Copper sends a warning shot across markets, economist says

While investors have focused on the sharp rally in gold and silver, a less closely watched commodity — copper — has quietly surged to record highs, a move some economists say carries more troubling implications for inflation.

Copper jumped nearly 5% on Boxing Day, pushing futures prices to a new all-time high of $5.85 per pound in futures markets. The industrial metal is now up roughly 45% year to date, an unusually steep gain for a base commodity.

Often referred to as “Dr. Copper,” the metal is widely used across the real economy, including construction, electrical wiring, power grids, electric vehicles, electronics, and industrial machinery. Because of its broad applications, copper prices are closely watched as a barometer of underlying economic demand and cost pressures.

Economist Peter Schiff highlighted the move, arguing that the rally in copper reinforces the inflationary signal already being sent by precious metals.

“It’s not just precious metals that are soaring,” Schiff wrote. The rise in gold, silver, and copper “clearly indicates that inflation is much higher than what the Fed or Trump claim. Consumers will feel the pain even more in 2026.”

Unlike gold, which often rises on investor fear or currency hedging, copper demand is tied directly to physical production and infrastructure.

When copper reaches record highs, it typically reflects real input-cost pressures moving through supply chains rather than speculative sentiment alone.

Those higher costs are often absorbed temporarily by manufacturers and builders before being passed on to consumers, which helps explain why commodity-driven inflation can show up with a delay.

As a result, today’s copper prices may already be embedding higher costs that surface more clearly in consumer goods, housing, and utilities next year.

In that sense, copper’s rally is less a prediction than a confirmation: inflation pressures may be more persistent than headline data currently suggests.

Economists aren’t buying the latest inflation data

Schiff and others have pushed back against the latest inflation figures, arguing they understate underlying price pressures.

The most recent report from the Bureau of Labor Statistics showed inflation cooling broadly in November. The Consumer Price Index eased to a 2.7% annual rate, down from 3% in September, while so-called core inflation — which excludes food and energy — slowed to 2.6%.

Skepticism among economists centers largely on owners’ equivalent rent, the measure used to estimate housing inflation for homeowners. Critics argue the methodology can lag real-world housing costs and may temporarily understate inflation pressures, particularly when shelter costs are changing rapidly.

Michael Gapen, chief U.S. economist at Morgan Stanley, warned that if methodological distortions are present, inflation could reaccelerate in the coming months.

“If these technical factors are the main source of weakness, we could see reacceleration in December,” Gapen said.