Are metals kicking off the next commodity supercycle?

Key Markets report for Wednesday, 26 March 2025

Today, COMEX Copper made a new all-time high at $5.37/lb, and it looks like, by the time you read this report, it could move higher still. Market analysts tend to attribute great significance to the price of copper as an important leading economic indicator: if demand for copper is rising, the economy is growing (and vice versa). For that reason, they pay close attention to what "Dr. Copper" is saying.

But last week, Gold also made new all time highs at around $3,050/oz. Silver rallied quite strongly as well, but it's still trading well below its ATH price, which was just shy of $50/tr.oz. in April of 2011. Here's what the whole COMEX metals complex looks like (01 Jan. 2021 = 100):

As we can see, there has been an overall rising trend in the metals, building gradually from late 2023. However, platinum barely moved thus far and palladium actually dropped by more than half in the last four years. The rise in Gold, Silver and Copper may be driven by inflation fears rather than economic growth. Those three metals are investors' preferred inflation hedges. Inflation hedging demand is likely what's behind the upward pressure on prices.

Europe’s rearmament will add fuel to the fire

At the same time, we shouldn't forget that Europe's great rearmament frenzy and the hundreds of billions of euros being allocated for it might end up adding more upward pressure to prices of industrial metals, as well as energy. In all, this will end up giving a strong boost to commodity price inflation in what could end up being a self-reinforcing cycle triggering the next leg in the widely anticipated commodity super-cycle.

None of this will happen overnight: the commodity supercycle is expected to span a period of 10 to 25 years and it will be marked with many price rallies, followed by corrections and consolidations in that time. It should therefore be navigated with due caution and an iron discipline.

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Trading signals for Key Markets, 26 March 2025

With yesterday’s closing prices we have the following changes: