed Stimulus Concerns Hot Air

About a week ago I wrote that there was absolutely no doubt the quantitative easing of the Federal Reserve would continue. That was in response to the nonsensical idea that because of the minutes of the latest meeting a couple of officials expressed concern over continuing to stimulate the U.S. economy.

Anybody that understands a modicum of economics knew this was all smoke and mirrors, as since the last introduction of stimulus, the unemployment figures have gone nowhere; even going slightly higher.

Bernanke's defense before Congress of his continuing to print money and throw it into the economy ensures there is never going to be some type of premature and surprising exit from that plan.

Other than a little strength in housing, there's nothing to suggest Bernanke would even think of starting to wind down the process.

So as far as stimulus has an impact on commodities, that part of the puzzle will remain in play, and anyone making investing decisions based upon rumors to the contrary will be making a big mistake, unless they understand the temporary effects the news will bring for short-term moves.

No Doubt Fed Stimulus will Continue

The temporary negative response to the content of the Fed minutes from its last meeting has proven to be nonsensical, as there is no doubt, and hasn't been any doubt, the global and American economy have really never exited the recession, and that bodes well for those investing in commodities, and specifically gold and silver.

It's probable that the major reason for the Federal Reserve acting like it's in conflict and confusion is for the purpose of keeping the U.S. dollar shored up, as the dollar weakening from the trillions in stimulus caused other currencies to rise against it, affecting their exports. The greenback climbed to a 5-1/2 month high against a basket of currencies on Thursday.

With unemployment jumping 20,000 last week and the Philadelphia Fed's business activity index plummeting to minus 12.5 in February, it shows factory activity has really slowed down. A reading of zero points to contraction. Last month it has plunged by minus 5.8.

Europe is another major problems the mainstream media seems to only occasionally bring up to keep the recovery narrative going, but economic conditions there continue to worsen, and there is little positive in that region in the world to look forward to in the near or medium term.

Food and energy has been rising in price, and even consumer prices outside of those soared by 0.3 percent, the largest gains since May 2011.

Some point to existing home sales as a positive, which rose 0.4 percent in January. The average price of a home has climbed 12.3 percent from a year ago.

The supposition is consumers will spend as a result, but I don't think that's really likely, other than a slight few who may do some refinancing.

A strong economy needs to be in place, or at least perceived to be in place in order for that to happen, and that bubble has burst for most consumers, and it's unlikely we'll see anything in homes that will make a significant impact on the U.S. economy.

In other words, the quantitative easing will continue from the central bank no matter what a couple of the directions may say.

Shorting Yen Making Millions for Investors

Investors shorting the yen since November when the Bank of Japan was pressured to debase the currency, have made millions on the move, with currency expert George Soros generating a cool $1 billion from the play.

Other major players generating big gains from the debasing of the yer were David Einhorn's Greenlight Capital, Daniel Loeb's Third Point LLC and Kyle Bass's Hayman Capital Management LP.

Since the announcement in November of retaliation against the U.S. dollar by the Japanese for the ongoing policy of the Federal Reserve of endless quantitative easing, the yen has dropped 20 percent. Expectations are it still has room to fall.

Currencies and Central Banking

A lot of clueless or dishonest economic writers in the West at times attempt to make a big deal out of how China is "manipulating" their currency by pegging it at a certain level against the U.S. dollar. But the truth is Western nations are doing the same, except they're doing in a stealth mode that the general population doesn't understand.

The best example of that is the United States, Great Britain and the Euro zone, all of whom, via the U.S. Federal Reserve, the Bank of England and the European Central Bank (ECB), employ strategies to manipulate their respective currencies against one another and other currencies to keep the competition from being overly volatile, to the detriment of one currency against another.

That is done simply through inflating the currency, or in other words, through the printing of paper money, or the creating of digital money out of thin air. If one country does it, such as the the United States when the Federal Reserve announced its most recent round of quantitative easing by buying up $40 billion in mortgage-backed securities indefinitely, other countries will do it as well to ensure their currency doesn't become too strong against the U.S. dollar, which would be detrimental to exports in the country or region.

So if one currency gets weaker, the strategic response is to weaken the competing currency in order to order to keep a predictable balance between the currencies.

This is what maddens these dishonest countries concerning China, which is actually much more honest in its currency policy, announcing it right out in the open and pegging it to the up and down movements of the U.S. dollar.

The Japanese, British and nations of the Euro zone do the same thing, only through the mechanism of printing more money, rather than pegging their currencies to the U.S. dollar; the results are the same, but just hidden behind the smokescreen of money creation.

As those in power continue to strive for a one-world government and economic zone, these are the tools used to hide their practical agenda, as few people understand what's really going on and why.

Moves like this continue to strike a dagger into the heart of free markets, as currencies should be allowed to float freely against one another without government and central banking interference. That's where the markets will determine the outcome and response to it, not central planners who believe they can control the economic world.

The point is we must be vigilant and aware of what is happening and why concerning currencies, as they play a major part in any investment decision across a wide spectrum of equities and commodities.

Because central planners always will fail, eventually this will change as one important country or another decides to go their own way in order to protect their own interests. When that happens some of this currency scenario could quickly change. But for now, it appears there are some deals being made behind closed doors to keep some of the volatility out of the currency market.

How Far Can Gold Prices Rise? $5,000? More?

We are living in extraordinary times in relationship to the price of gold and its correlation to the quantitative easing programs put into play by major economic global players around the world.

So while the idea of gold soaring to price of $5,000, and possibly even to $10,000, while seemingly outrageous for the uninitiated, could in fact become a reality, dependent upon how economies respond to previously failed stimulus measures, and how those nations deal with the growing amount of debt incurred as a result of creating money out of thin air.

A couple of major factors are the debasement of currencies and how high inflation will rise.

Gold prices will largely move on those two factors, especially when the U.S. dollar and other currencies fall in value and are no longer perceived to be places to safely park one's capital.

The major problem with predicting the price of any asset is usually those who understand where things really are, tend to get overly excitable and project prices reaching certain levels dates which are too short in duration. Afterwards, most investors don't believe the probable numbers because of the many failed short-term predictions. But that doesn't mean the underlying assumptions are false, just that the people making the predictions usually are doing so to garner attention to themselves.

That aside, gold will continue to be in a bull market for some time to come, and bubble status hasn't come close to reaching proportions which could actually be identified as such in any meaningful way. The price of gold,, in other words, isn't close to reaching the top yet, and nowhere near enough casual investors have entered into the gold fray yet to allow speculative investing to push the gold prices up. As a matter of fact, we're not even close to that to use the term "bubble" in relationship to gold prices. It will happen someday of course, but is likely to be years away, as well as a much higher price away.

Even those with a much more conservative bent see gold climbing to $2,000 over the next 12 months or so, and possibly as soon as a few months from now, which could be around the early part of 2013.

With the direct connection between the price of gold and creation of money out of thin air, the current practices of open-ended stimulus by the Federal Reserve - the central bank of America - and the lack of effect on helping the economy, all that's really happening is a growing debt load and rising inflation, with nothing positive in return. That is a extraordinarily positive environment for gold, and as well for silver, and both will benefit over the next decade or so, and possibly much longer, depending on the actions of governments and central banks during that time.

The only reason the U.S. dollar hasn't appeared to totally collapse, is other major economic players and their central banks have taken the same actions, which masks the fall in value of the U.S. dollar, because their currencies are also falling. It's more accurate to measure any currency and its value against gold than other currencies, as they're generally simply moving in lock-step with one another because of similar actions taken by central banks, which negates the fall in value of the U.S. dollar.

All of this is to say there is no political desire or will to stop the creation of funny money, and until and if that happens, or is forced to happen, there is absolutely nothing to keep the price of gold to continue on to new heights.

In the end, we're in totally uncharted territory as far as the amount of money being printed, national debt, and amazingly high unfunded liabilities. In the United States alone unfunded liabilities are over $220 trillion (that's not a typo).

But even with these unprecedented numbers, the underlying elements that push the price of gold up are still in place, and because they're increasing in number, as far as money creation goes, and it's only a matter of time before inflation of major proportions set in, gold prices will continue on their upward trajectory, and while it's impossible to know how high it'll go and how long it will take, we're going to continue to see an amazing story unfold concerning gold, and those riding the trend will continue to see their wealth grow with it.

At this time there is no reason to fear a gold bubble, as it's unlikely we're even in the early stages of one. But there will be a time when it arrives, yet even then history has proven the price of gold can soar for some time before it settles back down to earth. We're not close to being there yet, although there will continue to be corrections, which for now must be considered buying opportunities.

So will gold reach $5,000 or even $10,000. It's totally possible, although there is no way to put a time frame on it. All of this will be determined by central bank actions and government policies. Look to Europe to note that governments have little will to implement austerity policies, even though they must if they are to survive. Each government continues to attempt to kick the can down the road and hope it doesn't stop on their watch. One day it will, and gold and those investing in it will wildly benefit from it; even more so than they have in the past in all likelihood.

We are in uncharted territory will central bank money printing and government debt and obligations around the world, that means the price of gold is also in uncharted territory, and all we can do is follow the actions and trust what we know to be the consequences of the practices of these two entities. Nothing will change gold price movements as they relate to the actions of governments and central banks, and how it has responded in the past will continue to be the same in the future until there is in fact a real gold bubble. We're not there yet.

Gold Will Outperform Dow Says Parets

Those who understand currencies and their responses to stimulus measures by central banks, know that it devalues them, as the Federal Reserve has done from its inception in the United States, whereby the U.S. dollar has plummeted over 95 percent in value since 1913.

Inflation is another major factor, which always follows stimulus measures, or as it's called today: quantitative easing.

While those who invest in precious metals like gold and silver know they are the place to be when central banks go crazy with money printing, there is another metric to check for those that may not understand the relationship between gold and the increase of the money supply. And that is the Dow-Gold Ratio, which measures how much it costs gold to buy one share of the Dow.

According to Eagle Bay Capital hedge fund manager J.C. Parets, it is the right time to rediscover this metric, citing the strength of the data since 1999, when the gold bull run began.

At that time it took 44 ounces of gold to acquire 1 share of the Dow Jones Industrial Average. Parets says that in 1980, one ounce of gold would buy 1 share of the DJIA. So from 1980 to 1999, it went from a ration of 1-to-1 to 44.

In 2011 the ration was 6, and at the time of this writing it has risen to 8.

Since 1:1 has been the historic low of the metric, Parets said there is a long way from 8:1 to that low, and believing gold will undoubtedly outperform the Dow, he sees gold to still be a good investment even beyond the obvious impacts of the effect from overstimulating the economy and the resultant price movement of gold.

This is simply another piece of data to use in our arsenal to measure the price movements and probabilities of gold.

Disastrous Fed Policy Does Provide Road Map

Even though the decision by Ben Bernanke and the Federal Reserve to initiate an open-ended acquisition of mortgage-backed securities to the tune of $40 billion a month is a disaster, the good news is it does provide a roadmap for investors who would be smart to move from the U.S. dollar to hard assets.

By committing to attempt to bolster the mortgage sector, Bernanke and friends hope to push the prices of homes up in an attempt to boost the overall economy. Has he and they already forgotten the housing bubble? Apparently so.

The ECB, presumably anticipating the Fed move, or having had been communicated with by the Fed beforehand, made its stimulus the week before.

Not long after those two moves other central banks around the world followed suit, wrongly believing a weak currency is better for the country. This is, in most cases, a nod towards the belief a country's exports will plunge if their currencies rise too much.

Commenting on this recently, Peter Schiff said this:

All of this simultaneous money creation will likely be a boon for nominal stock and real estate prices. But in real terms such gains will likely not keep pace with dollar depreciation.  Inflation pushes up prices for just about everything, so stocks and real estate are not likely to prove to be exceptions. Even bond prices can rise in the short term, but their real values are the most vulnerable to decline. In fact, even nominal bond prices will ultimately fall, as inflation eventually sends interest rates climbing.  But prices for hard assets, precious metals, commodities, and even those few remaining relatively hard currencies should be on the leading edge of the upward trend in prices.

Some investing options are to move towards commodities, and in some currencies that haven't had the central banks of the respective countries implement quantitative easing.

Again, now that we know what the Federal Reserve and other important central banks are going to do, it makes it much clearer on where to invest our money, as the Fed has suggested it will continue to stimulate until the unemployment rate falls below 6 percent, and possibly as low as 5.5 percent.

Sam Zell: Stock Market 4,000 Too High

Billionaire Sam Zell, who mad his fortune in real estate, says the stock market it over 4,000 points above what it should be if not for the artificial stimulus which pushed up the price of stocks far beyond their real values.

According to Zell, if quantitative easing were removed from the economic situation, the index would plunge by over 4,000 points to land at about 9,000, based upon economic and corporate fundamentals.

"Based on the fiscal cliff and all of the headwinds, the stock market should be at 9,000 and not 14,000," Zell concluded.

The fiscal cliff refers to the combination of Republican President George Bush's tax breaks expiring while at the same time public spending is cut.

Uncertainty surrounding taxes are a major part of the reason businesses of all sizes aren't expanding, as is the renegade Democratic party and Obama, who continue to boost regulations at the expense of doing business in the country.

Combined, this weighs heavily on the present and future business climate in the United States, and businesses must base their decisions on the most accurate picture of the future they can see, using the most up-to-date data.

These ancillary issues cloud the economic picture enough to make it possible to fairly accurately see the future in any way. That is why the businesses, for the most part, aren't hiring or expanding, and why they won't until the interference from the government, as well as tax situation is resolved.

If Obama is re-elected says Zell, it'll make it harder to implement healthy economic reforms which would have a positive impact on the economy. He's right.

Zell concluded, "You're looking at capital expenditures across the board being deferred, and they are being deferred for a very good reason. They have no confidence."

Copper Traders Bullish on Stimulus Expectations

There is no doubt that stimulus expectations are the economic story and source behind the rise in stock prices and commodities, as investors and traders are basing their strategy, for the most part, on the belief there will be plenty of more stimulus in the near term to battle the faltering global economy from various countries, including the Federal Reserve in the U.S.

That has resulted in a much more bullish outlook for copper, which is now more favored by analysts than it has been in about 11 months.

With that in mind, hedge funds are starting to re-enter copper for the first time since May, expecting copper prices to jump in response to the stimulus they're looking for.

Another factor is that copper watched by the London Metal Exchange show that stockpiles it monitors have dropped to four-year lows for the metals, generating the probability that supply may struggle to meet demand if the stimulus efforts result in increased global business.

In the first half of 2013, Barclays Plc says that it expects demand to climb above supply for copper, while in the second half increased production should push prices down as demand decreases.

China is also part of the overall equation, as it cut its industrial production estimates for 2012 to 10 percent from 11 percent on September 5. China accounts for 40 percent of all copper consumption.

Europe is another concern, as the contracting region accounts for 18 percent of copper consumption, and a slowing North American economy, 11 percent.

Fed, Bernanke Ready to Stimulate

Even though Ben Bernanke is understating the eventuality of more stimulus for the economy, it's becoming apparent from his recent statements about the weakness of the U.S. economy that it is inevitable that the Federal Reserve will again pour money into the economy.

It's only a matter of when and by what means.

Some believe Bernanke may wait until the September meeting to see if there are any positive economic effects from the continuation of Operation Twist.

But with anemic jobs creation and continuing devastating unemployment, the question is whether the Fed has the nerves to wait another couple of months before taking action.

Action could be taken at the upcoming meeting from July 31 to August 1. If they don't and the economy falters, even more extraordinary pressure will be applied as the elections approach, especially for the hapless Obama and his administration, which has been totally ineffective in helping the economy along, and rather are making it worse by wanting to increase taxes rather than cut government spending.

It idea is if the Fed waits until September they'll have a better view of whether or not Operation Twist has done any good. I would be surprised if they do wait that long.

To me, the terrible American and global economy has called Bernanke's bluff, as growth numbers from key nations like China continue to move downward, confirming the precarious state of the global economy, which has such a detrimental impact on the U.S.

So Bernanke and the other Fed heads face growing pressure. If they fail to stimulate, the fallout will be enormous for them, even though over the long term it's a disaster.

But what makes me think stimulation is around the corner is former Fed officials who have been opposing more stimulus are starting to change their viewpoint, suggesting growing political pressure from the Democrats, who are afraid of getting slaughtered in the upcoming election, whether Obama gets reelected or not.

Also significant is the fact there is no real, sustainable economic growth in America which has signaled to the Fed that it is growing fast enough on its own.

In their view that's a disaster, and pushes them towards another round of easing, whatever the mechanism for doing it will be.

I think the Fed is growing closer to stimulating, and it would be surprising if it isn't done within a week. If not, the markets will remain in turmoil because of the uncertainty surrounding whether or not there will be a stimulus.

With everything pointing towards it, I can't see what reason the Fed could give for waiting, in light of the risk of not doing it now.

Next week will be enormous heading into August.

Commodity Prices and QE3

Debate is raging over whether another round of quantitative easing will in fact help boost the price of commodities.

Bears look at it from the point of view of demand alone, while bulls look at it from a more holistic view.

While demand is obviously a major factor in commodity prices, the U.S. dollar is just as important, and also can determine the demand because commodities are bought with U.S. dollars being used as the medium of exchange.

So if the U.S. dollar is strong, the demand for commodities can go down because of the high cost of acquiring them. That is what has been happening as it has strengthened against a number of currencies as the sovereign debt crisis in Europe continues to push down the price of competitive currencies.

If the Federal Reserve eases, that is sure to put downward pressure on the dollar and commodity prices in general will start to rise again.

There are other factors involved, but the strength of the U.S. dollar is among the top elements that impact most commodities.

Gold and silver will especially respond strongly if there is more easing, as they are also considered alternative currencies or safety against inflation, along with many industrial uses in regard to silver.

Over the short term it's any one's guess as to the price movement of commodities, but over the long haul there is no doubt commodities will, for the most part, continue on their upward price run.

Some commodities, for example grains, are already outside the impact of whether or not more easing will come, as other factors like the ongoing drought in America, and now parts of Europe and Australia, are aiding in pushing grain prices like corn and soybeans to record highs.

Spain on Verge of Being Bailed Out

Spain moved one step closer to being bailed out after the German Parliament voted to allow the plan to go forward on Thursday, and then the finance ministers of the 17 member countries using the euro gave their approval to the terms offered in the bailout, which stands at an offer of just under $123 billion.

As usual in the news cycle, Europe's horrendous economic problems flow out of the eye of the public for a week or two before again appearing in the news, reminding everyone listening of the dire circumstances continuing to unfold there.

Reminders of the economic turmoil in the region hit the stock market, led by the banking stocks getting hammered, as they are the most vulnerable initially to such news.

The KBW bank index (.BKX) dropped 1.9 percent, ending the week down 2.3 percent. All the major American banks closed down on Friday.

Gold and silver on the other hand were able to finish slightly up on the day, as growing anticipation of another round of quantitative easing is slowly pushing the price of the two precious metals up even as bears attempt to pull them down.

There isn't enough conviction on either side of the trade to allow for major moves lately, and so both metals have been trading in a narrower range lately until more clarity emerges. The failing global economy will pressure the Federal Reserve, Ben Bernanke, and other central bank officials in certain parts of the world to take steps. It's only a matter of when, with each passing day of bad news gradually turning the sentiment in that regard.

Gold and silver should gradually move up until we're hit with the first big announcement. This one helps, but it'll take one more big push to send gold and silver prices soaring again. Most think it's likely to happen in the latter part of August, but it could easily happen earlier as negative economic news continues to mount.

One of the major obstacles for gold and silver is when announcements like this come out of Europe the euro takes a big hit against the U.S. dollar, keeping the prices temporarily in check. That happened again Friday when the euro dropped to about a two-year low against the U.S. dollar, falling as low as $1.2143.

For Spain, the 10-year bond soared to new highs as measured by the introduction of the euro, now bringing yields of 7.3 percent; a number experts see as unsustainable.

The Spanish government also slashed its economic growth projection, revealing the certainty Spain will continue to be in a recession at least through 2013, and quite probably beyond.

For the Spanish banks and the bailout money, there will be assessments of the needs of the banks in the country, and from their stress tests applied to guide the allocation of the funds. That should be completed sometime in September.

How much of the available funds that will be used by the Spanish won't be known until that time.

While the IMF has no administrative or official relationship to the funding proposal, it did say they are available to give "independent advice" concerning the bailouts of the Spanish banks, and if there are no objections, will publish reports concerning the progress the financial firms make toward recapitalization.

The reports won't point out any specific banks, but will focus on the overall progress of the banking industry in Spain.

China Says Fed's Inflating Poses Major Risk to Economic Recovery

The move by the Federal Reserve has many countries fuming, including Germany and china, who are outraged over the consequences that could emerge from the misguided move.

China went so far as to say it could undermine any economic recovery that may come in the future, and the U.S. "should not force others to take medicine for its own disease."

Zhang Tao, director of the international department of People's Bank of China, said, "For emerging countries, capital inflows may lead to significant increase in asset prices and foreign exchange reserves, and many countries are concerned about that.

"Doubtlessly, disordered international capital inflows will make emerging countries very vulnerable. As emerging countries are important for the global economic recovery, that will greatly increase the downward risks in the world economy."

Concerning the revaluation of the renminbi or yuan, Chinese President Hu Jinatao reiterated China's policy of gradually reforming the currency over time.

US Dollar Will continue Collapse Even with Temporary Reprieve

The decision by the Federal Reserve Thursday has ended up producing upheaval in the Forex market Friday, as heads of central banks around the world reiterated their concerns over U.S. policy, with Asians unsurprisingly voicing their opposition the most.

The USD is plummeted around the globe, although rebounded Friday afternoon on the news jobs created in the U.S. were higher than anticipated.

With the promise by the Federal Reserve to inflate again through acquiring more government debt to the tune of $75 billion a month over the next eight months, the stock market took off, as many believed it would.

Gold prices have also soared, closing in on the $1,400 an ounce mark, which it will reach sometime within the week. Gold went against the grain again as the U.S. dollar rose, although the Euro only managed a slight gain because of a huge increase in CDS and cash spreads within Europe. The battle is beginning by nations against the move by the Fed, as they must defend their currencies against the fall in value of the U.S. dollar. That's great news for gold, as it remains the only real alternative as a currency, rising against many currencies around the world, one of the more overlooked, but important metrics to watch. Other commodities should continue to do well going forward as well with the misguided practices of the Federal Reserve continuing on.

Incredibly, the hapless Ben Bernanke, chairman of the Federal Reserve, continues to spew his unprovable assertion that the first round of quantitative easing or inflating saved the U.S. economy, when in fact things are as bad as they have ever been.

Saying the economy would have been worse is another way of admitting QE was an abysmal failure. You can't prove something that can't be measured, and you can't measure an economy that did nothing by saying it was the intervention of the Fed that protected it from getting worse, even as it didn't get better.

Bernanke knows this, but is playing games with those that don't understand how it all works, and who assume the printing of all that money had to have had some positive effect.

The truth is Bernanke admits, in spite of his other assertions, the first round of QE didn't work, which is why there is now a second round being enacted. His saying he wants inflation to be higher during this round of QE shows it failed the first time, generating the question as to how it's going to be different this time.

No matter what one may think in regard to this, the US dollar is in for a rough ride, and the Forex will be interesting to watch as countries implement measures to protect their currencies and exports.

Insteel Industries (Nasdaq:IIIN), Mechel OAO (NYSE:MTL), Universal Stainless (Nasdaq:USAP) Soar on Fed Inflation, Collapsing US Dollar

Insteel Industries Inc. (Nasdaq:IIIN), Mechel OAO (NYSE:MTL),
Universal Stainless & Alloy Pr (Nasdaq:USAP) all moved up with the broader commodity sector Thursday, as the reality the Federal Reserve was going to inflate again via its quantitative easing strategy pushed up the price of commodities in anticipation of the inevitable inflation to come.

Commodities moving up in price included gold, aluminum, silver and oil. Gold prices exploded record levels again, moving toward the $1,400 an ounce level. Silver pushed past the $26 mark, and is more than likely going to continue increasing for some time.

The steel industry overall may go through seasons of wide fluctuations as currencies sway in response to the drop in value of the U.S. dollar, which will affect margins because of the wide moves in currency value and the fight by some against the Chinese renminbi, which they'll be forced to take defensive measures against.

Taking into account market factors, and the general economic health of the steel industry , it more than likely won't partake in the surge in commodity prices and demand as other commodities will surely do.

Insteel Industries Inc. closed at $9.11 Thursday, rising $0.22, or 2.47 percent. Mechel OAO surged to close at $25.27, gaining $1.68, or 7.12 percent. Universal Stainless & Alloy Pr was up to $30.62 at the end of the trading session, gaining $1.03, or 3.48 percent.

Gibraltar Industries (Nasdaq:ROCK), Harsco (NYSE:HSC), Haynes International (Nasdaq:HAYN) Surge on Collapsing US Dollar, Fed Inflation

Gibraltar Industries, Inc. (Nasdaq:ROCK), Harsco Corporation (NYSE:HSC) and Haynes International Inc. (Nasdaq:HAYN) all moved up with the broader commodity sector Thursday, as the reality the Federal Reserve was going to inflate again via its quantitative easing strategy pushed up the price of commodities in anticipation of the inevitable inflation to come.

Commodity prices surging included aluminum, gold, silver and oil. Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver moved past the $26 mark, and is more than likely going to continue increasing for some time.

The steel industry may go through seasons of wide swings as currencies respond to the drop in value of the U.S. dollar, which will affect margins because of the wide moves in currency value and the fight by some against the Chinese renminbi, which they'll be forced to take defensive measures against.

Taking into account market factors, and the overall economic health of the steel industry in general, it probably won't partake in the surge in commodity prices and demand as other raw materials will surely do.

Gibraltar Industries, Inc. closed at $4.54 Thursday, rising $0.17, or 3.39 percent. Harsco Corporation (NYSE:HSC) surged to close at $24.03, gaining $1.59, or 7.09 percent. Haynes International Inc. was up to $15.73 at the end of the trading session, gaining $0.49, or 3.22 percent.

Endeavour Silver, (AMEX:EXK), Fortuna Silver (TSE:FR), FIRST MAJESTIC (TSE:FR) Rise on Fed Inflation Measures

Endeavour Silver Corp., (AMEX:EXK), Fortuna Silver Mines Inc. (TSE:FR), FIRST Majestic Silver Corp(TSE:FR) all rose Thursday on the inflationary measures of QE2 by the Federal Reserve, which pushed up the overall commodity market, along with companies within each sector, including the silver miners.

Commodity prices in general increased, including silver, which increased to over $26 an ounce. Gold prices soared to all-time record highs again, reaching close to $1,400 an ounce. Aluminum moved up to its highest levels since April.

Endeavour Silver closed at $5.25 Thursday, rising $0.41, or 8.47 percent. Fortuna Silver surged to close at $4.12, gaining $0.21, or 5.37 percent. First Majectic was up $9.66 at the end of the day, increasing by $0.86, or 9.77 percent.

Mag Silver (AMEX:MVG) Silver Wheaton (NYSE:SLW), Pan American(Nasdaq:PAAS) Surge on Fed QE

Mag Silver Corp. (AMEX:MVG) Silver Wheaton Corp. (NYSE:SLW), Pan American Silver Corp. (Nasdaq:PAAS) all soared Thursday on the news the Federal Reserve was going to inflate in a big way again, driving up the broader commodity market, along with individual companies within each sector.

Almost all commodity prices rose, including silver, which surpassed $26 an ounce. Gold prices rose to all-time records, while aluminum rose to its highest levels since April.

Mag Silver closed at $9.67 Thursday, rising $0.24, or 2.54 percent. Silver Wheaton surged to close at $32.20, gaining $2.59, or 8.75 percent. Pan American was up $34.51 at the end of the day, increasing by $2.06, or 6.35 percent.

ArcelorMittal (NYSE:MT), Carpenter Technology (NYSE:CRS), US Steel (NYSE:X) Soar on Collasping US Dollar, QE2

ArcelorMittal (NYSE:MT), Carpenter Technology (NYSE:CRS), US Steel (NYSE:X) all moved up with the broader commodity sector Thursday, as the announcement that the Federal Reserve was going to inflate again via its quantitative easing strategy pushed up the price of commodities in anticipation of the inevitable inflation to come.

Commodity prices rising included oil prices, gold, silver and aluminum. Gold prices reached record levels again, straining toward the $1,400 an ounce level. Silver broke the $26 level, and seems poised to continue moving up.

The steel industry could go through a period of uncertainty as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the fluctuations and the battle by some against the Chinese renminbi, which they'll have to attempt to protect themselves against.

ArcelorMittal closed at $47.33 Thursday, rising $1.66, or 3.63 percent. Carpenter Technology surged to close at $35.51, gaining $0.96, or 2.78 percent. US Steel was up to $47.33 at the end of the trading session, gaining $1.66, or 3.63 percent.