Commodity-backed loans are vulnerable to a domino of defaults
People walk past a copper coin-shaped decoration for Chinese New Year in Zhengzhou, China, in this file photo. Copper and gold are widely used to back loans in China and both metals have recently come under pressure due to forced liquidations. VCG/VCG via Getty Images)
Weakness in copper persists—down 15 percent from its six-month high in June—and it shows the risks to optimistic global-growth and inflation expectations.
But something else is happening in gold and copper apart from a global slowdown and dollar strength.
