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00:00 – 00:08
This is a BBC podcast. You can get all our podcasts and our terms of use at bbcworldservice.com/podcasts 
00:08 – 00:19
And now the documentary. Michael Robinson investigates why the cost of commodities has been going through the roof, and asks; are we headed for «bubble trouble»?
00:20 – 00:41
With the growing chorus of complaint from politicians and business leaders that commodity prices have been driven irrasionally high by a flood of speculative investment, we set up to examine a fundamental question: are today's high prices the genuine product of supply and demand, or are they yet another bubble? Like .com or property. And we decided to explore it through one key industrial metal. In fact, one of the oldest metals known to mankind: Copper!
00:52 – 00:56
Yeah we are the kingdom of copper, yes. Lovely. And it's all around us!
00:57 – 01:07
So, what I'm looking at here is a load of pallets, and on each pallet.. three, four, five, six, seven, eight, nine.. 20 flat pieces of copper. [barely audible] Yep!
01:08 – 01:16
In the yard of a large factory in Osnabrück in North Germany, I found myself surrounded by piles of illustrious red metal.
01:16 – 01:33
Here, let me see if I can lift a corner. [Grunts] That's heavy! It's too heavy. It's impossible. I can't even lift one sheet of this stuff. I can just make it rattle, I can lift it .. one centimeter.
01:33 – 01:43
KME is the worlds largest producer of copper pipe, sheet and rod. With me in the yard, Marco Calamia, the company's head of metal-buying.
01:44 – 01:58
We sell every month, in division of 50 thousand tons of copper, half billion of dollar every..
Half a billion dollars every month? Yeah. Wow, that's a lot of money. We know, it is an important amount of money
01:58 – 02:18
After 20 years buying and selling copper, Marco Calamia thought he understood the market, but like the producers and consumers of commodities we heard from in the first program of this BBC series, in recent years, he's become puzzled and concerned as the price of his raw material began to fluctuate wildly.
02:18 – 02:51
2004, 2005 the price was 2000 dollars. Then the price increase in two-three years around to 8000 dollar. In 2007 I think it touched the first time 8000, then, in the financial crisis there is the collaps of copper. From 8000, the copper price collapsed to 2700 end of 2008, and it start to increase. In 2009, because of the worldwide financial crisis the consumption of copper was very low, but the copper price start to increase again.
02:51 – 03:05
Marco Calamia says copper today costs around 3000 dollars a ton to mine, refine and deliver to  market. Which is why he found it incomprehensible when in february, the price topped 10.000 dollars a ton.
03:05 – 03:16
To speak copper about 10.000 dollars is something that is totally unbelievable. It's a legendary number, 10.000 dollar for copper, now it is real, it's a reality.
03:17 – 03:25
Why is it such an incredible number for you? Because the cost is 3000 and the real consumption of copper does not justify this kind of price.

03:25 – 03:54
Like most large consumers, Marco Calamia buys most of KME's copper under long-term contracts, directly from mines and smelters. But the price is determined by what happens on the London Metal Exchange. Marco Calamia believes the LME's price is [?] not so much a product of supply and demand, as the result of a tide of new money, channeled into commodities by large hedgefunds and financial institutions.
03:55 – 04:34
Among these financial institutions are three giant survivors of the subprime crisis, the investment banks Goldman Sachs, J.P. Morgan and Barclays Capital. And I'm here amid the skyscrapers and fountains of London's Canary Wharf, to meet Gail Berry, Barclays copper analyst. And it's an interesting time to be doing that, because, just a day ago, commodities suffered their biggest fall in two years, taking copper well below 9000 dollars a ton. So, I'm keen to find out if Gail Berry is reconsidering Barclays' forecast of 13.000 dollars a ton.
04:34 – 05:11
The answer was an infatic «no». I think it's a fantastic buying oppurtunity for corporate. At the moment the market is ignoring what is a very positive picture that's evolving, if you look at the fundamental story that has been devouring. Major copper-miners have actually been reporting a fall in raw-material production, whilst the developed world and developing-world countries have had very strong demand growth. You match the two up, and that 13.000 dollars a ton I think you'll see at.. Before the end of the year.