While much attention on the commodities market has been focussed on silver, another metal market has been quietly cornered by an unknown speculator.
According to the Telegraph a mystery trader has managed to buy up a dominant position in the copper market. They have managed to take control of 80% of the copper traded through London and stockpiled much of it in warehouses. London stockpiles have fallen though from the beginning of the year.
This has put a squeeze on the market and the spot price of copper hit $89 mid-week.
One of the drivers here may be that there is a fear that in the event of an economic rebound copper mining production may not be able to keep pace so causing a supply / demand imbalance driving prices up.
Copper is a very widely used metal and is employed for all manner of applications from plumbing to ordnance. Its ductile and electrical properties make it a very versatile metal indeed.
Copper prices have been doing rather nicely recently driven by several factors. There has been a Chilean miners strike in Collahuasi, China is expected to triple its demand over the next decade, the Fed's QE programme may well bolster construction and there is overall a general bullish feel about copper over the next year or so.
Under London Metal Exchange rules any trader that holds between 50-80% of the amount of copper needed to maintain day to day liquidity must lend it out. The trader concerned is lending it out at a 0.5% premium to the cash price.
There are moves by certain companies to start up copper based exchange traded funds (JP Morgan appears to be one).
One thing I find strange is that when people withhold their labour for a better price as in the BA strikes it is seen as anti-community and even the Prime Minister stands up in the house of commons to lecture the workers on their 'responsibilities'. But the stockpiling of metals and gas etc for a better price is seen somehow as legitimate even if the old freeze and UK companies suffer through lack of resources.
It looks like metals are definitely coming into favour.
Perhaps we'll be seeing Max Keiser saying 'crash JP Morgan, buy copper' soon.