Gold vs. copper: Which metal will shine brighter in 2025? | News | Aurica
Gold vs. copper: Which metal will shine brighter in 2025?
Tuesday, March 11, 2025
At the Prospectors and Developers Association 2025 Conference, the panel "Copper vs. Gold: Which Metal Will Perform Better?" addressed the question of which metal has greater investment potential.
Moderated by Gracelin Baskaran, director of the Critical Minerals Security program at the Center for Strategic and International Studies, the discussion brought together industry experts to weigh the risks and rewards of both commodities.
Last year, gold and copper passed key price milestones, with gold surpassing $2,700 an ounce and copper surpassing $5 a pound. While gold is primarily seen as a safe financial haven in times of geopolitical uncertainty, copper is an essential industrial metal, increasingly central to resource nationalism and critical mining security.
For investors, both metals present opportunities, but understanding their distinct market drivers remains crucial.
Shared influences of gold and copper
In recent years, global uncertainty has been driving an unprecedented rise in the price of gold .
Factors include high inflation in the wake of the COVID-19 pandemic, a three-year war between Russia and Ukraine, the conflict between Israel and Gaza that has threatened to spread across the Middle East, and economic instability unleashed by President Donald Trump's administration in the United States .
Many of these same issues are affecting the copper market. COVID-19 caused spikes in inflation that have led to a slowdown in real estate development around the world, while shipping routes had to be modified to avoid conflict zones. More recently, U.S. tariffs could affect a variety of industries around the world, including the U.S. real estate market.
While these influences greatly affect the demand for raw materials, supply is also similarly affected. In particular, declining grades of both copper and gold are increasing overall mining costs and ultimately affecting corporate balance sheets.
The case for copper
The biggest strength for investors in the copper sector is the supply and demand situation.
While copper demand growth has only increased slightly in recent years, it has been largely held back by weakness in the Chinese real estate sector, traditionally one of the biggest drivers of copper demand.
Despite this, demand is increasingly coming from rapid urbanization as the world's population grows and young people move from rural areas to cities at a faster rate than previous generations. In addition, demand from the technology sector is also increasing in several areas, including energy transition, artificial intelligence and data centers.
Frank Nikolic, vice president of batteries and base metals at CRU North America, explained that this demand was critical to the value of copper in the coming years.
"Prior to 1990, the intensity of copper use per person on the planet was relatively flat or slow-growing. Then after 1990, as the world opened up with the departure of communism from the global stage, to a large extent, we've seen the massive exposure of computers, the rise of the Internet, the miracle of China, I call it the great urbanization, and then finally the last five years or so of decarbonization," he said.
Nikolic suggested that the recent growth in copper markets is due to growth in China, but over the next five years that will begin to change as demand for decarbonization technologies increases.
He also highlighted the growing wealth in the global south, specifically Indonesia, India and South America, which will generate additional demand for copper.
Nikolic also acknowledged that while copper will remain in a supply/demand surplus situation over the next year, it will begin to move into a deficit situation. This will require 6 to 8 million metric tons to be added to the market over the next 10 years, but there will be significant challenges in meeting that demand.
"Solving the demand gap will be much more expensive than in the past. We have seen a massive explosion in capital costs for copper, both greenfield and industrial projects, and the cost of operating these assets is also increasing," he said.
These rising costs are also being offset by declining grades and depleting deposits, which will require $100 million per year just to keep up with current demand growth. Nikolic also suggests that scrap replacement is unlikely to provide much relief, noting that it is barely keeping up with demand.
David Strang, CEO of Ero Copper, supported Nikolic's views, particularly on the expansion of the global south, by providing a history of how technology impacted copper in the mid-20th century.
A shift occurred in the late 1940s, when households in the West stopped getting milk delivered to their homes and instead began buying it at grocery stores. The advent of refrigeration reduced the need for daily deliveries.
Incorporating this new technology required copper not only in the refrigerator itself, but also in the electrical demands of homes and stores.
Strang pointed to India and Indonesia, which have growing economies and an expanding middle class. However, many still lack what the West would call basic necessities, such as cell phones and refrigeration.
He sees a fundamental imbalance in the copper market as this new wealth drives demand growth not seen since the middle of the last century.
"So the question is this: copper is in crisis. If the world is going to go on as it should with these economies, we have to find more copper. There are only two things that are going to affect that. One is technology, and the other is that the price of the metal has to go up because we can't continue to live the way we want to live relative to the other countries that are growing as fast as they are," Strang said.
The case for gold
Moving away from the red metal, panelist Jason Attew, president and CEO of Osisko Gold Royalties, made the case for investing in gold.
Attew noted that copper and gold fundamentals are largely influenced by supply and demand, and questioned whether copper would be in such a strong position if the U.S. goes bankrupt, which he sees as a distinct possibility.
He noted that the U.S. has $36.5 trillion in federal debt versus $29.1 trillion in gross domestic product (GDP), a debt-to-GDP ratio of 125 percent.
"This is the highest level since the end of World War II...This translates to more than $650,000 per American family. It is simply remarkable. This ratio has risen steadily since the pandemic began in 2020, when the federal government debt was about $20 trillion and GDP was $21 trillion," he said.
Attew suggests that the pandemic and subsequent stimulus increased inflation, forcing the U.S. Federal Reserve to raise interest rates.
The big picture he painted is of a U.S. economy on the edge of a cliff with few solutions. One possible remedy presented by Attew is to increase the money supply, but that would come with the caveat of devaluing the strength of the dollar, which is where his gold backing comes into play.
"Everybody knows that the strength of the U.S. dollar has an inverse correlation with the gold price in real terms, all of which is very constructive for gold. So even if it's not as bearish as I said ... we're headed for a recession in the U.S., and it's very difficult or very hard to see how a soft landing is going to happen here," Attew said.
Lawson Winder, senior metals and mining research analyst at Bank of America Securities, agreed with Attew, but added that gold was also more attractive beyond what was happening in the U.S. and that it provides a tangible asset in times of uncertainty.
This has led to huge purchases by central banks, which Winder said are at an all-time high. It has also led to retail purchases by Chinese and Indian consumers experiencing the largest increases he has ever seen. However, these increases in gold buying have yet to materialize among Western investors, but Winder believes that will change.
"As the turmoil with Trump and tariffs increases, we believe Western investors will increasingly want to own more physical gold and will likely express that through these means, ultimately contributing to a higher gold price," he said.
What does this mean for investors?
Both copper and gold have their advantages and risks, and the panelists made effective arguments in favor of each metal.
The world is experiencing economic and geopolitical uncertainty, causing investors to turn to gold to maintain balance in their portfolios and reduce risk. Gold is unlikely to change its status as a safe-haven asset in the near future.
The presenters also defended copper based on its fundamentals. Copper is a necessary commodity that powers a world that needs more electricity. Demand has increased and supply is becoming more expensive and harder to find.
In contrast, gold offers investors more options, from physical and paper ownership to stocks and ETFs, while copper is largely limited to equities and a small number of ETFs.
All in all, both metals have strong arguments and, given the global situation, both could offer excellent opportunities for investors in 2025.
