Copper Might Just Outshine Gold Over The Next Two Years

Copper Might Just Outshine Gold Over The Next Two Years
Theodora Lee Joseph, CFA

about 2 months ago2 mins

What’s going on here?

Experts predicted that copper could outshine gold by reaching record-breaking prices by 2025.

What does this mean?

The world’s taken decades to catch onto the fact that fossil fuels are destroying the planet. But after a slow start, governments around the globe are suddenly clamoring over electric energy. So much so that copper – a key component of electric cars, wind turbines, and solar power systems – is in short supply. There’s little chance that the metal will fall out of favor anytime soon: Citibank estimates that renewable energy initiatives could double demand for copper by 2050. And at the recent COP28 climate change conference, more than 60 countries were in favor of a plan to triple global production capacity for renewable energy by 2030. So unless copper miners find a faster way to shore up stock, experts believe copper prices will tick up by some 75% in the next two years.

Copper prices
Source: London Metal Exchange

Why should I care?

For markets: Gold’s old news.

The prospect of rising prices has plenty of companies pouring cash into the industry and shaking hands with key suppliers to make sure they have a stake in copper’s future – gold producers Newmont and Barrick Gold, to name two. That bet will take years to pay off, but in the meantime, their leaning into copper could make gold’s price swings easier to stomach.

Zooming out: Read the room.

If you had any sense of style in the mid-noughties, you sported a color-changing mood ring. Well, copper has taken that spot for investors: it may be less aesthetically interesting, but the metal can indicate the state of the global economy. After all, it’s used in a ton of industries, so the busier they are, the pricier copper is. Make sure to keep an eye on it this year: China’s still working on its long-awaited comeback, and if the country finally builds some momentum, that’ll likely show up in copper’s pricing.

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