Chinese investors are flooding metals futures as cash piles up and real investment options dry out.

Chinese investors are rushing into metals. Prices for copper, gold, and silver have exploded. This isn’t because factories need more materials. It’s because people in China have too much cash and nowhere real to put it.

Trading on Chinese futures exchanges has gone wild. Silver, aluminum, nickel, tin, and steel wire rod are seeing huge volumes. Duncan Wrigley, chief economist at Pantheon Macroeconomics, said, “We are seeing rocketing short-term trading volumes… likely a result of surplus liquidity with a dearth of attractive options elsewhere.”

Speculators are driving prices while the economy slows down

The People’s Bank of China has been pumping money into the system for years. But now it’s harder to push that money into anything useful. In December, China’s M2 money supply grew 8.5% compared to the year before. But the economy only grew 3.9% in the last quarter of 2025. That gap shows the problem.

Retail spending is still weak. Households are cutting back. Banks issued the fewest new loans since 2018. Fixed-asset investment, which includes buildings, machines, and infrastructure, fell for the first time ever. People aren’t spending, and companies aren’t investing. So traders are betting on metals instead.

Even with some recent drops, prices for copper and gold are still near record highs. But the rally has no connection to real demand. Factories are cutting back on materials. They don’t want to pay inflated prices when consumer demand is already weak.

Still, China’s financial speculators are ignoring the drop in real-world use. They’re focused on longer-term stories. That includes the green energy transition, currency worries that make gold look safer, and AI demand for metals like tin. Plus, we are facing global shortages in copper and aluminum.

Price swings grow as copper slips from highs

Gold-linked investment products inside China more than doubled in two years. There were over 300 by the end of 2025. Their combined value hit 243 billion yuan. That’s a big jump but still small compared to the country’s massive 180 trillion yuan financial products market.

Copper shot past $14,500 a ton last week. Then it started falling. On Friday, it dropped for the third day in a row to $12,750 on the London Metal Exchange. That’s a 3.1% drop for the week. It’s now having its worst stretch since April. Warehouses in London, Shanghai, and New York are loaded with copper, more than at any time since 2003.

BNP Paribas analyst David Wilson said copper is “still overvalued” and that anything above $11,500 is “almost entirely speculatively driven.”

Peter Taylor from Macquarie said prices don’t match real use, even as his team raised their copper forecast for the first quarter by 18% to $12,900, showing just how long this disconnect might last.

Zhou Xiao’ou from Zijin Tianfeng Futures said volatility could drop next week. That’s because many traders in China are stepping back for Lunar New Year. Open interest in copper futures has already dropped to its lowest since early December.

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