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Friday, July 13, 2012

China Growth Down for Sixth Straight Quarter

Growth in China fell for the sixth quarter in a row, dropping to 7.6 percent for the period. That's the lowest level since the first quarter of 2009.

While it was a little better than the market had concerns over, it was still down enough to keep the inevitable stimulus for that country alive, even as Europe and the United States will soon implement another round of quantitative easing.

That's good news for gold, silver, and some other commodities, as it certainly will push up the price of the metals in a big way, rewarding patient investors.

Gold and silver are positioned well with the economic decline, as they'll go up in price without a doubt because of the resulting fall in the value of the U.S. dollar, and the assumption the buying up of more bonds will help the economy.

It won't. But many traders will use it for an opportunity to push up the value of silver and gold, which will pull up the prices of base metals as well.

Some are spinning this as a triumph, which has taken the pressure off of China's need to aggressively stimulate its economy.

Assuming the numbers are fairly accurate, China, as do a number of nations, faces the problem of overestimating the health of their economy, which would result in its taking too long to respond to a weakening economy.

If that's what happens, the stimulus measures taken by a number of governments would be even more robust than before.

China has lowered interest rates and significantly cut back on imports in response to the slowing economy (some of that is related to stockpiling commodities in the prior months), suggesting their real assessment of their economy is it'll continue to slow down, as recent comments by Chinese official confirm when talking about declining exports, which are reflective of the weak global economy.

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