On Monday night, , as shown below, reached an all-time high of over $12,000 per metric ton. Copper is often referred to as “Doctor Copper” because it serves as a barometer of global economic activity. However, the current surge in prices is not due to sharply rising demand; tariffs and physical dislocation are heavily impacting the supply side. The bullet points below help appreciate why copper is hitting all-time highs.
- Traders are front-running U.S. tariff policy, bringing the metal into the U.S. ahead of potential tariffs. This has distorted global trade flows, tightening inventories elsewhere, and creating artificial scarcity.
- The scarcity is enhanced by inventory stockpiling, not end-user consumption.
- Adding to supply woes, copper mine disruptions, declining ore grades, and years of underinvestment limit miners’ ability to meet growing demand quickly.
- Copper trades on the futures exchanges. Accordingly, it is leveraged and traded by speculative momentum traders. As we are witnessing with silver, speculative traders make a living chasing trends.
Because the price increase is primarily supply-related, if tariff threats fade and trade routes normalize, excess inventories could quickly hit the market, causing speculative trades to unwind. In such an instance, copper prices could fall just as fast as they have risen.
Watch The Yen In 2026
As we share below, the is again approaching its lowest levels against the dollar since at least 1995. We circle the sharp, short-term increase in the yen occurring in August 2024. This was the market swoon related to the supposed liquidation of the yen carry trade. It is rumored that tens of billions of dollars are propping up US assets, supported by loans made in Japan through the yen carry trade. The relatively low Japanese borrowing rates and a declining yen make such a trade highly attractive to hedge funds and other institutional money managers. Moreover, Japanese citizens and corporations, facing low interest rates, are incentivized to invest their money abroad. By doing so, they can profit from high-yielding assets they cannot access at home and from a depreciating yen.
The depreciating yen fortifies the yen carry trade. However, looking ahead, there are growing rumors that Japan will intervene to support the yen. Japan heavily depends on energy and materials imports. A depreciating yen makes these goods more expensive. As a result, per Bloomberg:
The resulting cost-of-living crunch helped bring down two prime ministers before the current leader, Sanae Takaichi, took office.
Given the domestic economic and political situation, along with pressure from the US, we should expect the Japanese government to take steps to strengthen the yen. If an upward adjustment is done gradually, the impact on financial markets should be minimal. However, if it occurs suddenly, such as in August 2024, volatility could spike. Stay aware of this risk in 2026!
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