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Commodities markets by and large rise with inflation, making commodities one of the rare asset classes that benefits in times of rising inflation. Commodities are a crucial asset class when it comes to market diversification within a balanced portfolio. With commodities markets historically having a negative correlation to the stock market, they have the capacity to offer some degree of inflation protection.

Q1 2025: as inflation was finally coming under some level of control paired with a strong economy and robust labor market, many commodities remained bullish. Especially Copper, base metals, PGM’s and critical metals. However, as we now enter unchartered territory with a self-imposed trade war, this has thrown the landscape into disarray.

The risk of a global recession purely based on the unknown impact or timeline of tariffs, which appear to be ever changing. Likely risk is a slowing economy and in the short term, upward pressure on inflation and this has created an environment of much risk. Copper and other Base metals (BM) are often seen as signals of global economic strength. Their capacity to power a booming infrastructure and feed growing economic demands along with technological advancements are often used to gauge the health of a global economy. PGM’s play a key role in industrial sectors and are also safe haven asset classes.
 

Gold

With almost every 2025 year end bull target already achieved for Gold, new ATH’S are now a regular event. The safe haven appeal is continuing to drive demand with the tariff uncertainty, geopolitical tensions rising, and continuing war in the Ukraine & Middle East. Goldman Sachs just increased their upside objective for Gold to $3700 by year end. At this point, many speculators are backing away from further upside targets, which to all intent, is a very bullish signal.

I believe that for as long as safe haven appetite continues, the uptrend will continue. Caution would arise if the trade war was to settle down along with the risk in the treasury markets, Gold could quickly see some rotations back into balance. With initial Daily SUPP levels at – $3178.8, $3136.8, Weekly SUPP levels $3033.7 & $2902.00. All prices are Spot. For now, Gold continues it’s inverse correlation with trade flow, further sustaining the Bull market appetite.

With physical gold being the most traditional way to stay invested and hedge against geopolitical insecurities and rising inflation, GOLD ETFs and Funds remain another key area to invest in Gold.

• GraniteShares Gold Shares (BAR)
• iShares Gold Trust (IAU)
• SPDR Gold Shares (GLD) (Does track bullion price)
• VanEck Gold Miners ETF (GDX) (tracks spot gold price)
• VanEck Junior Gold Miners (GDXJ) (Focuses on smaller Gold mining companies potentially offering higher returns, also can be higher risk for those less risk averse)
   

Copper

Copper has proven to have become the new “Oil” Trade over the last several years due to it’s
fundamental importance in technology and the transition to cleaner energy solutions.

We now have a 43,000 Tons drop in Copper stockpiles after tariff led price collapse. Paired with the No one Copper miner globally seeing a -6% fall in output balanced by the worlds largest copper mine increasing production +16% is leading to mixed signals causing some gargantuan swings.

The shockwave of USA’s trade war saw a large -16% off record highs, this was the largest sell off since 2020. The Trump trade war is directly affecting Copper industries worldwide. Balancing both ongoing supply shortages with the weaponization of trade flows remains a dichotomy.

Prices could struggle to make or hold new ATH. Much now relies on China’s infrastructure growth maintaining at least a 4.2% pace with US tariffs set to impact $60B of China’s metallurgical exports. The situation is ever changing.

As of April 14th we’re trading just under 10K per ton at $9739 a ton. To hold a buy-side perspective we would want to maintain a price above $9K per ton.
 

For exposure to critical metals & mining for asset diversification

ETF’s can be a valuable addition when it comes to investing across a basket of metals or sectors within the metals markets without direct exposure to a physical asset.

• iShares MSCI Global metals and mining producers ETF (PICK)
• SPRDR S&P Metals & Mining ETF (XME)
• VanEck Rare earth and strategic metals ETF (REMX)
   

USA – Losing safe haven appeal across the financial markets as global trust diminishes

If the trade war continues to antagonize not only US allies and major trading partners, but in particular, China, the risk of China retaliating not by increasing tariffs but by withdrawing from both the MBS market (Mortgage backed securities) and the US Treasury market is now a serious and very real scenario for concern.

With China being the most major purchaser of US treasury yields and No two holder and buyer of MBS, a sudden sell off would cause unprecedented volatility with long lasting impacts on the broader US economy.

The US has quickly lost it’s luster as a market that was safe and trustworthy to invest in. The unfolding situation in US treasury markets is a clear indication of a systemic loss in US confidence globally. This too is now impacting the USD. Not only in value due to it’s loss of safe haven appeal as an asset, but could trigger the beginning of the end of the USD as world reserve currency with an incentive for other major trading nations to pull away from the USD. Again, this remains unclear, and will only be determined by how long this situation continues on. Any transition to a new world currency reserve would take many
years.

Any further loss of China from the MBS market could cause a very serious US Housing market downturn. Current rate of Chinese with drawl from MBS would impact the mortgage rates by a 50 basis points increase a week.

As America continues to erode decades of financial security for foreign investors the financial markets are now starting to factor these very real risks in.

We’re starting to also see the expectance of many US companies pulling guidance for the rest of 2025. Another concern for the US stock markets. This in turn is a knock on effect for CAPEX and M&A activity.

The US could find itself squeezed into a short term recession purely based on ever changing trade policy and constantly changing tariff levels. The underlying fundamentals remain economically buoyant.

A short term recession would also gravely impact demand for BM but continue to help drive demand for Gold. EUR/CHF/JPY are bolstering well and as trading partners look to form new stronger alliances outside of the USA, these FX currencies could see more appetite for a LT buy-side agenda.

In reality, none of us know how long the impacts will last, but the longer the uncertainty continues, the more the risk to long term damage to the US markets will be. That in turn has the potential to impact the forward projections one to three years out. I would see this as the most major risk to the forward projections.

The US now faces the reality that it’s major trading partners will begin to strategically align with each other and become far less reliant on US trade. Potentially over time seeking to replace significant portions of the trade formally done with the United States.

Protectionist policy in the US could leave America in the cold for years to come if the situation is not clarified with absolute certainty in a short time frame. The geopolitical landscape is ever changing, it yet remains unclear if this will be a blip or the start of new world trade allegiances that have the potential to reshape the flow of money as we know it.

The only thing certain for now is uncertainty.

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