Prices Take Wing

  • David Humphreys
Chapter

Abstract

The five-minute ‘ring’ starts slowly, with the dealers slouched on their red leather benches in a circle under the bright lights. Periodically, one of them proffers a trade with an air of studied indifference. This continues for four minutes. In the last minute of the ring, the pace begins to quicken. The bids and offers flow more freely. The air of indifference evaporates. Dealers become more animated. Outside the ring, telephones clamped to their ears, traders signal to their colleagues in the ring the buy and sell orders coming down the line from clients. The last seconds of the ring are a complete frenzy, the dealers straining forward on their benches shouting and gesticulating. Then, as quickly as it arose, the storm abates. The bell sounds and the shouting ceases. The dealers leave the ring and calm prevails. The price of metal for the next trading period has been set.

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Notes

  1. 1.
    For a fuller discussion on these issues, see D. Humphreys (2011) ‘Pricing and Trading in Metals and Minerals’ in P. Darling (ed.) SME Mining Engineering Handbook, 3rd edn. (Society for Mining, Metallurgy, and Exploration).Google Scholar
  2. 2.
    This and the following paragraphs draw heavily on D. Humphreys (2010) ‘The Great Metals Boom: A Retrospective’, Resources Policy, 35, 1.CrossRefGoogle Scholar
  3. 4.
    J.T. Cuddington and D. Jerrett (2008) ‘Super Cycles in Real Metals Prices?’, IMF Staff Papers, 55, 4.CrossRefGoogle Scholar
  4. 6.
    M. Radetzki, R.G. Eggert, G. Lagos, M. Lima and J.E. Tilton (2008) ‘The Boom in Mineral Markets: How Long Might it Last?’, Resources Policy, 33, 3. Also, M. Stürmer, ‘150 Years of Boom and Bust – What Drives Mineral Commodity Prices?’, German Development Institute Discussion Paper 5/2013.CrossRefGoogle Scholar
  5. 9.
    J.E. Tilton (2014) ‘Cyclical and Secular Determinants of Productivity in the Copper, Aluminium, Iron Ore, and Coal Industries’, Mineral Economics, 27, 1.CrossRefGoogle Scholar
  6. 16.
    J. Rogers (2007) Hot Commodities (Chichester, West Sussex, England, John Wiley).Google Scholar
  7. 22.
    M.W. Masters, ‘Testimony before the Commodities Futures Trading Commission’, 5 August 2009.Google Scholar
  8. 24.
    These matters are discussed in detail in J.E. Tilton, D. Humphreys and M. Radetzki (2011) ‘Investor Demand and Spot Commodity Prices’, Resources Policy, 36, 3.CrossRefGoogle Scholar
  9. See also, O. Östensson (2012) ‘The 2008 Commodity Price Boom: Did Speculation Play a Role?’ Mineral Economics, 25, 1.CrossRefGoogle Scholar
  10. 26.
    IMF (2006), World Economic Outlook (Washington, DC, International Monetary Fund), Chapter5.Google Scholar
  11. 27.
    HM Treasury (2008) Global Commodities: A Long Term Vision for Stable, Secure and Sustainable Global Markets (London: HM Treasury).Google Scholar
  12. US Interagency Task Force on Commodity Markets (2008) Interim Report on Crude Oil (Washington DC: US Interagency Task Force on Commodity Markets). S.H. Irwin and D.R. Sanders, ‘Speculation and Financial Fund Activity, Draft Report, Annex’ in Proceedings of OECD Working Party on Agricultural Policies and Markets, 17–20 May 2010.Google Scholar
  13. 28.
    IMF (2010) Global Prospects and Policies (Washington, DC, International Monetary Fund), Chapter 1, Appendix 1.Google Scholar

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© David Humphreys 2015

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  • David Humphreys

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