Many do not realize it, but the price of copper explains a lot about the various forces of the economy. How, you may ask? Read on below to satisfy your basic curiosity.

The power of copper

Copper trades for about 12 cents per ounce. This may not seem like much compared to gold that trades today for about $467 per ounce, but copper is the world's third most widely used metal. It is not an investment metal but a working metal that moves dynamically as the economy changes. And copper prices have all posted double-digit gains in the Commodities Research Bureau index.

Copper traders are becoming wealthier by the minute, as the consumption and production of copper rises. Copper production around the world increased by 20% between 2002 and 2004 alone - that is a remarkable development in a two-year period of time. In fact, copper is largely responsible for the economic success of Chile, the supplier of about 1/3 of the world's copper.

It's therefore no surprise that the price of copper has doubled in the recent years. And this increase is a very accurate indicator of the demand for it. Copper is very stable trade - unlike precious metals such as gold and silver, nobody hoards copper, and yet it is always in demand.

What does this all say about the world economy? It is apparently booming. The progressively rising production and prices of copper indicates that companies all over the world are buying copper to transform into industrial output.