Price Bubbles Always Burst: Mining Giant BHP Billiton Is In a Price Bubble

BHP Billiton (BHP), the huge metals mining conglomerate (aluminum, coal, copper, iron ore, lead, manganese, oil, zinc and more), has risen 790 percent in just over five years as it continues to make new highs. Many people believe that the stock has many more years on its secular upside, but the price chart shows the occurrence of two very steep upsides (numbered 4 and 5), indicating that the stock is in a bubble phase which cannot be sustained.



As long as demand for BHP's products remains strong, its stock price will remain at high levels. But when base metals and energy prices trend down (lead, nickel and zinc are down significantly from their all-time highs), BHP could plunge.

Posted May 23, 2008.