The trouble with virtually-zero interest rates and free flowing government money is that "dumb capital" finds its way into wild speculation. This eventually causes imbalance and risks for those that would be legitimate investors and consumers. This article from the Globe and Mail today is revealing:

"Forget the sluggish U.S. economy. The biggest threat to the stunning rebound in base metal prices could come from Chinese pig farmers.

Easy access to credit from Chinese banks has apparently inspired hog producers in Guangzhou province, investing-astute citizens in Zhejiang province and residents of the northern scrap metal trading hub of Anxin county to speculate on the price of copper and nickel.

Regular Chinese citizens are mimicking the government's decision to aggressively stockpile metal supplies amid the global economic crisis.

According to a recent report by China Central Television (CCTV), residents in rural areas have been accumulating physical copper in recent months, in quantities ranging from a few tonnes to a few hundred tonnes.

The new breed of base metals speculator is cause for concern, according to commodity experts. Na Liu, China strategist at Scotia Capital in Toronto, said local observers estimate that the non-institutional Chinese speculators could account for stockpiling of some 200,000 tonnes of copper and 50,000 tonnes of nickel.

“These stockpiles are in ‘weak hands,' as speculators have no real use for base metals," Mr. Liu told clients in a report.

“When the market sentiment turns, they are very likely to turn into quick sellers, especially when the bank's money is involved."

Such selling could put pressure on the price of copper and dampen the strong rebound that Canadian copper miners including and have enjoyed in recent months."

See the full article: What do Chinese farmers have to do with the price of copper? Plenty

Me thinks copper is not the only thing that speculators have been stock piling the past few months... Speculators are not known for their patience and long-term holding periods. A prolonged period of soft world consumption is very likely to flood these stockpiles out on to world supply again not too far ahead.