Commodities SuperCycle: Gold, Oil, and Copper Companies on the Rise
A real-asset supercycle has begun in the commodities sector, driven by a structural shift towards gold, oil, and copper companies. This cycle started during the COVID-19 pandemic and is now converging with other great cycles.
The end of the 39-year cycle of falling interest rates marked the beginning of this era, which saw cheap money and asset-light business models dominate the market. However, the commodities sector has undergone a significant change, characterized by less debt, more capital discipline, and strong cash flows.
Gold, in particular, is experiencing a secular breakout, with the price setting up to reach $8,000-$10,000 an ounce in the next 8-year top around 2028. The institutions that print paper money are choosing gold as their reserve asset, signaling a shift towards this metal.
The operating leverage of gold miners is significant, as they can multiply their margins if gold prices rise while costs remain low. Five recommended gold miners for the emerging supercycle include Newmont (NEM), Barrick (ABX), Agnico Eagle (AEM), Wheaton Precious Metals (WPM), and Franco-Nevada (FNV).