Something different today: Why commodity markets are in for a rude awakening

Hedge funds and large commodity traders have reportedly been stockpiling copper in China since 2004-2005. The purpose, according to a Dow Jones exposé published in mid-2008, was to create the appearance of a shortage of said metal by hiding it outside of London Metal Exchange warehouses (markets use LME inventory data to get a sense of supply and demand trends). This stockpiling helped keep prices high, to the benefit of those allegedly involved in the scheme. The International Copper Study Group, which produces widely-quoted data on the metal’s supply and demand picture, detected that something was amiss. Those concerns emerged in a seemingly accidental email to the group’s public distribution list recipients, including this author. One of the attachments in the email described the purpose of an upcoming meeting: [email protected]  11:34

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