The only thing that investors have heard recently about the copper market is that there is vast oversupply ahead as evidenced by a buildup in copper warehouse inventories globally.
Inventories at LME (London Metals Exchange) warehouses have risen in excess of 190% since October alone. Inventories are now at levels not seen since 2003 at more than 590,000 tons.
LME inventories are closely watched by traders and economists alike as a key indicator of global economic strength and activity. Normally, such rising levels of copper in warehouses would be a flashing red light warning about economic weakness ahead globally.
According to the Commodity Futures Trading Commission (CFTC), traders have jumped on this inventory number and have accumulated the highest level of net short positions on copper in over six months.
How to Double Your Money by Investing in Copper
Copper prices are up 170% over the past four years - meaning huge profits for anyone who has been investing in copper.
But now many investors are bailing on the red metal. Prices have slipped about 9% this year, and inventories are soaring.
Copper prices hit an eight-month low today (Wednesday) as slowing economic growth has led speculators to take more short positions on the metal.
Copper inventories also appear to signal low demand. Stockpiles of the red metal in the London Metals Exchange are at the highest level since October 2003.
But what appear to be bearish signals for investing in copper are not the case. Here's what investors need to understand...
Investing in Copper: Why Prices Will Rebound in 2013
If you're considering investing in copper, you need to know what's happening in China right now.
The country's extraordinary growth spurt - and the resulting surge in demand for copper - will create a global shortage of the metal this year, likely driving up prices. Copper is currently trading around $3.50 a pound.
Indeed, the real demand story for copper continues to be in emerging markets, particularly in China, which is responsible for about 40% of global consumption of the metal.
Last year, China's imports of refined copper hit a record high 3.4 million metric tons, according to the General Administration of Customs in China. This figure surpassed the previous high of 3.19 million metric tons, set in 2009 during the stimulus following the 2008 financial crisis.