Global commodity markets may be standing at the threshold of a new supercycle - a prolonged period of powerful growth that historically reshapes economies, investment flows, and geopolitics. After years of underinvestment, resource depletion, and mounting political tensions, conditions are emerging that echo past cycles which transformed the global financial system.
Supercycles are not ordinary fluctuations in commodity prices. They are extended, multi-decade uptrends triggered by structural shifts. The supercycle of the 1970s, for example, was driven by geopolitical shocks and loose monetary policy, while the cycle in the early 2000s was fueled by China’s rapid industrialization and urbanization. Today’s combination of chronic underfunding in mining, scarcity of easily accessible resources, the concentration of supply in a handful of countries, and persistent inflation suggests that a new long phase of growth may already be forming.
For more than a decade, commodity producers have faced difficulties that discouraged long-term investment. Under pressure from shareholders, mining companies focused on paying dividends instead of reinvesting profits into exploration and development. This has left the sector vulnerable. High-grade deposits with rich ore content are nearly exhausted, while new projects are constrained by lower resource quality, rising capital expenditures, and timelines that can exceed ten years before production begins. The result is a structural lag in supply growth at precisely the moment when demand for critical resources is accelerating.
Geographic concentration makes the picture even more fragile. Over 40 percent of the world’s copper comes from Chile and Peru, more than half of global iron ore originates in Australia and Brazil, and Kazakhstan controls more than 40 percent of uranium reserves. Processing capacity is equally concentrated, with China refining around 90 percent of rare earth metals, essential for electric vehicles, green technologies, and defense systems, as well as more than 40 percent of global copper, which has become indispensable for artificial intelligence and advanced electronics. This concentration has already been used as a political tool. In 2025, China restricted exports of rare earths during trade conflicts, demonstrating how supply chains can be weaponized in moments of tension.
The geological challenge intensifies the situation. Easily accessible, high-grade deposits have been nearly depleted worldwide, and the new projects that replace them often yield lower concentrations of usable resources, demand far greater capital commitments, and require lengthy regulatory and construction lead times. In many cases, the timeline from exploration to production exceeds a decade, which means that supply cannot quickly adjust to rising demand.
Financial flows are beginning to reflect these realities. For much of the past decade, commodities were out of favor, underperforming other asset classes. Inflation-adjusted copper prices remain 30 percent below their 2011 peak, while oil and the Bloomberg Commodity Index, which tracks energy, industrial and precious metals, and agricultural products, are still 70 percent below their highs of 2008. This stands in stark contrast to the U.S. equity market, where the S&P 500 has nearly tripled since its 2007 peak, even after accounting for inflation, and continues to reach record levels. The imbalance suggests that commodities are now undervalued and that investors searching for diversification may soon rediscover them as essential components of a resilient portfolio.
Persistent inflation in advanced economies, especially the United States, strengthens this case. Elevated price pressures restrict the ability of central banks to cut interest rates during periods of economic slowdown, which in turn undermines bonds as a reliable hedge against falling equity prices. The traditional 60/40 portfolio, built on the assumption that stocks and bonds move in opposite directions, has become increasingly fragile. Investors are now forced to seek alternative hedges, and commodities are once again entering the conversation.
Gold has already reasserted its role as a safe haven. Central banks around the world continue to add to their reserves, while retail investors increase their purchases in response to concerns about currency debasement and geopolitical instability. Gold has consistently demonstrated its ability to preserve wealth during crises, and in the current environment it is becoming the foundation of global capital protection. Industrial metals may follow. Copper, essential for electrification, artificial intelligence, and digital infrastructure, is increasingly strategic. Rare earth metals, vital for both consumer technologies and military applications, have become geopolitical instruments. Uranium, long overlooked, is regaining importance as the world reassesses nuclear power in the context of energy security and climate goals.
The fragility of supply chains is particularly evident in rare earths. In August 2025, China’s exports of rare earth products, including high-performance magnets used in both consumer goods and defense technologies, surged to 7,338 tons. According to Bloomberg estimates based on government reports, this was the highest monthly level since 2012. The timing was notable, coming just ahead of a scheduled call between Xi Jinping and Donald Trump in which critical materials were expected to be discussed. Yet earlier in the same year, China had sharply reduced exports after imposing restrictions amid intensifying trade tensions with the United States. The volatility underlines how fragile supply chains have become and how easily they can be leveraged for strategic purposes.
The lessons from commodities also mirror deeper truths about money. The concept of hardness, the resistance of money or assets to devaluation, explains why certain stores of value endure while others fade. In the 1800s, aluminum was more expensive than gold because it was difficult to extract. Once a cheap method of production was discovered, its value collapsed, and the metal shifted from rare and precious to common and industrial. Gold, by contrast, has preserved its role as hard money. Its annual supply increases by only 1.7 percent, a rate that has held stable for millennia. Nearly all the gold ever mined still exists, because it is not destroyed or consumed by industrial processes. This makes sudden supply shocks impossible and ensures that its value cannot be easily undermined. By contrast, platinum and palladium, though rarer than gold, are less suitable as money because their production relative to reserves is higher and they are heavily consumed by industry. The principle is clear: throughout history, the hardest currency has always prevailed, and gold has consistently remained the ultimate store of value.
Today, with global debt at record levels and confidence in national currencies and central banks weakening, the world appears to be approaching another monetary crisis. Commodities are no longer just inputs for industrial growth; they are emerging as strategic financial assets. Gold is already reclaiming its central role, and other commodities are increasingly recognized as potential hedges against inflation, economic downturns, and geopolitical shocks. The next supercycle may not simply raise prices. It could reshape the foundations of wealth preservation, global trade, and political power. In times of uncertainty, the hardest assets, and the hardest currencies, are always the ones that endure.
Key Takeaways:
1. New supercycle forming: Commodity markets may be entering a long-term growth phase, similar to the 1970s (geopolitical shocks, loose monetary policy) and early 2000s (China’s urbanization).
2. Underinvestment risk: Mining companies prioritized dividends over reinvestment for more than a decade, leaving supply growth weak. High-grade deposits are depleted, while new projects face rising costs and decade-long development timelines.
3. Concentration of supply:
40% of copper comes from Chile and Peru.
Over half of iron ore is from Australia and Brazil.
Kazakhstan controls 40% of uranium reserves.
China refines 90% of rare earths and over 40% of global copper.
In 2025, China restricted rare earth exports during trade disputes, showing how supply is used as a political tool.
4. Financial flows shifting:
Copper is still 30% below its 2011 peak (inflation-adjusted).
Oil and Bloomberg Commodity Index are 70% below 2008 highs.
In contrast, the S&P 500 has nearly tripled since 2007, even after inflation.
Commodities may become attractive as equities look overvalued and bonds lose their hedging role.
5. Inflation challenge: Persistent inflation, especially in the U.S., limits central banks’ ability to cut rates, weakening bonds as portfolio protection. Traditional 60/40 portfolios are now vulnerable.
6. Gold’s role: Supported by central bank purchases and retail demand, gold has reaffirmed its status as a safe haven against inflation, currency debasement, and geopolitical risk.
7. Industrial metals rising: Copper, rare earths, and uranium are becoming strategic assets due to electrification, AI, defense needs, and energy security.
8. Rare earth case study: In August 2025, China’s exports of rare earth products, including high-performance magnets, surged to 7,338 tons - the highest since 2012. Earlier that year, exports had been restricted amid U.S.-China trade tensions.
9. Hard money principle: Assets retain value if they are difficult to produce. Aluminum was once more expensive than gold until production became cheap, collapsing its value. Gold, with annual supply growth of just 1.7% and near-total preservation of mined stock, remains the hardest and most enduring form of money.
Looking forward: With record global debt and declining trust in fiat currencies and central banks, commodities, especially gold, may become central to wealth preservation. The next supercycle could redefine markets, portfolios, and geopolitical power.