Rio Tinto (NYSE:RIO) is about to release earnings. Ponder this Bear Case Scenario:
Sovereign risk is heightened. Look at he Australians imposing taxation and grabbing cash.
Global economy has peaked. China demand for raw resources may have peaked. If not it will not grow anywhere near its previous levels.
Pure plays trade at higher multiples than diversified players. Then exposure to the commodity outright excludes stupid management risks and avoid further discounts. It`s not easy being a miner.
George Gutowski writes from a caveat emptor perspective.