Stock Market Warning You Should Be Aware OfCritical Warning 6http://1goldinvestment.com/critical-warning-6/While many inve...
Chart courtesy of www.StockCharts.com. News of the halt in expansion is a good thing; mining stocks realize there is going...
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Stock market warning you should be aware of

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While many investors are concerned about the global economy, the stock market continues to move up. http://1goldinvestment.com/critical-warning-6/

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Stock market warning you should be aware of

  1. 1. Stock Market Warning You Should Be Aware OfCritical Warning 6http://1goldinvestment.com/critical-warning-6/While many investors are concerned about the global economy, the stock marketcontinues to move up. Some might be feeling left out of the party. When it comes togetting a feeling of what’s happening in the global economy, starting with the basic rawmaterial commodity firms is a good first step. The global economy depends on miningstocks to extract valuable inputs, such as iron ore, that go into making things, such assteel. If the global economy starts to slow down, less demand for the final product meansthat mining stocks will receive lower prices for the extracted materials.BHP Billiton Ltd. (NYSE/BHP), one of the world’s largest mining stocks, announcedthat it is not approving any new projects until June of 2013. The company went on toinclude a delay of its massive $20.0-billion Olympic Dam mine in Australia. With amassive decrease in income to $5.5 billion for the first six months of 2012, ended June30, as compared to $13.1 billion in the year-earlier period, the company and other miningstocks are feeling the pinch from a slowing global economy.With China, being a major buyer of raw materials, now slowing down rapidly, the futureis not bright for mining stocks of basic commodities, at least not in the short term. Thecompany states that costs that are continuing to rise and buyers are reducing the level oforders for iron ore, copper, coal, and nickel among other base materials.This is on top of reports that inventory levels are soaring in China. Basically, theeconomy appears to be grinding to a halt. This could become significantly worse if theseconditions are not worked off. The global economy will feel the stark effects of thenumber two economy encountering a slowdown. This will most likely mean even lowerraw material commodity prices, hitting mining stocks. Critical Warning 6 http://1goldinvestment.com/critical-warning-6/
  2. 2. Chart courtesy of www.StockCharts.com. News of the halt in expansion is a good thing; mining stocks realize there is going to beless demand, therefore, they should expand at a lower rate to supply the market withfewer materials. With the stock sitting near the 200-day moving average, one should becautious, as that has been an area of resistance in the past. If demand continues to dry upfrom a weak global economy, you’re left with mining stocks selling raw materials atlower prices.While this is only one company out of many mining stocks, because of the size of BHPand the breadth of commodities it is involved in, I think it is a good barometer of theglobal economy. If company management thought that the global economy was on theverge of turning around, rest assured BHP would be expanding to meet this demand. But,according to BHP, it doesn’t see the global economy expanding, and I think this cautioustone should be heard by all investors. Mining stocks in materials such as iron ore andcopper will most likely languish until the global economy shows signs of turning around. Critical Warning 6 http://1goldinvestment.com/critical-warning-6/

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