EU Private Sector Faltering

The recent announcements by a number of corporations participating in the EU concerning slashing tens of thousands of jobs, underscores the reality that the private sector continues to struggle, even as governments had hoped they would help turn the region around.

Among those recently announcing jobs being slashed are UBS (UBS), which said it'll be be getting rid of a massive 10,000 jobs - which has already begun. Other major employers cutting thousands of jobs (aggregately) are ING (ING), Kloeckner, Ericsson (ERIC) and Bombardier.

A growing number of economists believe the next couple of years in Europe will see jobless rates jump to even worse levels than they stand at now. We probably won't know until around the summer months because these current layoffs won't affect data until about six to nine months after the layoffs are implemented.

The major problem in Europe is that governments have finally started to shrink a little, causing bloated staffs to be laid off, but at a rate that the private sector can't keep up with.

Of course it was never a reality that outrageous government debt and spending could be compensated for by the private sector after years of abuse, fraud, and unsustainable promises and practices.

People in some countries don't even think in terms of the private sector as a legitimate work environment because they've been brainwashed into believing government is the great healer of nations. Most are finding out too late that that is a fallacy, and since the private sectors of nations were weakened by these outlooks and effects, it's impossible in a short period of time to rectify all the mistakes that have been made, even if they wanted to.

It has taken far too long for governments in the EU to shrink, and they're no paying for that ongoing irresponsible mindset, as austerity is forced upon the nations of Europe, with a private sector not robust enough to absorb the people being released from work.

The good news is over time this will be positive for the private sector as workers and the rest of the people realize that governments can't provide for them in the ways that were promised. It's productivity that results in prosperity, not artificially created government jobs that provide ridiculous benefits the productive are asked to shoulder. Those days are thankfully coming to an end, as are outrageous union demands.

Because Europe has played far too long with countries that long ago should have decreased the size of government, now the forced austerity is pressuring private companies who must operate under actual market conditions, and not the illusory markets created by governments throwing debt-induced money around while being enabled by central banks and failing Keynesian policies.

Yet some foolish economists continue to say things like there must be growth in the "public" or private sector if some of the nations in the EU are to stay in it. What about limited government and downsizing don't these quacks understand? It's inevitable. These governments and their debt coming from endless spending and programs are through. In a relatively short period of time what they were before the sovereign debt crisis will no longer exist.

There will be governments still in place of course, but the bloated monstrosities they have become will gradually be shrunk down in size to the benefit of everyone but the parasites that used them to their advantage.

In the months ahead we'll see growing pressure in Greece, and probably Spain and others in the eurozone to start thinking in terms of abandoning the euro for their own currencies. That would result in some short-term pain, but over the long haul it would be the best for all countries in the region, as well as the rest of the world.

But if nations continuing to use their central banks as a rich uncle not willing to rein in a spoiled kid's spending don't change, this will extend across the globe, as the United States is hanging on by a thread, and with over $220 trillion in unfunded liabilities facing the nation, and China having taken up some bad Keynesian money creation habits, it may be only time before pressure rises on all of them.

IMF's Lagarde Wants Less Austerity

With the need for even more austerity in Europe, along with the abandonment of Keynesianism and socialism, it's pathetic to see IMF Managing Director Christine Lagarde say that the austerity measures European officials are attempting to require in order for nations to receive aid - are "harsh."

The usual ignorance surrounding economics by Lagarde and others is evident in the ongoing idea that actually dealing with the unsustainable debt problem in a practical manner would result in it hurting nations like Greece and Spain, which continue to attempt to extract more money from the eurozone while doing very little to meaningfully cut back on debt and spending.

How does cutting back on government spending present problems for growth? It doesn't if your a market economy and embrace real capitalism (not crony capitalism).

But when the idea that government has a right to interfere in economies is part of the mix, it creates outrageous problems like the sovereign debt crisis now faced by Europe. To think that government spending actually has a positive, long-term effect on any economy is thinking from a day before the fall of the Soviet Union and socialism. To attempt to revive it through out of control government spending is doomed to failure, and calls for anemic austerity measures is a way to allow this failing economic dinosaur to last a little longer, while threatening to take down the eurozone with it.

Lagarde wants to have these irresponsible countries, including Portugal with Greece and Spain, to have another two years to deal with the problems. But since the reality is they have done little but talk austerity as the money keeps pouring into them, all that will do is result in the debt load of the countries climbing even more. The region simply doesn't have people with the courage to take the needed steps that would heal the damage done for the socialist, Keynesian cancer spreading across the eurozone.

No economic radiation or chemotherapy will help the situation, neither will cutting out the source of the cancer. It's too late, as the entire area has been infected with the financial cancer, and the patient will have to allow itself to die before any chance of recovery begins.

That's because there are none who have the will to take the needed steps to ensure a long-term economic health recovery to the countries there.

The idea that austerity measures are a risk rather than a long-term cure only shows the lunatics are running the asylum, and whether anyone takes the needed steps or not, the economic conditions will force them to be taken in one form or another in the not too distant future.

What will come out of that will be the final death of socialism and Keynesianism (other than a few deluded dreamers who will always adhere to the failed theories and systems), which could result in a gravitation towards real free markets and capitalism, which offer the only hope for long-term economic success for the world.

Germany Cuts Growth Estimates in Half

In what could be the precursor to a major blow to the eurozone, German economists lowered their growth estimates in half, cutting them from the previous 2 percent down to 1 percent.

While the German public has little in the way of support for the poorly run countries in the eurozone, Chancellor Angela Merkel continues to go against that sentiment, saying the country needs "to do things to stimulate the European economy."

Merkel continues to look to the failed idea of consumers bailing out Europe. She said to reporters, "If we manage to keep our domestic consumption up, then that has of course the advantage that we can increase imports from other European Union countries."

That's all a smokescreen. Who doesn't know that doing things to help the European economy means throwing money at the irresponsible nations in the eurozone, who are Keynesian and socialist to the core, and are doing nothing to get out of the way so free markets and real capitalism will emerge. That's the only practical answer, and until they takes those steps and put in place even more austerity measures, things will continue to spiral downwards.

Projections for growth in the eurozone for 2013 is an anemic 0.2 percent, according to the International Monetary Fund. In the second quarter growth in the eurozone dropped 0.2 percent, while Germany only grew 0.3 percent for the quarter.

The German economists concluded that German growth faces major challenges if other countries in the eurozone don't take steps to cut back on spending and lower their debt. A recession is likely if things continue on as they are.

The economic report, which comes out twice a year, also lowered its estimates for German growth for 2012, dropping it from 0.9 percent to 0.8 percent.

It's interesting to see these many beggar nations point to austerity making things worse. The fact is the lack of austerity is what brought this outrageous sovereign debt crisis about, and while it will cause some pain, it's overspending and offering more than can be delivered by governments that has the eurozone where it is today.

Many leaders and economists continue to act and believe that government spending is what brings about economic success, as evidenced by the continual calls to spend even more while doing very little to make actual cuts in the debt.

Business is what brings economic strength and success, not governments. And until these corrupt politicians in Europe, and many other areas of the world, stop believing government is the answer to building wealth, things will remain the same, or get much worse.

As for German Chancellor Angela Merkel, she continues to talk tough in the beginning of the next round of throwing money at the problem, but after this false posturing, caves in and backs up continual spending.

Nothing will change that until German voters see what's really happening and how it negatively affects them, and end up voting her and her party out.

Either that or, Merkel finally gets some inner strength and stands against the rest of the eurozone in order to protect her country or people.

But since she is a proponent of a new world order, unless she has an epiphany, nothing will change, and she'll continue to cave in time after time to the foolish practice of providing money to governments who really have no intentions of cutting back on spending, but who hope that the global economy will improve while they keep kicking the can down the road.

In that case the major countries in the region will continue to prop up the failed practices and economic policies of these countries, but it won't be as noticeable to voters because things will appear to have been taken care of.

But Germany doesn't appear strong enough to carry the weight of increasingly socialist Europe, which has an entitlement culture so inbred in them that even when this could bring down the entire eurozone economically, they continue to hang on to these failed theories and practices.

In other words, socialism and entitlements have taken on a religious connotation, and people who believe in the state as almighty, will continue to follow that until their faith in government fails them, and they'll have to start to become responsible for their own lives. It'll take time for that to happen. But happen it will.

Should We Worry About Gold Now?

A growing number of investors, individual and institutional, have started to get worried about whether or not gold is in bubble territory.

There is nothing to justify those fears, as until the reasons for such strong support for gold are over, gold has every reason to continue on its upward climb, and it will.

That's not to say there won't be any corrections, as there is sure to be one on the horizon sometime soon, probably after a season of time which gold incrementally continues to move up to a point where profits are taken and some type of temporary, supposed positive economic news from somewhere helps the selling along.

But there is nothing in the short term, or mid-term for that matter, that suggests gold is too high, and will come plummeting down to earth.

Even if there was a gold correction stronger than expected, that does nothing to change the underlying fundamentals, and it'll again resume its climb until those things change.

Some of those fundamentals include inflation, deficits, weak U.S. dollar, weak global economy and the sovereign debt crisis in Europe. And even if there is deflation, it would be another reason to own gold.

All these solid reasons are making some investors nervous, as it sounds like too solid of a case, and too predictable.

It's hard to see anything short term which could stop the rise of gold, and that is also worrying to a growing number of people.

It seems the fundamentals supporting gold prices are strong, and there is nothing that could perceivably happen that will change that in any surprising way.

Now over the long term, whenever interest rates are increased again, along with a real economic recovery, that would be a time to seriously look at selling gold.

A secondary, but easy to identify possibility, would be if the regular man on the street starts to irrationally invest in gold without knowing why, other than his friend or neighbor is going it.

In that case, even the reason for high gold prices could be outrun by their exuberance, and bring gold to very high levels which couldn't even in our economic environment be justified.

But again, that won't matter in the long run, as until the fundamentals are no longer in place, gold prices will rise, even if there are significant peaks and valleys along the way.

Citigroup (NYSE:C): Euro Could Plunge 4 Percent

Citigroup (NYSE:C) said if support for the euro weakens, it could drop by 4 percent against the US dollar as a result. That level hasn't been experienced since July if it happens.

Renewed focus on Europe and its dubious stress tests of banks has been the impetus behind the fall in the Euro to its lowest level so far in September, and is sure to continue to fall as support crumbles.

Citi analyst Tom Fitzpatrick, said in a note to clients, “There is still another move down coming on the euro. The euro has come under renewed pressure in the short term as a result of focus again on European banks and sovereign spreads.”

Fitzpatrick added, if the euro falls below the support level of $1.2588, it may fall as low as $1.22.

Nobody should allow themselves to be lulled to sleep by the financial mainstream media coverage of the European sovereign debt crisis, as it's very real, and much worse than being admitted.

Teck (NYSE:TCK), BHP (NYSE:BHP), Freeport (NYSE:FCX) Slump on Stronger U.S. Dollar

The ongoing recession has metal producer like Teck Resources (NYSE:TCK), BHP Billiton (NYSE:BHP) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) down today, as the dollar strengthened, lowering the appeal of commodities.

Concerns over the continuing sovereign debt crisis in Europe is the major impetus behind this, as the focus goes back on the EU after being given a free ride in the press for some time.

Confirming what we and others commented on concerning the pathetic "stress tests" which made it appear the sovereign debt holdings were in better shape than they actually were for European banks, now they are again under pressure as the real story of their condition has yet to accurately be told, and we can almost be certain they'll be far weaker than thought.

Yield spreads for Germany and Greece were at their widest levels since May, and the gap between yields on 10-year German bonds and Portuguese and Irish debt are at the highest levels in history.

German bankers said Monday the ten largest lenders in the country may have to raise an additional $134 billion in new capital, underscoring their weakness.

Copper prices dropped on the news as demand issues were raised in light of the revelation things aren't as good as they were asserted in Europe.

Morgan Stanley (NYSE:MS): Some Governments Will Default

As governments around the world refuse to cut back on their size and continue to embrace their socialists policies, the risk increases for governments to default on their debt, and according to Morgan Stanley (NYSE:MS), it's no longer if, it's going to be who and when.

It is amazing to see this unfold and be ignored by governments, as the inability to extract more money from the productive and redistribute it to the unproductive is bringing these countries down, and they fanatically hang onto their failed philosophies and economic voodoo based on socialist schemes which can no longer be supported.

Arnaud Mares, an executive director at Morgan Stanley, said this, “Governments will impose a loss on some of their stakeholders. The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.”

Mares added, the sovereign debt crisis isn't just relegated to Europe, as it's a global phenomenon, “and it is not over.”

We at Commodity Surge have been amazed at the lack of coverage in the mainstream economic media, as after a few overtures and announcements from European leaders that the sovereign debt crisis was over, reporters ran for the doors to the next important financial story.

To even seriously think the crisis was over in Europe, let alone other nations of the world, after a few austerity moves, was naive at best. Even the selling of bonds in the market should have been taken largely with a grain of salt, as if decades of economic practices and mindsets can be changed by throwing money at the problem.

As in the United States and its stimulus spending, all it does is temporarily cover up the mess until the money runs out, and then it picks up again right away revealing the gasping economic patient who survives only because of the misguided attempt to maintain things as they are, even if they can't be afforded.

There is no answer but smaller government and people taking responsibility for their own lives through being productive. The game is up and the attempt to save socialism from complete collapse is nearing an end, as the great experiment is over, and it have totally failed.

How long government stubbornly hold to their promises will determine the depth of the carnage, as some simply can't believe their socialist theories and Keynesian practices are completely wrong.

They better start believing it, as the welfare of their people and survival as a nation are at stake.

Ireland Bonds Downgraded by Standard & Poor's

It was only a matter of time before the extraordinary risk inherent in the European Union was brought to the forefront of economic news, and it happened on Tuesday when Standard & Poor's downgraded Ireland's bond ratings, following up on the same downgrade on Irish bonds made by Moody's (NYSE:MCO) in July.

Reasons given for the downgrade were the enormous costs associated with supporting the financial system of the country.

Irish bonds were slashed one level to "AA-" from "AA." A negative outlook was also assigned. The short-term rating was maintained at "A1+."

S&P said the increasing costs will "further weaken the government's fiscal flexibility over the medium term."

The rating agency added that the overall debt of the Irish government will increase by 2012 to an enormous 113 percent of the gross domestic product of Ireland. They said that is over one-and-a-half times over the average for the other European Union countries.

It even surpasses Spain and Belgium by a significant amount, said S&P.

Depending on how the government of Ireland performs fiscally, the rating could be lowered again, especially if the time-frame is extended, of in the case of their deficit being reduced quicker, it could result in an upgrade.

More than likely we'll see things get worse for the Emerald Isle before they get better. That means there will probably be more downgrades in the future, and they won't be the only country experiencing that unwanted distinction.

Investors Flee to Gold For Safety as Economy is in Shambles

Very few people seem willing to admit the U.S. and global economy is under extreme pressure. Investors know it though, and fled to gold as a safe haven today, pushing gold futures up to their highest level in eight weeks.

The words "unexpected" continue to come from economic writers concerning jobless claims rising, Europe not being as strong as asserted, and China's production falling.

Even today economic writers use terms like the "recovery is slowing," as if there ever really was an economic recovery.

Jobless claims climbed to a five-month high today, while industrial production in Europe and China both fell. In the case of China, it plummeted to an 11-month low.

This doesn't include the horrid sovereign debt crisis of Europe, which is being ignored or covered up by the mainstream press, who seem to believe a few turns of the knob over and everything was magically turned around.

Governments and the press seem to be attempting to hold up the global economy by wishful thinking and Disney-like hopes and dreams, rather than the harsh realities that should be brought out into the open so it can be understood and prepared for by people.

The fact that the Federal Reserve "changed it mind" concerning dropping its monetary stimulus points to the real condition of the economy. They committed to doing whatever it takes to deal with the weak economic conditions recently, again revealing there are extreme concerns about what is really happening.

Gold investors should rejoice, as the Treasury and Federal Reserve can't help themselves. They're going to continue to print money and buy U.S. debt in efforts to artificially prop up the economy.

What don't they get about it not working in the recent past? How much they going spend? Two trillion this time?

Either way, they are going to do the very predictable, and we can count on that. That means gold prices are going to take off again, as they have today.

Citigroup (NYSE:C) Says Euro Could Reach $1.39 in August

For the first time since February, the euro could go as high as $1.39, says Citigroup (NYSE:C).

Supposed reasons for this are the "stabilization" of the sovereign debt crisis in Europe, and the probability of the Federal Reserve starting to print money again in an attempt to stimulate the economy.

Now the Federal Reserve disaster is sure to happen, as they will continue to destroy the value of the dollar and wreak havoc on the future of American children.

As far as the lie about sovereign debt crisis being stabilized, that isn't even close to happening, in spite of the mainstream media outlets regurgitating that to their readers.

That story has been circulated in order to manage concern among the populations of Europe in order to keep them subdued and from rebelling and rioting; something that has already happened across the region.

So even though it's a coverup, that has had the temporary effect of lulling people into a false sense of security, while the problems which brought the situation to the forefront of the news cycle remain in place.

One of the metrics used in an attempt to convince people the EU is stable, is the meaningless stress tests, which were so lax, almost anyone could pass them. Even Citigroup, not long after the tests said 24 of the banks in reality should have failed the tests, not the 7 that were allowed to be exposed.

Stabilization of Europe is also asserted to be a reality because of the narrowing of spreads between those nations under enormous debt and Germany, which is used as a standard to measure by in the EU.

I wonder why the downgrading of Ireland national debt hasn't been talked about much lately? Somehow it just doesn't fit into the narrative, so is an inconvenience to talk about.

As long as people believe this, it's possible the euro will reach these heights and even probable.

Just don't believe the underlying reasons for this are from a stabilized Europe. There is just too much optimism being thrown around about Europe to be believable.

No economy the size of Europe could have in any meaningful way turned things around on a dime like it is being purported about the EU.

The feeling is the real condition of Europe is now officially off limits to mainstream media outlets, and you're not going to hear much about the depth of the financial disease until conditions force it to come out into the open again. That probably won't take too long, unless the media blacks it out.

Bernanke's Misguided Policies Drive Gold Prices Up

Anyone who thinks gold prices are going to plunge, better read up on Ben Bernanke and his philosophy for running the Federal Reserve, which is nothing more than printing as much money as needed to pretty much do absolutely nothing, as evidenced by the ongoing recession.

Gold prices are going to continue to go up based on nothing else but that, although there are other factors which will contribute to the price movements of gold.

It's an incredible joke to hear economic and business writers say that gold prices are going up because the Federal Reserve will act to "stimulate" the economy if needed.

As mentioned, printing and throwing money at the problem can't be equated with economic stimulation, as the last two years have shown. There has been no stimulation, just artificial props that crash once they're removed, like the tax credit for new home buyers.

For gold investors it's good news to be reminded of these foolish actions, as it guarantees gold prices will move up for some time to come, as there can be no doubt the economy will continue to sputter, and Bernanke will crank up the printing presses yet again.

It also guarantees a robust Tea Party movement, as these types of actions are what led to organic formation of the political powerhouse to begin with, as government spending continues to spiral out of control and bring the United States to the point of ruin.

This is why gold will continue to attract new investors, and why it'll hold its own against the majority of investments for some time to come.

Gold in the short term will probably continue to fluctuate, as mixed economic news continues to be the narrative, giving differing signals at the same time.

But as the market slowly realizes Europe is far from fixed, even though some are attempting to make it look like it's back to business as usual, we'll see gold get a huge push from the ongoing sovereign debt crisis as well.

The recent downgrade of Ireland's debt reminds us of the threat still inherent in the European Union, and which isn't close to being taken care of.

For gold, all of this is going to keep support under it, and once it takes off again, will probably move to record highs, as there will be very few places to put our money.

Gold prices finished up for the third day in a row, increasing to $1,195.60 an ounce on the Comex in New York.

BHP (NYSE:BHP) Wary of Short Term Global Economic Outlook

BHP Billiton (NYSE:BHP) said in a recent production report they are wary of the short-term outlook for growth, especially in mature markets, with European nations putting austerity measures in place to combat the sovereign debt crisis.

Prospects in the United States aren't looking good, and China is taking measures to combat their urban property crisis, which has overheated in a big way.

China will continue to grow, just at lower levels than the recent past, contrary to a few recent reports they're going to allow the property market to go forward as it was. That's just wishful thinking and attempts to get investors to put their money in dubious companies and funds.

BHP said this in their production report, "Uncertainty surrounds the near-term prospects for growth in the developed world as governments adjust fiscal policies following a period of significant stimulus and subsequent increase in sovereign debt levels. Within China, measures introduced to reduce growth to more sustainable levels means volatility in commodity end-demand is likely to persist. BHP Billiton sees these measures as a normal continuation of China's economic management policies,"

In other words, over the short term there is very little to bring optimism to the demand factor of a number of raw materials, and that's going to show in the results of companies like BHP.

While we'll see some good quarterly reports for the last quarter, like with Freeport-McMoRan (NYSE:FCX), that was based on commodity prices last quarter. Since then a number of metals and other commodities have fallen, and that's pointing to a tough quarter next time around.

Moody's (NYSE:MCO) Downgrades Ireland Government Bonds

Government bond ratings from Ireland were downgraded by Moody's (NYSE:MC), a good reminder that the sovereign debt crisis in the European Union remains a key component of global economic health, and the patient remains in serious condition, possibly ready to move to critical.

The major reasons given be Moody's for the downgrade were these:

- The government's gradual but significant loss of financial strength, as reflected by the substantial increase in the debt-to-GDP ratio and weakening debt affordability.

- Ireland's weakened growth prospects as a result of the severe downturn in the financial services and real estate sectors and an ongoing contraction in private sector credit.

- The crystallization of contingent liabilities from the banking system, as represented by a series of recapitalization measures and the need to create the National Asset Management Agency (NAMA), a government-created special purpose vehicle that is acquiring impaired loans from banks.

It's good that Moody's did this, more, again, from the perspective that investors need to be reminded of the ongoing weakness of the European Union.

A number of media outlets, including financial ones, have been making it look like Europe was out of deep trouble and was doing well. That's far from the truth, and the sovereign debt crisis remains a major challenge for the global economy going forward, as the overall EU is the largest economy in the world.

As far as the actual downgrade of Irish government bonds, it was from Aa1 to Aa2.

US Dollar Crushed by Major Currencies

The US dollar got clobbered today as interest rates will be held down by the Federal Reserve for some time to come, as inflation remains low for the time being in the U.S.

Questions as to whether or not we've ever escaped the recession are increasingly being asked, as no jobs are being created in the private sector and housing remains in terrible condition, and is expected to worsen.

We still haven't seen the full effect of the commercial property market yet either, which is supposed to be in trouble over the second half of 2010.

The illusion the sovereign debt crisis in Europe has been handled because Greece has been able to auction bonds in the private markets is a real stretch, but that has strengthened the euro some for now, another downward pressure on the dollar.

Based on Wal-Mart (NYSE:WMT) starting a food price war to draw consumers back to the store, food prices dropped strongly in June, as they and competitors fought for foot traffic.

Consequently, the producer price index sank by 0.5 percent, after a 0.3 percent fall in May. Economists were said to be looking for 0.1 percent, but to me should have known better with the move by Wal-Mart and its competitors.

The dollar fell to 1.2910 against the euro, its worst showing in over two months.

Deutsche Bank (NYSE:DB) Upgrades BHP Billiton (NYSE:BHP)

The market largely ignored the upgrade of BHP Billiton (NYSE:BHP) by Deutsche Bank (NYSE:DB), punishing the stock in New York as continued concerns over demand for raw materials in a shaky global economy continue.

Add to that the unsurety of the super tax in Australia and there's a need to settle things down to get a better picture of where they are going, especially with external forces like the Australian government acting upon them.

For the upgrade, it was from a "Hold" to a "Buy." On June 16, JPMorgan went the opposite direction with BHP, downgrading them from "Neutral" to "Undeweight."

While it seems the Australian miners definitely have an upper hand, and half the country surprised the politicians by supporting the miners with the 40 percent super tax.

It wasn't to solely support the mining companies, but the understanding it could devastate their economy and the good jobs the industry provides for them.

As with all governments around the world, Australia needs to realize they need to cut back on their programs and promises, as it's simply not sustainable, as Europe, the United States, and now Australia, are proving.

Aluminum Prices Going Nowhere Through 2011

A growing consensus is emerging that aluminum prices over the next couple of years are going to remain largely level, and will fluctuate between $1,900 and $2,100 a ton during that time.

The global economic picture, along with the oversupply of aluminum are the major factors cited by economists and analysts as to the reasons for that outlook.

Within those general parameters, aluminum prices are expected to be volatile, mostly on the ongoing battle of China against inflation in their urban property markets, as well as the continuing European debt crisis.

Although demand has been looking good over the long term, the supply is high, and that is negating the increase in demand as far as aluminum prices go, and new aluminum smelters make supply an issue going forward, as it should increase even more as they go online.

Some erratic pricing behavior for aluminum will arise from the inventory deals which could limit supply during certain periods of time, which will be part of the fluctuation in prices mentioned above, but over time that won't have any significant impact on aluminum prices until demand reaches levels where it can't be supplied, which doesn't look to be any time soon.

One new element which isn't being talked about much yet, but which could dramatically change the aluminum demand picture is the news that new aluminum-backed ETFs are going to launch in the latter part of 2010, which could create the type of demand mentioned, changing the overall picture for aluminum.

In that regard, aluminum suppliers could have a harder time meeting demand in the future, increasing the price, but a lot of things have to fall into place for these ETFs to become major aluminum players; like getting the type of financing to take them through the challenges early stages, which is far from guaranteed at this time, but could end up happening over the next several years.

Aluminum looks good over the long term, along with aluminum producers, but in the short term there's very little to get excited about, other than the shares of aluminum companies going down, which will give investors good entry points to invest.

Citigroup's (NYSE:C) Pandit: Euro Not Going Away

According to Citigroup (NYSE:C) CEO Vikram Pandit, he and the giant bank believes the "euro is here to stay."

Pandit added, "I think we are going to look at this as another one of these issues that we’ve put behind us."

Pandit also offered praise to how the European Union handled the situation, saying it was a "very good job," on Bloomberg television.

What was the good job? They simply through money at it to the tune of $975 billion. What's so great about that?

But then again we must consider the source, as Pandit was at the helm of Citigroup as it had to get taxpayer dollars in order to survive. So the idea to throwing money at problems is about all big bankers like Pandit can see as a solution to challenges like these.

Many analysts and investors believe the euro can't survive this crisis because Europe refused to defend it by allowing the situation to play out in the countries, showing them they were serious about adhering to the financial rules of the EU.

The euro of course won't immediately fail, but definitely could sometime in the next decade or so.

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.

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.

Teck Resources (TSE:TCK-B) Falling on Economic Uncertainty

Teck Resources (TSE:TCK-B) has dropped today as a growing number of negative economic indicators and situations make it highly unlikely raw material demand will strengthen in the short term.

The ongoing worries and fears over China, Europe and the United States has investors running for safety.

While the European sovereign debt crisis and China battling inflation were bad enough, the jobs report release that revealed the U.S. private sector was doing very little hiring weakened the economic outlook even further, which nowhere to go to find a place where demand for materials, goods and services was rising unimpeded.

There will be a resumption in demand sometime, but that is increasingly looking like it's much further out into the future than being spun by governments and the mainstream economic media.

Most precious metals will remain under pressure until that changes.