Beyond gold: Where will the next chapter in the commodity supercycle take us?

Gold in the spotlight – but the commodity complex is undergoing broader changes
Despite a healthy correction in October, gold remains the strongest-performing asset class of the year, driven by structural factors such as rising sovereign debt levels, anticipated interest rate cuts, sustained central bank purchases, and mounting institutional demand. Meanwhile, silver and selected strategic commodities, such as rare earth elements, are attracting increased attention.

However, the commodities sector as a whole remains significantly underinvested, a situation that appears unsustainable given global energy dynamics. Supply constraints are becoming particularly evident in the energy sector – most notably in oil – creating the conditions for sustained price increases.

Structural bottlenecks: Energy demand is growing faster than supply
Global energy demand increased by approximately 2.2% in 2024, driven by all energy sources: fossil fuels, renewables, and nuclear power. Nevertheless, fossil fuels continue to account for around 80% of global energy consumption and are growing faster in absolute terms than renewable sources.

Economic growth in populous emerging economies, such as India and China, is inconceivable without increased energy consumption. As a result, the resource intensity of the global economy continues to increase, contradicting expectations of a rapid 'peak oil demand'. Put simply: economic growth requires energy and energy requires raw materials (see Figure 1). Therefore, contrary to widespread hopes for a swift energy transition, the world will require more oil in the future, not less.

Conclusion: In the medium term, the global economy will require more energy and thus more raw materials - across almost all commodities.

Figure 1 illustrates the relationship between per capita energy consumption (in barrels of oil equivalent) and per capita GDP across the 20 richest and most populous countries. The largest emerging economies (in the lower left corner), led by China and India, are likely to set the pace for future energy demand growth.

Oil: ‘No chance’ that prices will remain low

In our view, the oil market is approaching a structural inflection point.

• Underinvestment: For years, insufficient capital has flowed into new production projects, while regulatory requirements and capital costs have risen steadily.
• Cost structure: Approximately 70% of new projects require long-term prices above USD 70 per barrel, with US shale oil production only marginally below this level (see Figure 2).
• Strategic market policy: The current low oil price (approximately 60 US dollar per barrel (WTI)) is primarily the result of politically motivated supply increases by Saudi Arabia and OPEC+.

Despite a fiscal break-even price of approximately 85-95 US dollar per barrel, Saudi Arabia is deliberately pushing down oil prices in the short term to defend market share, pressure competitors, and reinforce its leading role in OPEC+. This strategy is calculated and temporary: while Riyadh can absorb lower prices for a limited period, many other producers cannot.

When this tactical phase ends - as it must, to stabilise the Saudi budget and finance the 'Vision 2030' expenditure programme — supply is likely to be curtailed rapidly, allowing oil prices to rise back toward a level acceptable for Saudi Arabia, estimated at 85-95 US dollar per barrel.

Meanwhile, OPEC's spare capacity is steadily declining. With global demand at approximately 104 million barrels per day and an annual growth rate of around +1 million barrels per day, today's reserve capacity could be exhausted within four to five years (Figure 3).

 

Copper: The ‘new oil’ of the energy transition
Copper recently reached a new record high of over USD 11,000 per ton, a development that has gone largely unnoticed by many investors. Production disruptions at major mines such as Grasberg in Indonesia and Kamoa-Kakula in the Democratic Republic of the Congo are further exacerbating supply shortage.

Thanks to its exceptional conductivity - second only to silver - and its broad range of industrial applications, copper is indispensable for electromobility, infrastructure development, data centers and artificial intelligence. Mid-sized producers in particular appear attractively valued given their strong margins, offering a convincing risk/reward profile.

In short, there is no energy transition without copper, making it the most strategically important industrial metal of the coming decade.

Targeted positioning with the Earth Exploration Fund UI (ISIN: DE000A1C2XE1 I (EUR I))
The early stages of a commodity supercycle are creating an exceptionally attractive market environment for professional investors. While gold continues to offer considerable upside potential, copper and oil are undergoing a structural revaluation.

We see the primary long-term driver of commodity prices as structurally rising demand colliding with chronically insufficient supply.

Commodity equities remain attractively valued by historical standards and could emerge as the preferred sector in a changing market regime.

In this cycle, disciplined stock selection will be critical.

The Earth Exploration Fund UI pursues an active, tactically oriented investment approach, with a clear focus on high-quality companies across the global commodities sector, including gold, oil, copper and uranium. The strategy is designed to selectively capture opportunities in an improving market environment and participate disproportionately in a potential upside phase.

For institutional investors, the fund offers a differentiated solution for targeted exposure to a structurally attractive segment of the global market.