Copper Investors Poised for ‘Supernormal Returns’ by Decade’s End
Understanding the Current Landscape of Commodities
As we navigate the increasingly complex landscape of commodities, the latest insights from David Finch, CEO of Ixios Asset Management, provide a clear and insightful perspective on the future trajectories of both gold and copper, two essential resources in today’s economy. Recent discussions at the 2025 Minds and Money Conference in Miami highlight the critical dynamics shaping these markets and offer compelling arguments for astute investors to pivot their strategies accordingly.
The Gold Market: A Dual Faced Portrait
Gold, having recently rallied to over $2,900 per ounce, has seemingly established a nonchalant trend towards ever-greater highs, surpassing the 40 all-time high benchmarks in just a year. Finch attributes this upward momentum primarily to two key factors: long-term central bank buying and a recent physical market squeeze. Central banks, in particular, are reevaluating their reserve strategies in light of geopolitical tensions, notably the U.S. sanctions imposed on Russian reserves. Finch asserts, “holding the debt of other countries is becoming a less and less tenable position,” provoking a structural transition expected to unfold over the next decade.
Beyond the traditional players, nations like Singapore, Saudi Arabia, and Poland are also increasing their gold reserves, indicating a broader, global sentiment shift towards gold as a safe haven asset. However, despite this optimistic outlook for gold prices, Finch’s thoughts on the gold mining sector are considerably more tempered.
Challenges in the Gold Mining Sector
According to Finch, the gold mining industry is beset by structural weaknesses. With its capital-intensive nature and typically short mine life, companies must continually engage in reserve replacement, a challenge compounded by a history of poor free cash yield. As gold prices rise, the coming year stands as a watershed moment for the industry—will companies choose to return cash to shareholders or will they reinvest to grow production?
Finch acknowledges the movement towards shareholder-friendly practices among major firms, citing Newmont’s asset disposals for added capital return. However, companies like Barrick are grappling with their financial realities, with limited free cash flow to distribute. Collectively, the industry has indeed upped its game and distributed approximately $6 billion in the last reporting cycle, nearly doubling the figure from 2023. Yet Finch notes, “Six on 450 is not a great free cash flow yield,” suggesting a need for bolder actions from gold mining executives.
The Case for Copper: The Next Big Opportunity
Shifting focus to copper, Finch describes the recent surge in price, currently hovering around $4.50 per pound, as influenced by several technical factors. Notably, copper COMEX futures are trading at a premium to the LME price, exacerbated by increased stocking in the U.S. due to tariff apprehensions. Looking beyond the immediate price action, Finch foresees a looming “structural supply deficit” that could reshape the copper market.
As energy demands escalate alongside economic growth, the rising energy intensity of GDP will substantially bolster demand for copper—especially for power transmission needs. Finch has recently launched a new copper fund as part of his conviction that the energy transition is fundamentally intertwined with energy self-sufficiency. He notes that the Chinese National Grid may soon purchase significantly more copper than the construction industry, amplifying the critical importance of building infrastructure that supports electric power systems.
Predictions and Investor Outlook
While immediate market dynamics reflect current supply and demand equations, Finch’s long-term outlook is decidedly optimistic. “By the end of this decade, we will have much, much higher copper prices,” he projects, implying that investors who position themselves in well-managed copper companies could realize “supernormal returns.”
Nonetheless, it is vital to underscore that this anticipated price escalation for copper is not expected to occur overnight; it involves a protracted viewpoint, supplemented by structural changes in the market.
Conclusion: A Call to Strategic Action
In summary, as we delve deeper into the commodities landscape, both gold and copper present unique opportunities tempered by inherent challenges. For discerning investors focused on optimizing their portfolios within resource-driven sectors, the insights shared by David Finch should be seen as crucial indicators of where to point resources. Carefully navigating these markets will require an appreciation for both the immediate variables at play as well as the broader market realities that point towards a transformative future. With strategic positioning, particularly within the copper sector, the potential for significant returns looms large by the end of this decade.
