Copper: The Gold of 2026

Original Author: Jia Liu

Could copper become the other gold of this era?

Over the past two years, the market has understood the AI infrastructure story primarily through the lens of chips. Discussions revolved almost entirely around silicon: NVIDIA's GPUs, TSMC's capacity, HBM yields, and CoWoS packaging bottlenecks. But an AI data center isn't something you can just plug GPUs into and expect it to run. It also requires grid connections, transformers, busways, cables, liquid cooling systems, fiber optic interconnects, and vast quantities of metals.

In the previous article, "The Great Famine of Fiber and Copper in the AI Era," we briefly touched upon one thing: AI demand is cascading from chips down to fiber optics and copper.

This piece delves deeper into the changing narrative surrounding copper over the past year. Why does the market increasingly view copper as similar to gold? Why are macro investors starting to buy copper? Why are mining companies and commodity traders all saying "there isn't enough copper"? And why is it no longer just the industrial metal used to gauge economic cycles?

Dr. Copper is No Longer Just a Barometer of the Manufacturing Cycle

There's an old saying in English financial markets: "Dr. Copper." The idea is that copper prices, like a doctor, can diagnose the health of the global economy in advance.

This is because copper prices are inseparable from manufacturing. When China's real estate construction is booming, manufacturers restock inventories, and demand rises for appliances, cars, cables, and pipes, copper prices go up. When the cycle turns down, copper follows. Essentially, copper prices have been a proxy for China's property market, global manufacturing, and the trade cycle.

But today, copper demand has new variables: AI data centers, grid expansion, new energy vehicles, energy storage, military applications, and re-industrialization are all adding structural demand for copper.

Wherever electricity is used, copper is indispensable.

In an analysis of AI data centers and the copper market, the Banque de France cited BHP's estimate: copper demand from AI data centers could grow from approximately 500,000 tonnes in 2024 to about 3 million tonnes by 2050. Over the same period, copper demand from low-carbon energy systems could rise from 7.9 million tonnes to 17.3 million tonnes. The article also cited a specific case: the construction of Microsoft's Chicago data center consumed 2,177 tonnes of copper.

Alone, that number isn't exceptionally large in the global copper market. But the point isn't how much copper a single data center uses; it's that AI data centers represent not a point source of demand, but a whole suite of power infrastructure requirements. Denser GPUs and higher rack power draw make data centers resemble high-energy-consumption factories. Factories need electricity, and electricity requires the grid, transformers, cables, busways, switchgear, and cooling systems.

Of course, not all copper stories can be simply attributed to AI.

Richard Holtum, CEO of global commodity trading giant Trafigura, cautioned during LME Week 2025 that while data centers and defense are indeed hot topics, the lion's share of copper demand over the next decade will still come from traditional infrastructure, construction, urbanization, and consumer goods. He also noted that air conditioners still consume more copper than data centers.

This perspective offers another lens: the increase in copper demand doesn't rely solely on AI; it stems from the simultaneous expansion of virtually all electricity-consuming scenarios.

Copper's Biggest Bull Thesis: It Can't Be Mined Fast Enough

Many people's first impression of copper is that of an "industrial metal," assuming that if the price rises, mines can simply dig more and supply will follow. But the reality is different.

Developing a large copper mine—from discovery, exploration, resource confirmation, feasibility studies, financing, permitting, construction, to production—typically takes over a decade. An IEA report indicates that it takes an average of about 17 years from discovery to production for a new copper project. This means that if the market suddenly realizes there isn't enough copper in 2026, truly large-scale new supply might not appear until 2028 or 2029, with much of it arriving only in the 2030s.

Robert Friedland, founder and executive co-chairman of Canadian mining company Ivanhoe Mines, has repeatedly emphasized this issue. One of the most prominent copper bulls in the global mining industry, he oversees the world-class Kamoa-Kakula copper mine in the Democratic Republic of the Congo (DRC). His rhetoric is characteristically bold: the world hasn't yet realized how much copper it truly needs. Over the past decade-plus, the world hasn't prepared enough new copper mines for the electrification era.

This isn't just his opinion. IEA data supports this direction.

The average grade of global copper mines has fallen by about 40% since 1991. Declining grades mean that where miners once got more copper from a tonne of ore, they now need to dig more ore, consume more electricity, use more water, and process more waste rock to obtain the same tonne of copper. The IEA also notes that only 5% of copper deposits discovered in the last 35 years were found in the most recent decade. New discoveries are scarce, old mines have lower grades, project construction cycles are lengthening, and capital expenditures are rising. The IEA estimates that, based on the current project pipeline, the copper market could face a 30% supply deficit by 2035.

So, copper is not the kind of asset from a typical commodity cycle where "supply immediately emerges after a price increase." Copper mine projects increasingly resemble large-scale infrastructure projects: you need to find the ore, obtain permits, handle community relations, solve water resource issues, pass environmental reviews, and endure changes in resource-rich countries' tax policies.

Countries like Chile, Peru, the DRC, Zambia, Indonesia, and Mongolia all possess significant copper resources but also carry various forms of political, tax, community, or operational risk. The more strategic copper becomes, the greater the incentive for resource-rich nations to demand a larger share; the higher the copper price, the more likely mining companies face tax increases and renegotiations.

Strain is also becoming evident at the smelting stage.

Copper concentrate enters smelters, where it is processed into refined copper. Smelters charge mines a processing and refining fee, known in the industry as TC/RC (treatment charge and refining charge). Under normal conditions, when concentrate supply is ample, smelters have stronger bargaining power, and TC/RCs are higher. When concentrate is tight and smelters compete for raw materials, TC/RCs fall.

An anomaly in 2026 is that while copper prices hit new highs, smelter processing fees dropped to historic lows. The IEA reports that the 2026 annual TC/RC benchmark fell to $0 per tonne, and spot TC/RCs have been negative since 2024.

This is even more critical than simply looking at exchange inventories. The bottleneck for copper isn't just refined copper products; it's also mines and concentrates. If upstream raw materials are tight, having more smelters is useless. China has massively expanded its copper smelting capacity over the past two decades, accounting for over 90% of global copper smelting production growth since 2005, according to the IEA, and is expected to represent about half of global output by 2025. Strong midstream capacity coupled with tight upstream mines amplifies supply chain vulnerability.

Gold's scarcity comes from its reserves, extraction costs, and monetary properties. Copper is certainly not gold. But as its new supply becomes slower, its resources more concentrated, and its strategic attributes stronger, it too begins to possess a certain gold-like sense of scarcity.

Why Macro Capital is Starting to Like Copper

Copper used to belong mainly to commodity traders and mining analysts. Now, it's increasingly attracting macro capital.

Consider Stanley Druckenmiller, one of the most famous macro investors in the US. He co-managed the Quantum Fund with George Soros and later founded the Duquesne Family Office. Known for making big-picture, high-conviction bets, the market closely watches his views on AI, the dollar, bonds, and commodities.

In a recent interview with Morgan Stanley, he mentioned that his portfolio had been primarily AI-driven in recent years but has now shifted towards a more macro and geopolitical positioning. He mentioned holding copper, being bearish on the US dollar, and holding gold as a geopolitical hedge.

His logic is: if the dollar weakens, dollar-denominated commodities benefit. Fiscal deficits expand, governments continue spending, geopolitical risks rise – all supporting gold buying. In the same environment, grid, military, AI data centers, energy systems, and reshoring create demand for physical assets, and copper sits at the intersection of these trends.

Druckenmiller represents the macro capital perspective. Within the commodity trading world, there are even more aggressive voices.

Pierre Andurand is a prime example. A prominent European commodity hedge fund manager, he previously co-founded BlueGold Capital and later founded Andurand Capital. He gave a very aggressive prediction in an interview with the Financial Times: copper prices could hit $40,000 per tonne in the coming years.

Jeff Currie's view is also worth noting. The long-time head of Commodities Research at Goldman Sachs, he later joined Carlyle, making him one of the most influential figures on Wall Street for commodity research. He famously coined the phrase "copper is the new oil," suggesting that in the energy transition era, copper could play a foundational role similar to oil in the fossil fuel era. In 2024, he called copper one of his highest-conviction trades.

Data also confirms the influx of capital.

The Banque de France notes that from 2023 to 2024, annual trading volume for LME copper futures grew by 10.5%, while CME copper futures grew by 6.8%. Speculative long positions by investment funds in LME copper futures reached 16.5% of open interest in May 2024. This isn't just physical restocking; financial capital is increasingly using copper as a macro trading tool.

Copper Mining Stocks: Leverage on Copper

In a gold bull market, gold stocks typically amplify gold price movements. In a copper bull market, copper mining stocks display similar amplifier characteristics.

Rising copper prices represent cost pressure for end-users but can mean margin expansion for mining companies with existing production capacity. For instance, if the copper price rises from $9,000 to $12,000 per tonne, and the miner's cash costs don't rise proportionally, a large portion of that additional $3,000 flows directly to the bottom line. This is why copper mining stocks inherently possess operational leverage. A modest rise in copper prices can lead to a much larger increase in mining profits; conversely, a price decline can cause profits to contract sharply.

The market has been pricing in this leverage over the past two years.

Looking at A-shares as an example, from June 2024 to June 2026, CMOC Group Ltd. (洛阳钼业) has been a classic high-beta example. Its core value driver is its copper-cobalt assets in the DRC, particularly Tenke Fungurume and KFM. Based on adjusted closing prices, CMOC's share price appreciated approximately 129% over the period, peaking near 260%. This is not typical cyclical stock performance; it reflects the market repricing overseas copper resources.

Companies like Jiangxi Copper (江西铜业), Tongling Nonferrous Metals (铜陵有色), and Yunnan Copper (云南铜业) better illustrate volatility driven by the interplay of copper prices and smelting attributes. Jiangxi Copper saw an interval gain of approximately 82%, peaking over 200%; Tongling Nonferrous gained about 77%, peaking around 159%; Yunnan Copper gained only about 29%, but still peaked over 130%.

These stocks highlight another side of copper miners: significant upside potential during strong trends, but equally brutal drawdowns when the tide turns.

Looking at drawdowns from highs makes the volatility clearer. Yunnan Copper fell roughly 45% from its interval high, Jiangxi Copper dropped about 41%, and stocks like CMOC, North Copper (北方铜业), and Zijin Mining (紫金矿业) all experienced drawdowns exceeding 30%. A copper mining stock is not the copper price itself; it's the combined result of copper prices, costs, inventories, TC/RCs, project progress, country risk, and equity market sentiment.

In US markets, the quintessential copper mining stock is Freeport-McMoRan (FCX). One of America's core copper producers, its assets include Morenci (US), Cerro Verde (Peru), and Grasberg (Indonesia). For global capital, FCX is arguably the most common tool for gaining exposure to copper prices. MarketWatch data shows FCX hit a 52-week high of $72.09 on June 2, 2026, but fell 9.07% on June 5, pulling back over 12% in just a few days.

Southern Copper (SCCO) represents another high-quality copper miner. Its assets are primarily in Peru and Mexico, offering high copper exposure and strong profitability. IBD noted earlier this year that SCCO had risen 55% year-to-date and hit an all-time high. Compared to FCX, SCCO resembles a purer, higher-quality copper asset, but it cannot escape the risks of copper prices and the countries of operation.

If investors prefer not to bet on a single company, they can look at copper mining ETFs, such as the Global X Copper Miners ETF.

However, copper mining stocks are far more complex than copper itself.

A miner's value depends not only on the copper price but also on ore grades, cash costs, reserve life, capital expenditure, country of operation, tax policies, labor relations, environmental permits, transportation conditions, and management execution. While a rising copper price can lift the entire sector's valuation, significant divergence emerges between individual companies.

Country-specific risk is particularly crucial. Many high-quality copper mines are located in countries like Chile, Peru, DRC, Zambia, Mongolia, and Indonesia. Good resource endowments do not guarantee stable shareholder returns. The more valuable copper becomes, the more governments seek to renegotiate terms; the larger the project, the more complex the issues surrounding communities, the environment, water use, and infrastructure.

Cost inflation can also eat into profits. When copper prices rise, costs for energy, equipment, labor, steel, and financing often rise simultaneously. A project that looks promising on paper may ultimately fail to deliver significant returns to shareholders due to capital expenditure overruns, production delays, or permitting hurdles.

Early-stage copper companies carry even higher risk. They are stories of future reserves and future production, but every step—from resources to reserves, feasibility studies to financing, permits to construction—can fail. A valid long-term thesis for copper does not mean every copper mining stock will succeed.

Therefore, copper mining stocks are best understood as leveraged expressions of the copper price thesis, not simple substitutes for holding copper itself. They offer higher potential upside but also carry significantly larger drawdowns. The companies truly worth researching are those with low costs, long mine lives, clear expansion paths, strong balance sheets, and manageable political risk.

This is part of copper's "goldification": the scarcity narrative for copper is no longer confined to the spot and futures markets; it's being repackaged by stock markets, ETFs, and speculative capital. The rise in copper prices is one layer of trading; the rise in copper mining stocks is another. The former reflects the commodity itself, while the latter reflects the market's willingness to pay for imagination about this long-term structural deficit.

Copper's 'Goldification' is Just Beginning

The world needs more electricity, and more electricity means more copper.

Of course, copper will never truly become gold. It lacks gold's pure monetary properties and cannot break free from economic cycles. A global economic slowdown, weaker manufacturing, or a cooling of risk assets would all suppress copper prices. Copper will continue to be volatile, perhaps even violently so.

But the change lies in the fundamental logic supporting copper. It's different from the past.

Historically, sharp copper price declines often occurred when weakening demand coincided with oversupply. Today, the supply side is far looser. Aging mines, declining grades, lengthening permit cycles, competition for smelter feed, and resource-rich nations seeking to redistribute benefits—these factors make it increasingly difficult to view copper simply as a generic cyclical commodity.

It may still be an industrial metal, but it is no longer just a proxy for the industrial cycle.

Copper's 'goldification' is just beginning.