Global Mining Investing $69.95, 2 Volume e-Book Set. Buy here.
Author, Andrew Sheldon

Global Mining Investing is a reference eBook to teach investors how to think and act as investors with a underlying theme of managing risk. The book touches on a huge amount of content which heavily relies on knowledge that can only be obtained through experience...The text was engaging, as I knew the valuable outcome was to be a better thinker and investor.

While some books (such as Coulson’s An Insider’s Guide to the Mining Sector) focus on one particular commodity this book (Global Mining Investing) attempts (and does well) to cover all types of mining and commodities.

Global Mining Investing - see store

Click here for the Book Review Visit Mining Stocks

Download Table of Contents and Foreword

Tuesday, March 06, 2012

Don't read too much into Chinese GDP figures

Australian markets are down today. Not surprising - the commodity markets are down. The question is - should they be down? Well, the purported reason for them falling is the 'concrete' reason that China has just reported that it is forecasting annual GDP growth of 7.5% in 2012 rather than 8%. One has to be suspicious of this number however for a simple reason - the Chinese government is:
1. Highly centralised
2. Even autocratic leaders need to depend on market info

The question is - what is deciding the reported forecast of Chinese economic activity. There are several possibilities:
1. The government bureaucratic analysts are looking at market trends - clearly this is not likely because they have a habit of always understating growth
2. The government bureaucrats are performing a market survey to assess market demand for commodities, demand for their products, and these forecasts are relatively negative, i.e. This could be because Chinese manufacturers and traders have a tragic, cautious nature....but alas the economy is growing fairly strongly. The other reason is that Chinese traders are advising the government that demand is weak because they want to drive market perceptions down, so they can buy commodities at lower prices.
3. Chinese commodity buyers, traders or manufacturers, are paying kickbacks to analysts to talk down prices and economic activity in China, so that international commodity prices fall, so that they can buy commodities lower. They can later in the year adjust their prices.

I favour this last approach because a lot of commodity prices are set on the basis of annual price negotiations; and they tend to occur in March or April, i.e. so these Chinese GDP figures are rather timely for the traders. I have over the years seen a great deal of corruption in Asian markets. Rest assured the economists studying PhDs in Canberra take Chinese bureaucratic numbers as gospel - but that is because there is no implication for their papers. i.e. Their salary is extorted from you the taxpayer, where you have no discretion. The trader has discretion, however they are responding to the 'news'; so I suggest they will be buying in coming weeks. I see copper prices are testing previous highs; and lead can go higher.

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Global Mining Investing $69.95, 2 Volume e-Book Set.
Author, Andrew Sheldon

Global Mining Investing is a reference eBook to teach investors how to think and act as investors with a underlying theme of managing risk. The book touches on a huge amount of content which heavily relies on knowledge that can only be obtained through experience...The text was engaging, as I knew the valuable outcome was to be a better thinker and investor.

While some books (such as Coulson’s An Insider’s Guide to the Mining Sector) focus on one particular commodity this book (Global Mining Investing) attempts (and does well) to cover all types of mining and commodities.

Global Mining Investing - see store

Click here for the Book Review Visit Mining Stocks

Download Table of Contents and Foreword

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