Positioning for the Next Commodity Supercycle in a Shifting Market

Markets are shifting as real assets and commodities challenge technology’s dominance, creating long-term opportunities; investors positioned in resource security and the energy transition may benefit the most.

According to Dynamic Asset, after a decade of low inflation, loose monetary policy, and heavy investment in mega-cap tech, markets are shifting as investors question whether expensive trades can withstand persistent inflation, slower growth, and rising geopolitical risk.

“The result is what we are calling the 'Great Rotation' - a gradual but accelerating move away from overvalued technology and speculative growth stocks towards real assets, precious metals, commodities, emerging markets and structurally advantaged sectors. This shift is not a tactical trade, but rather a recognition that economics is being turned on its head and the investment regime is fundamentally changing,” Dynamic Asset added.

Financial conditions may also favour commodities, with prices still well below prior peaks compared to soaring equities. Sticky inflation and limited room for rate cuts add to the appeal, while gold has reasserted itself as protection against turmoil.

Source: Mining.com 

Supply and Demand Dynamics

The structural shifts on both the supply and demand sides suggest the stage may now be set for the next boom. Past cycles were triggered by transformative events, from the 1970s supply shocks to China’s urbanization in the 2000s. Years of underinvestment, concentrated supply chains, and geopolitical maneuvering are creating vulnerabilities that could support a bullish long-term outlook for investors.

Concentrated Supply and Strategic Metals: Supply is concentrated, with Chile and Peru producing over 40% of copper, Australia and Brazil more than half of iron ore, and Kazakhstan leading uranium. China refines nearly 90% of rare earths and over 40% of copper, amplifying trade leverage. Meanwhile, high costs, long project timelines, and miners’ dividend focus could limit new supply and expansion.

Rising Demand and Technological Drivers: Electrification and decarbonization are metal-intensive, with copper vital for EVs, renewables, and grids. Tech giants’ AI data centres add further strain. The IEA warns copper could face a 30% shortfall by 2035, signalling a structural clash of rising demand and constrained supply.

Commodities as Strategic Hedges

Industrial metals and other commodities could gain traction as strategic inflation and growth hedges. Once a supercycle begins, it tends to last until broken by major policy or technological shifts, and signs suggest the foundations may already be in place. 

• Precious metals are leading the shift, with gold breaking out above $3,700/oz and central banks accelerating purchases, while silver benefits from both safe-haven demand and industrial uses in solar and EVs.
• Industrial metals such as copper, nickel, and lithium are underpinned by supply shortages colliding with the energy transition and electrification boom.
• Traditional infrastructure materials like steel and cement, as well as energy commodities, also face tightening supply as governments expand fiscal spending on large-scale infrastructure and clean energy initiatives.

EasyAssetManagement Chief Investment Officer Shaun Krom said, "Both creating and deploying AI technology require a significant amount of energy. We have invested in both nuclear and natural gas, as these are the two most efficient ways of powering data centres. In nuclear, we have invested in companies that enrich uranium, build small nuclear reactors, and operate nuclear power plants. In gas, we have invested in gas explorers and midstream pipelines."

He added, "At this time, we have chosen not to invest in physical commodities, as we see more upside in companies that use these commodities to build infrastructure, next-generation power utilities, data-centre interconnects, and more."

The Satrix RESI gives exposure to top resource companies on the JSE, a sector driven by global commodity cycles that often holds steady until major policy or technological shifts emerge.

Investment Opportunities and AI Integration

The EasyEquities AI Basket creator can help investors access companies positioned to benefit from major commodity themes. Using AI-driven insights, it highlights businesses exposed to industrial metals, energy transition technologies, and infrastructure demand. With many mining leaders listed on markets like the ASX, the basket offers a simple way to diversify into companies driving electrification, decarbonization, and resource security.

Source: EasyEquities AI Basket creator. Capital is at risk, and investment returns are not guaranteed. This does not constitute financial advice. Past performance is not indicative of future results.   

Conclusion 

This structural backdrop could create opportunities across commodities that are not just cyclical but underpinned by long-term policy commitments, consumer demand and sentiment, and chronic underinvestment in supply. While risks such as deflationary recessions or policy reversals exist, history shows supercycles tend to persist through setbacks.

Dynamics adds that the Great Rotation signals the end of easy money and concentrated equity leadership. Investors focusing on real assets, commodities, and diversified global equities are better positioned to preserve wealth and capture upside.

With that said, investors could also access growth opportunities in emerging technologies, including AI, through funds like the EasyETFs AI World Actively Managed ETF, which provides diversified exposure across multiple international companies expected to benefit from the creation, adoption, and use of artificial intelligence for long-term capital appreciation. 

By focusing on a diversified portfolio of AI-driven companies rather than individual commodities, the fund could help protect against commodity volatility and geopolitical tensions, including the risk of governments using resources as a form of political leverage, while still capturing growth from the continued expansion of AI across the globe.

Sources – EasyResearch.

Follow Cay-Low Mbedzi

@caylow_SA

Government bonds offer a reliable way to earn fixed income by lending money to the government in exchange for regular interest payments. 

Dividends are one of the many key components of investing, representing a share of a company's profits distributed to its shareholders. 

Special dividends, also known as extraordinary dividends, are one-time payments made by companies to shareholders due to specific financial events, like windfall profits or asset sales.