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Gold and copper aren’t as fashionable as critical minerals — but are they still the best bet?
While much of the investment spotlight is often directed towards battery metals like lithium, cobalt, and rare earth elements, it is essential not to overlook the fundamental roles of gold and copper, which continue to sustain the global economy. These metals not only provide a measure of stability amid fluctuating markets but also present significant growth potential that the more volatile minerals may not consistently deliver. Rising demands for clean energy infrastructure have put copper in the spotlight, threatening supply constraints ahead, while gold maintains its stature as a safe haven against economic and geopolitical trials.
Copper: A Metal in High Demand
The International Energy Agency (IEA) predicts that copper demand will surpass its supply by up to 30% by 2035, primarily fueled by the energy transition. This anticipated deficit is significantly larger than projected shortfalls for most other metals, underscoring copper’s critical role.
Challenges to Copper Supply
Copper faces unique supply challenges. As lithium and nickel projects rapidly come online, copper development—a slower process—struggles with declining ore quality and heightened costs. Copper projects typically require 7 to 10 years from discovery to production, a timeline that may not align with the urgent pace of the energy transition. Moreover, concentration risks in regions like Chile, Peru, and China expose global markets to potential disruptions.
Gold: The Timeless Hedge
In contrast, gold’s enduring appeal lies in its function as a monetary asset and a hedge against uncertainties. Over the past two decades, gold prices have tripled, reflecting a consistent demand from central banks and investors alike, who seek stability during fluctuating economic conditions.
Market Dynamics
Gold production is currently stable, but increasing extraction costs and declining ore grades underline the necessity for new discoveries. Unlike battery metals, gold lacks industrial growth, making it resistant to price fluctuations fostered by market sentiment in the often rollercoaster-like realm of emerging minerals.
Australia: A Beneficiary of Dual Demand
As a leading global producer of both gold and copper, Australia is ideally situated to take advantage of both markets. The nation is also broadening its reach into lithium and rare earths. New projects in states like Queensland and South Australia aim to mitigate expected copper shortages, although the same long lead times and market pressures persist.
A significant portion of gold production occurs in Western Australia, with high-quality deposits fueling consistent output. Junior miners, including Antipa Minerals and Pantoro Gold, are making headlines with promising new findings, while multinational companies like Novo Resources are also on the hunt for next-generation discoveries across various states.
The Interplay of Pricing and Investor Strategies
Copper prices dipped from their peaks in 2021-22, but supply constraints could push prices upward again. Additionally, the IEA’s projections suggest that energy transition efforts could amplify demand by an extra 10-15%. Meanwhile, gold has seen high valuations in Australian dollars, offering local investors a hedge against currency fluctuations and broader market uncertainties.
Investors are advised to balance the explosive growth prospects of the battery metal sector against their inherent volatility. In contrast, both copper and gold provide more stable market fundamentals, making them attractive options for those looking to secure both growth and resilience in their portfolios.
Policy and Geopolitical Considerations
Governments worldwide are increasingly aware of mineral supply risks but tend to view copper and gold as less critical than battery metals. Initiatives in the EU, US, and Australia are aimed at reducing reliance on concentrated supply chains, fostering a more secure mining environment for these essential metals. Meanwhile, central bank purchases of gold provide an added level of market stabilisation, highlighting its significance in investment portfolios.
Conclusion
While gold and copper may not have the same headline-grabbing allure as the emerging battery metals, they play vital roles in the global economy. Copper’s essential role in industry and expected supply gaps make it a pillar of future demand. Gold, with its lasting monetary value, offers a level of stability that newer minerals cannot as yet match. For investors, particularly those focused on the Australian market, the ongoing demand for these traditional metals alongside their role as a supremely useful buffer against volatility demonstrates their pivotal importance in a thoughtfully constructed investment portfolio. Rather than merely surviving, these classic commodities are thriving amidst a complex global landscape.