Commodities And Monopolies

Corporations are prohibited by law from holding a monopoly on a particular industry. But the same cannot be said for investors, who are able to hold huge amounts of the world's commodities. The

has published a story focusing on the copper market, in which a single trader reportedly owns 80% to 90% of the copper sitting in London Metal Exchange warehouses. That's equal to about half of the world's exchange-registered copper stockpile and worth about $3 billion. This report came as copper prices soared to new records on Tuesday. Commodities prices rallied along with stocks, and the Dow Jones Industrial Average gained 55.03 points, or 0.48%, to 11533.16 – its highest level since August 2008. Copper soared to a new record of $4.2705 per pound, and is up 28.3% this year. The Wall Street Journal notes that J.P. Morgan Chase & Co.

recently had a large position in copper, but adds that it is unclear whether the U.S. bank increased its holdings, or whether a new player has taken the dominant position. David Threlkeld, President of Resolved Inc. (a metals consultancy), said, “Regardless of who owns it, the only thing of note here is that we are being told that one person has a substantial position.” Copper isn't the only metal where one trader owns a large amount of the commodity. For aluminum, as much as 90% is reportedly held by one trader. Meanwhile, 50% to 80% of the nickel, zinc and aluminum alloy markets are controlled by single traders. This, the Wall Street Journal said, could result in a concentration of ownership that could skew prices.