Could this be a period of slight correction before the next big rally or is the global economy heading for a double-dip recession? Gold investors are hedging against the latter. Could the world avoid the worst case scenario? Perhaps, but four issues need to be tackled before the economy can grow: financial reform, Chinese stabilization, unemployment and the BP oil spill.

Europe and the U.S. need to move forward with financial reform. While the Euro zone tries to determine what it will do with Greece, other countries are starting to falter. Spain and Hungary are the latest. Banco Santander, Europe’s largest banker and an important financial institution for Latin America, has billions of Euros invested in non-performing assets and Spanish bonds. In the last month, the Euro fell to $1.19 from $1.27. The dollar did not gain strength; it simply lost less than the Euro. In the U.S., it seems the surviving Wall St. investment firms and large banks, which have shown no remorse for the global financial crisis, plan to keep doing business as usual. Until credit begins to flow again, exploration programs and new projects will not advance.

China should demonstrate that its stimulus package is working to counter fears of another economic bubble. In addition to massive amounts of iron ore, lead and aluminum, the country consumes more than one-third of the world’s copper production. During the last two years, China has invested nearly $80 billion in natural resources companies. Moreover, China has offered loans to developing countries in exchange for access to minerals. No only does “slowing down an overheated economy” not compute, the world and the mining business in particular needs to see strong Chinese growth figures.

Unemployment figures must drop before Europe and North America can declare the economic recovery is at hand. The latest figures released by the U.S. were atrocious. Unsure on the direction of healthcare and environmental policies, American businesses are reluctant to expand and hire. Washington has taken a decidedly more pro-labor, anti-capital approach these days, a populist stance that ironically is holding back job growth. Employed consumers are happy and they drive the economy.

The oil gushing from the well in the Gulf of Mexico has a deep psychological impact. The longer the oil spills, the worse it will get. It’s already an environmental tragedy of epic proportion. How BP handles the cleanup of the coast and restores the lives of those affected will reshape energy and environmental policy for many years to come. This will have knock-on effect that will impact mining. The cost of environmental compliance will increase for all business.

Until the world can check all four of these items from its to-do list, an economic recovery can not proceed in earnest. In most cases regulators and policymakers hold the keys. Instead of reacting as politicians, they should lead by making informed decision with a long-term pro-business perspective. Once the world’s economic engine begins to accelerate again, mining companies will see another extended period of high demand.

Steve Fiscor, Editor-in-Chief, E&MJ