Author: Eli5DeF

Compiled by: Yuliya, PANews

Gold, silver, and copper are experiencing their hottest rally since 1979, driven by a “perfect storm” of supply scarcity, booming artificial intelligence (AI) infrastructure, and central banks’ estrangement from the dollar.

This article will analyze more than 40 research reports in depth, extract the core viewpoints, and explore their future trends.

TL;DR

Data-wise: Since 2025, gold prices have risen by 72%, silver by 120%, and copper by 40%, marking the first time in 45 years that all three have simultaneously reached record highs.
Key argument: This is not a cyclical rebound, but a fundamental shift in the global valuation logic of hard assets.
Investment Opportunity: The silver mining ETF is projected to return as high as 195% by 2025, and this round of trading is not yet over.
Risk warning: The conclusion of a peace agreement, the emergence of material substitutes, and short-term market corrections may lead to a price pullback of 20% to 40%.

From AI to energy, gold, silver, and copper have become the new "three driving forces."

Currently, everyone's attention is focused on AI chips, but the real supply bottleneck lies in the copper wires that connect these chips.

One alarming statistic is that AI data centers consume three times the amount of copper as traditional data centers, with a single facility potentially using up to 50,000 tons of copper. Microsoft's $500 billion Stargate project alone could consume more copper than the annual output of some small countries.

Moreover, it's not just AI that's driving demand. The entire 21st-century technology stack is built on these three metals:

Gold: The ultimate monetary asset, replacing the US dollar as the primary safe-haven asset during geopolitical crises.
Silver: The most conductive metal on Earth, essential for solar panels, electric vehicles, and data center electronics.
Copper: the "artery" connecting all electrification systems, from AI server racks to electric vehicle charging stations, it is everywhere.

The convergence of three major trends—AI demand, the clean energy transition, and geopolitical "de-dollarization"—has created what S&P Global calls a "systemic risk" to the global economy, with supply unable to keep pace with demand.

"Copper is a great driver of electrification, but the acceleration of electrification is posing an increasingly serious challenge to the supply of copper."
— Daniel Yergin, Vice Chairman, S&P Global

This is not an exaggeration. Let's analyze the data one by one.

I. The Supply Crisis That No One Can Solve

Silver: Supply Gap Appears for the Fifth Consecutive Year

Since 2020, the silver market has never achieved supply and demand balance, and the situation is worsening.

From 2021 to 2025, the cumulative supply gap is close to 820 million ounces, which is almost equivalent to a whole year's global production. Silver inventories on the London Metal Exchange (LME) have plummeted by 75% from their 2019 peak. In October 2025, silver prices briefly touched a record high of $54.24 per ounce before subsequently declining.

Why can't the supply keep up?

A little-known secret in the silver mining industry is that 70% of its output comes as a byproduct of gold, copper, lead, and zinc mining. This means that when the market demands more silver, it's not simply a matter of mining more silver mines; the mining of the primary metal must also be economically viable for this to drive up silver production. However, this is not currently the case.

Primary silver mines also face numerous challenges: declining ore grades, significant underinvestment in exploration over the past decade, and environmental, social, and governance (ESG) and approval hurdles that could delay the commissioning of new projects by more than 10 years.

The Silver Institute bluntly stated: "Investment in silver mines has been insufficient over the past decade."

Copper: Systemic Risk

If silver's situation is precarious, then copper's problem is a matter of survival.

In its January 2026 report, S&P Global predicted that global copper demand would surge by 50% by 2040, from 28 million metric tons to 42 million metric tons. Meanwhile, supply growth would slow or even decline.

It is projected that by 2040, the copper supply deficit will reach 10 million metric tons, equivalent to nearly 40% of current global production.

JP Morgan predicts that the refined copper market will face a shortage of 330,000 tons in 2026 alone, with prices potentially reaching $12,500 per metric ton by mid-year.

What drives demand?

Three major macroeconomic trends converge simultaneously:

AI Infrastructure: By 2025, half of the US GDP growth will come from AI-related spending, including data centers, chips, and power systems. A hyperscale AI facility requires 27 to 33 tons of copper per megawatt of capacity. The underlying data is alarming: global data center electricity demand is projected to grow from 2% of global electricity consumption currently to 9% by 2050.
Clean energy transition: Electric vehicles use 2.9 times more copper than internal combustion engine vehicles, approximately 60 kilograms more per vehicle. Annual new solar panel installations have exceeded 500 gigawatts (GW), and each GW of solar panels, inverters, and grid connections requires thousands of tons of copper.
Grid modernization: The process of delivering electricity to AI data centers actually consumes more copper than the data centers themselves. Grid upgrades, transmission lines, substations, and other infrastructure are all heavily reliant on copper.

Why can't the supply keep up?

New copper mines take 10 to 15 years to go from discovery to production, and there are very few projects currently under development. A series of major disruptions in 2025 will exacerbate the shortage—a mudslide at the world’s second-largest copper mine in Indonesia, ongoing problems at the Kamoa-Kakula copper mine in the Democratic Republic of Congo, and drought at the El Teniente copper mine in Chile.

The Resolution Copper project in the United States could have become one of the country's largest sources of copper, but it has been stalled due to legal proceedings involving the Apache tribe's sacred site, and production is at least a decade away.

As one analyst pointed out, "Mining companies are pushing a compelling long-term shortage story—and the market believes it. But belief and fundamentals are not the same thing."

However, for now, the fundamentals do support this belief.

Gold: A Hedging Tool for Central Banks

The situation is different for gold. It does not face an industrial supply crisis, and its production is relatively stable, with an annual output of approximately 3,000 tons.

The real change lies in who is buying.

Since Russia's invasion of Ukraine in 2022 and the freezing of its foreign exchange reserves, central banks around the world have been accumulating gold at an unprecedented rate. For three consecutive years, global central banks have purchased more than 1,000 tons of gold annually, more than double the pre-COVID-19 average.

China alone has increased its gold holdings for 13 consecutive months, while reducing its holdings of U.S. Treasury bonds to the lowest level in 17 years (to $688 billion by the end of 2024).

This is not speculation, but a structural shift in how sovereign wealth managers think about reserve assets.

Data from the World Gold Council shows that gold's share of global financial assets has risen to 2.8%, the highest level since 2010. JPMorgan Chase predicts that central bank gold purchases will continue at 755 tons in 2026, and the price of gold may reach $5,055 per ounce in the fourth quarter.

One catalyst that has not yet been widely discussed is:

Before 2022, the US dollar was the primary safe-haven asset during geopolitical crises. But that has changed. During the Venezuelan crisis in 2025—when the US captured Nicolás Maduro—gold prices soared, while the dollar's exchange rate barely changed.

Gold has replaced the US dollar as the preferred safe-haven asset when geopolitical risks surge.

II. Unexpected AI Demand

For readers interested in the technology sector, the following content will be particularly captivating.

Data Centers: The New Copper Consumption Giant

Traditional data centers are already major copper consumers, as their power distribution, cooling systems, and network infrastructure all rely on copper. AI data centers, however, are on a completely different level.

The relevant data is as follows:

A typical hyperscale data center uses 2,000 to 3,000 tons of copper.
Facilities focused on AI can use up to 50,000 tons of copper.
By 2025, global investment in AI infrastructure will exceed $500 billion.
In 2024 alone, the electricity demand for data centers increased by 19%, compared to an 8% increase in 2022.

BloombergNEF predicts that by 2030, data centers could consume 500,000 metric tons of copper annually, representing about 2% of global production, compared to almost zero a decade ago.

But the real demand doesn't come from inside the data centers, but from the power grid infrastructure needed to supply them.

“The copper density of data centers themselves is gradually decreasing, but the process of supplying power to data centers is extremely copper-intensive.” — Colin Hamilton, BMO Capital Markets

Each 100-megawatt (MW) AI facility requires a massive grid upgrade, including transmission lines, substations, and transformers, all of which compete for a limited supply of copper.

Solar energy: A structural demand driver for silver

The solar photovoltaic industry has completely transformed the silver market. Ten years ago, the solar industry consumed 54 million ounces of silver annually. By 2025, that figure had reached nearly 250 million ounces and was still growing.

It is predicted that by 2030, the solar energy industry may account for 40% of the total global demand for silver.

Silver's superior electrical conductivity (5.8% higher than copper) and thermal conductivity (39.4% higher than gold) make it irreplaceable in high-efficiency applications. Although solar cell manufacturers are striving to "use silver sparingly," that is, reduce the silver content per panel, the continued rise in installed capacity has completely offset the savings achieved by these efforts.

The EU aims to achieve 700 gigawatts (GW) of solar power capacity by 2030; China is continuing its construction at an unprecedented pace; and India plans to reach its 300 GW solar power target by the end of this decade.

Every gigawatt of installed capacity requires silver, but the supply of silver is extremely tight.

III. Geopolitical Catalysts

"De-dollarization" is a real phenomenon.

The Russia-Ukraine war has not only disrupted the supply of goods, but has also prompted sovereign wealth managers to fundamentally rethink the allocation of reserve assets.

When Western countries froze Russia's foreign exchange reserves in 2022, central banks around the world took note. The message was clear: dollar-denominated assets were at risk of being seized.

The reactions from various countries were very clear:

China : Reduce its holdings of U.S. Treasury bonds from $1.1 trillion in 2021 to $688 billion in 2024, while accumulating large amounts of gold.
India: Its gold ETF holdings increased by 40% in 2025.
Emerging markets : Their gold reserves are far lower than those of developed economies, indicating that they still have room to continue increasing their holdings.

Since the beginning of 2022, the renminbi has depreciated by nearly 20%, making gold more attractive as a store of value to Chinese depositors and institutions.

Conflict premiums are sticky

Traditional market views suggest that once the hype surrounding a headline fades, the geopolitical premium in commodity prices disappears quickly. However, this is not the case now.

2025 witnessed several geopolitical hotspots:

The Russia-Ukraine conflict (which has been ongoing since 2022)
Tensions in the Middle East (Gaza, Iranian attacks, disruption of shipping in the Red Sea)
Venezuelan crisis (US arrests Maduro)
US-China trade friction escalates (50% tariff on copper announced)

Each event reinforced gold's safe-haven status. The cumulative effect is that even during periods of relative calm, a persistent premium did not dissipate.

Analysis by the World Gold Council shows that geopolitical risks account for about 60% of gold's returns in 2025, the highest contribution on record.

IV. Investment Logic

Reasons for bullish outlook

Persistent structural drivers:

Supply deficit persists: Silver is projected to experience its sixth consecutive year of deficit in 2026. Copper shortages are widening. New mine supply will take 5 to 10 years to come online.
AI demand is accelerating: Goldman Sachs predicts that data center power demand will grow by 165% by 2030. Every watt of electricity requires copper.
Central bank continued buying: Even with gold prices exceeding $4,000/ounce, central banks are not sensitive to price fluctuations. The urgent need for diversification outweighs their sensitivity to short-term prices.
The Clean Energy Directive remains in effect: Despite changes in the political landscape, grid modernization and the adoption of electric vehicles continue globally.

Price targets from major institutions:

Reasons for bearishness

Before investors decide to enter the market in large quantities, they need to consider the potential risks:

Peace agreement: Easing tensions between Russia and Ukraine, a de-escalation in the Middle East, or a relaxation of trade relations between the US and China could all significantly reduce the safe-haven premium.
Savings and Alternatives: Solar panel manufacturers are actively reducing their silver usage. Data centers are shifting some applications to fiber optics. These trends will accelerate when prices are high.
Demand destruction: An economic slowdown could severely impact industrial demand. Don't forget: 60% of silver demand comes from industry.
Supply response: High prices will stimulate recycling, scrap recovery, and the restart of marginal mines. Some of the deficit may be offset by surface inventory.
Central bank fatigue: When gold prices exceed $4,000/oz, central banks can achieve the same dollar allocation target by purchasing fewer tons. Tonnage demand may slow.

Historical context: Following the post-financial crisis rebound, gold prices fell by 50% between 2011 and 2015, while silver plummeted by 70%. These are both highly volatile assets.

How to lay out

Investment instruments categorized by risk appetite:

Selected ETFs:

1. Physically exposed :

$GLD (SPDR Gold Shares) — The largest and most liquid gold ETF.
$SLV (iShares Silver Trust) — The most liquid silver ETF.
$PSLV (Sprott Physical Silver) — Redeemable for physical gold and silver.

2. Mining exposure :

$GDX (VanEck Gold Miners) — a major gold miner, up 166% year-to-date in 2025.
$SILJ (Amplify Junior Silver Miners) — Junior silver miners, up 195% year-to-date since 2025.
$COPX (Global X Copper Miners) — Extensive exposure to copper miners, up 80% year-to-date from 2025.

3. Stocks worth watching:

Wheaton Precious Metals ($WPM) — operates on a “metal flow” model with lower operational risk.
Pan American Silver ($PAAS) — The largest silver-focused producer.
Freeport-McMoRan ($FCX) — Blue-chip level copper exposure.

4. From a DeFi perspective: For investors who prefer on-chain exposure:

PAXG (Paxos Gold) — A token pegged 1:1 to physical gold that can be used in combination within DeFi.
XAUT (Tether Gold) — Institutional-grade tokenized gold.
On HyperliquidX, HIP-3 trading allows you to go long or short on commodities.

These tools enable yield strategies for gold positions within DeFi protocols, something that cannot be done with physical gold and silver.

Risk Warning

We need to be honest about the potential risks:

Volatility risk : These are not stablecoins. During the 2011-2015 correction, gold fell by 50% and silver by 70%. Therefore, position management is crucial.
Timing Risk: This rally is already historic. Entering the market after gold has risen 72% and silver 120% means paying a high price.
Liquidity risk : Junior mining stocks can be illiquid when markets are under pressure. Bid-ask spreads can widen when investors most need to exit.
Operational risks : Mining companies face risks such as cost overruns, approval delays, labor disputes, and resource nationalism. ETFs can mitigate, but cannot eliminate, these risks.
Macroeconomic risks : A "soft landing" scenario with declining inflation and rising real interest rates could put pressure on gold prices.

Conclusion

The bullish logic for gold, silver, and copper is not based on speculation, but on mathematics.

Demand is structurally stronger: AI infrastructure, clean energy, and central bank de-dollarization are not cyclical trends, but rather structural shifts with a decade-long tailwind.

Supply is structurally constrained: new mines take more than 10 years to come online, the grade of existing mines is declining, and recycling cannot make up for the shortfall.

The market is beginning to price this in. The fact that mining ETFs outperformed physical metals in 2025 is a sign that sophisticated capital is positioning itself for continued strength in commodities.

This is not just a transaction, but a revolution in the world's valuation system for hard assets against the backdrop of AI infrastructure development, energy transition, and fiat currency devaluation.

The window of opportunity has opened, but it will eventually close.

Investors are advised to adjust their positions accordingly. NFA + DYOR.

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