Copper Prices Rising, But Not Demand

Copper prices have risen again today, the third day in a row, even after the horrendous fall in new housing starts, which industry accounts for the majority of copper demand.

Housing starts in the United States plummeted by 33 percent, the largest decline ever.

So the fact that copper prices are going up while demand is going down, tells us that there is something else going on which is driving the price besides demand.

There is of course, and that something is low interest rates, which will continue to drive down the appeal of the U.S. dollar, while driving up the prices of commodities.

This isn't to say that demand for copper won't be relevant, as it's sure to keep a damper on how high copper prices will go. But it does mean copper prices have some room to move up as money looks for a place to grow.

The result of that will bring inflation, and inflation will of course push commodity prices higher overall, even when demand is low. As I said though, demand will affect how far those prices can rise, even in a low-interest rate environment.