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.

Mechel OAO (MTL) (MT) (X) (GGB) Drop as Commodities Correct

A general correction in commodities prices spurred by the plunge in oil prices pressured the steel sector as well, with ArcelorMittal (NYSE:MT), US Steel (NYSE:X), Gerdau S.A. (NYSE:GGB) and Mechel OAO (NYSE:MTL) all closing down Tuesday.

Crude oil prices for May delivery fell as much as 63 cents, or 0.6 percent, to $105.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $106.01 at 10:14 a.m. Sydney time. Yesterday, it fell $3.67 to $106.25. Prices dropped 5.9 percent on April 11 and 12.

The U.S. raised its crude-oil price projection for 2011 to an average $106.38 a barrel from $101.77 in March, according to the Energy Department’s Short-Term Energy Outlook.

Mechel OAO closed Tuesday at $28.58, falling $0.83, or 2.82 percent. Gerdau S.A. closed at $12.36, down $0.41, or 3.21 percent. ArcelorMittal closed at $35.80, dropping $0.72, or 1.97 percent. U.S. Steel ended the session at $50.52, declining $1.20, or 2.32 percent.

BHP (BHP), RIO (RIO) Jump on Rising Commodity Prices

Rising gold, silver and copper prices are pushing up the share price of diversified miners BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO), as safe haven status and growing copper demand offers the commodities support and growth.

Copper demand and prices are rising on the fact that Japan will need a tremendous amount to rebuild the country. Other commodities like aluminum and steel will also generate strong demand over time.

Gold is up on the various geo-political and economic crises around the world, with the never-ending sovereign debt crisis in the EU again adding fuel to the fire.

Silver continues to rise on an alternative to gold as well as demand as an industrial metal.

BHP was trading at $ 90.94, gaining $0.92, or 1.02 percent, as of 2:20 PM EDT. Rio Tinto was at $68.57, up $1.05, or 1.56 percent.

Goldman (NYSE:GS) Says Precious Metals Will Lead Commodities in 2011

Talking commodities today concerning 2011, Goldman Sachs (NYSE:GS) said they see precious metals leading the way, with gold reaching $1,690 in 12 months, while livestock performing the worst in the commodity sector.

Over the next year, Goldman sees precious metals rising 28 percent and livestock increasing by only 4 percent.

Goldman said in the report, “Extreme weakness in U.S. demand over the past two years has allowed China to grow unconstrained without any competition for raw materials. This is likely to change in 2011 with a stronger U.S. that is likely to bump up against a China that is consuming dramatically more commodities than pre-crisis.”

In order to cut back on American consumption, commodity prices will probably be pushed up in order to “to make room for further Chinese demand,” according to Goldman.

Precious metals specifically identified as being most affected were platinum and copper, and other commodities to be affected said Goldman, will be soybeans, cotton and crude oil.

As far as gold demand and prices, Goldman concluded, “A low U.S. real interest-rate environment will continue in 2011, particularly given the resumption of quantitative easing measures in the U.S.,” the analysts wrote. “However, as we look toward 2012, we find it timely to reiterate our view that at current price levels gold remains a compelling trade, but not a long-term investment.”

Teck Resources (NYSE:TCK) Outperforms Diversified Mining Peers

While their major competitors were all dropping in share price on Wednesday, Teck Resources (NYSE:TCK) was able to carve out a good day as their share price rose, and the company said they're going to raise their dividend by an additional 50 percent.

Raising dividends usually gives a company a boost as it signals they're confident in their ability to generate earnings for shareholders in the period ahead.

It also implies they believe commodity prices will continue to rise in the future.

Tech has had to hold back their dividend because of their acquisition of Fording in the middle of 2008, when they took on $9.8 billion in short-term debt to finance the deal. Tech paid that off earlier in 2010.

Chief Executive Officer Don Lindsay said, "This dividend increase reflects our confidence in our current balance sheet strength and our ability to fund our strong portfolio of growth assets."

JPMorgan (NYSE:JPM) on Possible China Interest Rate Increase

JPMorgan (NYSE:JPM) said recently if China does in fact increase their interest rate it would cause an immediate drop in oil prices.

But the financial giant said it should be considered a buying opportunity for the long term, although in the short term the drop in price could be dramatic.

This is something anyone investing in commodities in general should keep in mind as well.

Many raw materials and metals will probably experience significant downward pressure almost right away, but once the smoke clears, China is still going to acquire many commodities to fuel its growth, even if they attempt to slow it down some.

For most commodities, including gold, it should be considered a buying opportunity if and when it happens.

JPMorgan said, “We continue to emphasize that any price drop in crude, similar to Friday’s, is an opportunity to buy.” Extend that to most commodities and many investors should find good entry or re-entry points.

Bank of America (NYSE:BAC) Says Unwinding of Reflation Trade Could Accelerate

After the announcement by Ben Bernanke concerning implementing another round of quantitative easing, investors have had a nice bump up in profits as expectations that inflation would rise began to be fulfilled. Bank of America (NYSE:BAC) says that could be temporarily halted going forward.

“Reflation trades have gone a long way since Jackson Hole, and positioning alone makes them vulnerable. We estimate that the aggregate position of QE2/reflation trades now sits at a three-year high. The unwinding of the reflation trades that started with the sell-off in Treasuries is now spilling into the cyclically sensitive assets, may have more room to go,” said Bank of America.

“The size of these positions no doubt reflects the strong consensus that easy U.S. monetary policy and emerging market decoupling will keep U.S. interest rates low and global growth strong,” the bank wrote in the note. “However, vulnerability is beginning to show, and further position unwinding seems increasingly probable as we had into year-end.”

Assets which benefit from inflating the economy through printing money, including commodities in general, and gold, have fallen back since November 3.

There are other factors involved, of course, like the EU sovereign debt crisis and uncertainty as to China and how they'll battle inflation.

Barrick (NYSE:ABX), Ivanhoe (NYSE:IVN), Eldorado (NYSE:EGO), Agnico (NYSE:AEM) Rise with Surging Gold Prices

The jobs report in the U.S. showing further terrible results have gold prices today jumping and gold miners rising with them. Barrick Gold (NYSE:ABX), Ivanhoe Mines (NYSE:IVN), Eldorado Gold and (NYSE:EGO) and Agnico-Eagle Mines (NYSE:AEM) are all in positive territory in anticipation of the inevitable inflationary move by the Federal Reserve, which will pump more money into the American economy.

Ivanhoe Mines made the highest move of the gold miners mentioned above, rising to $24.59, gaining $0.86, or 3.62 percent, as of 2:40 PM EDT. Following them was Agnico, which pushed to $72.78, a gain of $1.38, or 1.93 percent. Barrick also increased, standing at $48.40, adding $0.72, or 1.51 percent. Eldorado finished the grouping off, rising to $18.57, an increase of $0.21, or 1.14 percent.

A number of diversified miners also benefited from the fall in jobs, anticipating higher metals' prices because of the falling value of the U.S. dollar, which will worsen from the Federal Reserve's inflating of the money supply.

Commodity prices in general will continue to increase in price because of the falling value of the U.S. dollar and inflation from the Federal Reserve's actions.

Alexco Resource (AMEX:AXU), Mines Management (AMEX:MGN) Rise as Metals Price Move Up

Metals miners enjoyed a great day today, as a number of precious metals rose on an increased positive outlook by investors, even though many pointers are out there showing there's a lot of risk.

Even today's confirmation China is continuing to cool off their economy was pretty much shrugged off by investors, so you know emotion is ruling the market at this time. After all, if investors aren't concerned over China slowing down, they're looking in the wrong place.

News that Europe was allegedly improving in a non-story. That's the narrative the mainstream media is carrying now, and that probably won't change, even though the region remains under extraordinary stress.

For smaller miners like Alexco Resource (AMEX:AXU) and Mines Management (AMEX:MGN) though, they can move up nicely in investing environments like this, and did, with both of them moving up in conjunction with metals prices.

Alexco traded at $3.19 at the end of the day, gaining $0.11, or 3.57 percent. Trading volume was less than half the 3-month average, pointing to large caps being on the radar of traders at this time. Even so, those holding shares in the company enjoyed a nice move.

Mines Management (AMEX:MGN) made an even bigger move, as measured by percentages, ending the trading session at $1.62, a gain of $0.07, or 4.52 percent. Trading volume was also down for Mines Management as it was for Alexco.

As long as emotion and not facts rule the market, companies like these could move up nicely, although we know they can also come down just as fast when the other side of the picture is focused on.

The question is how long with the optimism remain and commodity prices continue to rise.