Copper, the Gold of 2026

Original Author: Jialiu

Could copper become the new gold of our era?

Over the past two years, the market has interpreted the AI infrastructure narrative as a chip story. NVIDIA’s GPUs, TSMC’s capacity, HBM yield rates, CoWoS packaging bottlenecks – almost all discussions revolved around silicon wafers. However, an AI data center isn't something you can just plug GPUs into and expect to run. It requires grid connections, transformers, busways, cables, liquid cooling systems, fiber optic interconnects, and vast amounts of metal.

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

This article delves deeper into the evolving narrative surrounding copper over the past year. Why does the market increasingly view copper as akin to gold? Why are macro funds 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 Proxy for the Manufacturing Cycle

In English financial markets, there's an old saying, "Dr. Copper," sometimes translated as "Doctor Copper" in Chinese financial media. The name implies that copper prices, like an economic physician, can diagnose the health of the global economy in advance.

This is because copper prices are inseparable from manufacturing. When China's real estate sector is active, factories restock inventories, and demand rises for home appliances, automobiles, cables, and pipes, copper prices go up. When the cycle turns down, copper follows suit. Essentially, copper prices were a microcosm of China's real estate, global manufacturing, and trade cycles.

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

Anything that uses electricity is inseparable from copper.

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

Looking at that number alone, it's not extraordinarily large within the global copper market. But the key point isn't how much copper a single data center uses; it's that the demand behind AI data centers isn't a single point of need but a whole suite of power infrastructure requirements. The denser the GPUs, the higher the rack power, the more a data center resembles a high-energy-consumption factory. Factories need electricity, and electricity requires power grids, transformers, cables, busways, switchgear, and cooling systems.

Of course, we can't simplistically attribute all copper narratives to AI.

Trafigura's CEO, Richard Holtum, cautioned during LME Week 2025 that while data centers and defense are indeed hot topics, the bulk of copper demand over the next decade will still come from traditional infrastructure, construction, urbanization, and consumer goods. He even noted that copper used for air conditioning still exceeds that used by data centers.

This perspective offers a new angle: the increase in copper demand isn't solely supported by AI; its demand stems from the simultaneous expansion of almost all electricity-consuming scenarios.

Copper's Biggest Bullish Thesis: Supply Can't Be Ramped Up Fast Enough

Many people's first impression of copper is "industrial metal," assuming that if prices rise, mines can just dig more and supply will naturally follow. But 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. IEA reports show that the average time from discovery to production for new copper projects is about 17 years. This means if the market suddenly realizes copper is insufficient in 2026, truly large-scale new supply might not arrive until 2028 or 2029; much of it won't appear until the 2030s.

Robert Friedland, founder and executive co-chairman of Canadian mining company Ivanhoe Mines, has repeatedly stressed this issue. He is one of the most famous copper bulls in the global mining community, with the world-class Kamoa-Kakula copper project in the Democratic Republic of Congo. His expressions are always provocative: 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 declined by about 40% since 1991. Declining grades mean that while in the past, mining one ton of ore yielded more copper, now you need to mine more ore, consume more electricity, use more water, and process more waste rock to get the same ton of copper. The IEA also notes that of the copper deposits discovered in the past 35 years, only 5% were found in the last decade. New discoveries are scarce, old mine grades are falling, 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 an asset that prompts "immediate supply response after a price increase" like in a typical commodity cycle. Copper mining projects increasingly resemble large-scale infrastructure projects: you need to find the ore, secure permits, manage community relations, address water resources, pass environmental reviews, and withstand changes in resource-rich countries' tax policies.

Chile, Peru, the DRC, Zambia, Indonesia, and Mongolia all host significant copper resources but also carry various forms of political, tax, community, or operational risks. The more strategic copper becomes, the greater the incentive for resource-rich countries to demand a larger share; the higher copper prices go, the more mining companies face tax increases and renegotiations.

Tensions are also surfacing on the smelting side.

Copper concentrate, upon entering a smelter, is processed into refined copper. The fee smelters charge mines for processing and refining is known in the industry as TC/RC (Treatment Charge and Refining Charge). Under normal circumstances, ample concentrate supply gives smelters stronger bargaining power, leading to higher TC/RCs; when concentrate is tight and smelters compete for raw materials, TC/RCs fall.

An anomaly in 2026 is that while copper prices hit record highs, smelting treatment charges fell to historic lows. The IEA states that the annual TC/RC benchmark dropped to $0 per ton in 2026, and spot TC/RCs have been negative since 2024.

This is more critical than just looking at exchange inventories. Because copper's bottleneck isn't just in refined copper products; it's also in mines and concentrates. If upstream raw materials are tight, it doesn't matter how many smelters exist. China has dramatically expanded its copper smelting capacity over the past two decades. The IEA says China has accounted for over 90% of global smelting output growth since 2005 and will account for about half of global smelting output by 2025. Strong midstream capacity coupled with tight upstream mines amplifies the supply chain's vulnerability.

Gold's scarcity comes from its reserves, extraction costs, and monetary attributes. Copper, of course, is not gold. But as its new supply slows, its resources become more concentrated, and its strategic importance grows, it begins to possess a scarcity akin to gold.

Why Macro Funds Are Starting to Favor Copper

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

Take Stanley Druckenmiller, for instance. One of America's most renowned macro investors, he once co-managed the Quantum Fund with George Soros and later founded the Duquesne Family Office. Known for betting on large cycles with high-conviction trades, 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, heavily driven by AI in past years, has now shifted towards a more macro and geopolitical stance. He mentioned holding copper, being bearish on the dollar, and holding gold as a geopolitical hedge.

His logic: if the dollar weakens, dollar-denominated commodities benefit. Fiscal deficits are widening, governments continue spending, geopolitical risks are rising – all supporting gold bids. In the same environment, grid upgrades, military spending, AI data centers, energy systems, and manufacturing reshoring drive demand for physical assets, and copper sits at the intersection of these trends.

Druckenmiller represents the macro fund perspective. The commodity trading world offers even more radical expressions.

Pierre Andurand is the most typical example. A well-known European commodity hedge fund manager, he started in energy trading, co-founded BlueGold Capital, and later founded Andurand Capital. He gave a very aggressive forecast in a Financial Times interview: copper prices could hit $40,000 per ton in the coming years.

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

Data also confirms money flowing in.

The Banque de France noted that from 2023 to 2024, annual trading volume in LME copper futures grew 10.5%, and in CME copper futures, it grew 6.8%. In LME copper futures, speculative long positions held by investment funds reached 16.5% of open interest in May 2024. This isn't simple physical restocking; it's financial capital treating copper as a macro trading instrument.

Copper Mining Stocks: A Lever on Copper

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

Rising copper prices are a cost pressure for end-users but can mean margin expansion for mining companies with existing capacity. For instance, if copper prices rise from $9,000 to $12,000 per ton and the mining company's cash costs don't increase in tandem, a large portion of that additional $3,000 flows directly into the profit and loss statement. This is precisely why copper mining stocks naturally possess operational leverage. A rise in copper prices can lead to a proportionally larger jump in a miner's profits; a price decline can cause profits to contract faster.

The market has already priced in this leverage over the past two years.

Taking A-shares as an example, from June 2024 to June 2026, China Molybdenum Co., Ltd. (CMOC) was a typical high-beta play. Its core appeal lies in its copper-cobalt assets in the DRC, notably Tenke Fungurume and KFM. Based on rough adjusted closing prices, CMOC's stock rose approximately 129% over this period, with a peak gain of nearly 260%. This is not typical cyclical stock performance; it represents the market repricing overseas copper resources.

Companies like Jiangxi Copper, Tongling Nonferrous Metals, and Yunnan Copper better reflect the volatility from the interplay of copper prices and smelting attributes. Jiangxi Copper gained about 82% over the period, with a peak rise exceeding 200%; Tongling Nonferrous Metals gained about 77%, with a peak rise of roughly 159%; Yunnan Copper gained only about 29%, but its peak rise was still over 130%.

These stocks also demonstrate another side of copper mining stocks: high upside when the trend is favorable, but significant downside when it recedes.

The drawdowns from peaks illustrate the volatility more directly. Yunnan Copper corrected roughly 45% from its period high, Jiangxi Copper corrected about 41%, and CMOC, Northern Copper, and Zijin Mining all saw corrections of over 30%. Copper mining stocks are not copper prices themselves; they are the result of the interplay of copper prices, costs, inventory, TC/RC, project timelines, resource-country risks, and equity market sentiment.

In the US stock market, Freeport-McMoRan (ticker: FCX) is the most representative copper mining stock. It's one of America's core copper producers, with assets including Morenix (US), Cerro Verde (Peru), and Grasberg (Indonesia). For global capital, FCX is almost the most common US equity tool to gain exposure to copper prices. MarketWatch data shows FCX hit a 52-week high of $72.09 on June 2, 2026, but fell 9.07% in a single day on June 5, correcting over 12% from its peak within days.

Southern Copper (ticker: SCCO) is another representative high-quality copper stock. Its assets are primarily in Peru and Mexico, offering high copper exposure and strong profitability. IBD noted earlier this year that SCCO was up as much as 55% year-to-date and hit an all-time high. Compared to FCX, SCCO appears to be a purer, higher-quality copper mining asset, but it too cannot escape the risks associated with copper prices and resource-rich countries.

For investors who don't want to bet on a single company, copper mining ETFs are an option, such as the Global X Copper Miners ETF.

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

A mining company's value depends not only on copper prices but also on mine grade, cash costs, reserve life, capital expenditure, country of operation, tax policies, labor relations, environmental permits, transportation conditions, and management execution. While copper prices can elevate the entire sector's valuation, significant divergence occurs between companies.

Resource-country risk is particularly important. Many high-quality copper mines are located in Chile, Peru, the DRC, Zambia, Mongolia, and Indonesia. Strong resource endowment doesn't guarantee stable shareholder returns. The more valuable the copper, the more governments recalculate their share; the larger the project, the more complex community, environmental, water, and infrastructure issues become.

Cost inflation can also eat into profits. When copper prices rise, energy, equipment, labor, steel, and financing costs often rise simultaneously. A seemingly attractive development project might yield little benefit for shareholders due to capital expenditure overruns, production delays, or permitting hurdles.

Early-stage copper mining companies carry even higher risks. Their narratives are based on future reserves and future production, but every step from resources to reserves, feasibility study to financing, permit to construction can fail. The long-term logic for copper being sound doesn't mean every copper stock will deliver.

Therefore, copper mining stocks are better understood as leveraged expressions of the copper price thesis, rather than simple substitutes for copper itself. They can offer higher upside potential but also bring larger drawdowns. Companies truly worth studying are those with low costs, long mine lives, clear expansion paths, solid balance sheets, and manageable political risks.

This is part of copper's "goldification": the scarcity logic for copper isn't confined to 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, the latter reflects the market's willingness to pay for imagination regarding this long-term shortage.

Copper's 'Goldification' is Just Beginning

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

Of course, copper won't truly become gold. It doesn't possess the pure monetary attributes of gold, nor will it escape economic cycles. A global economic slowdown, manufacturing weakness, or a cooling of risk assets would all suppress copper prices. Copper will continue to be volatile, possibly even violently so.

But the change lies in the underlying logic supporting copper. It's different now.

In the past, significant copper price drops often occurred when weakening demand coincided with excess supply. Today, the supply side is not so loose. Aging mines, declining grades, lengthening permitting cycles, smelters competing for raw materials, and resource-rich countries redistributing benefits – these factors make it increasingly difficult to simply classify copper as an ordinary 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.