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The Big Take

Commodity Traders Harvest Billions While Prices Rise for Everyone Else

From oil to steel, raw material prices are surging. As the world economy recovers, how much further does the boom have to run?

Clockwise from top left: Lithium, steel, corn, copper, oil, salt, aluminum, diesel fuel and iron.

Clockwise from top left: Lithium, steel, corn, copper, oil, salt, aluminum, diesel fuel and iron.

Source: Bloomberg (7), Getty Images (2) 

Doug King set up his hedge fund in the early days of the commodity super-cycle in 2004. It was perfectly timed: voracious Chinese demand lifted the price of everything from oil to copper to record highs. Investors flooded the commodities sector. At the peak, King’s Merchant Commodity Fund was managing about $2 billion.

But the boom ended abruptly after the 2008 global financial crisis and the onset of the U.S. shale revolution. Prices plunged, big institutional money got out and many specialist hedge funds closed.