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The Role of Financial Speculation in Copper Prices

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  • Kegomoditswe Koitsiwe
  • Tsuyoshi Adachi

Abstract

The recently ended rise in commodity price boom and the ensuing spectacular price falls that followed, have inspired an interest among the researchers on the role played by other factors besides the physical supply and demand. This paper examines the role played by financial speculation in copper price boom during the last decade. Using least squares with breakpoints, the results indicate that from January 1993 to December 2016 LME real copper spot prices have been characterized by structural changes and its determinants significantly varies in distinct periods. The results reveal that, financial speculation accentuated copper price moves during the last decade. The results support the conclusion that, fundamentals alone cannot fully explain price moves.

Suggested Citation

  • Kegomoditswe Koitsiwe & Tsuyoshi Adachi, 2018. "The Role of Financial Speculation in Copper Prices," Applied Economics and Finance, Redfame publishing, vol. 5(4), pages 87-94, July.
    • Handle: RePEc:rfa:aefjnl:v:5:y:2018:i:4:p:87-94
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    References listed on IDEAS

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    Cited by:

    1. Byungkwon Lim & Hyeon Sook Kim & Jaehwan Park, 2020. "Direct Effect of TC on the LME Copper Prices," Economies, MDPI, vol. 8(2), pages 1-9, May.

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    More about this item

    Keywords

    copper price; LME spot price; structural changes; determinants; speculation;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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