AI, War & Energy Transition: The 5th Supercycle Has Begun – Why Copper, Gold and Oil Are Now Rising Unstoppably

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Published on: May 15, 2026 / Updated on: May 15, 2026 – Author: Konrad Wolfenstein

AI, war & energy transition: The 5th supercycle has begun – Why copper, gold and oil are now rising unstoppably – Image: Xpert.Digital

The end of cheap raw materials: How four global megatrends are changing our economy forever

Warning about the “supercycle”: Why the world cannot wait for new supply now

Gold, copper, lithium: Those who ignore the new laws of the commodity markets will fall behind – the era of cheap and unlimited resources is finally over

While the global economy is still reeling from the acute shocks of the recent geopolitical crises, a tectonic shift is already building in the background: the fifth commodity supercycle. But unlike in past eras—be it the industrialization of the US, the reconstruction of Europe, or the rapid rise of China—this time, demand is not driven by a single engine. Today, four global megatrends are igniting simultaneously: the massively expanding physical infrastructure of artificial intelligence (AI), the immense material demands of the global energy transition, a lasting geopolitical realignment of supply chains, and an unprecedented flight of central banks to gold. At the same time, this immense wave of demand is colliding with a supply that has been structurally depleted by a decade of underinvestment. Anyone who wants to produce, build, or invest strategically in the future must understand the new rules of the game in this cycle—because the physical reality of commodity markets cannot be ignored.

The fifth commodity supercycle: AI, war, energy transition and the end of cheap supplies

When four drivers ignite simultaneously – why the world can't wait for a cheap offer this time

Since the beginning of the Industrial Revolution, the world's population and resource demands have grown in tandem. Behind every new level of prosperity, every wave of urbanization, every technological revolution lies a material core: metals, energy, food. Commodity prices are not mere market noise—they are an echo of human development, delayed, distorted, but essentially structurally determined.

What economists call a commodity supercycle is precisely this structural price movement: a multi-year, often decades-long, upward trend arising from a persistent gap between sluggish supply and growing demand. It differs fundamentally from short-term price shocks triggered by crop failures, mining accidents, or political crises, which subside within a few months. A supercycle, on the other hand, is structural. It begins quietly, builds up over years, and continues until massive investments close the supply gap—which, due to long project durations, can take many years.

The crucial cause of this cyclical dynamic lies in a fundamental asymmetry: demand can change within months when a new technology scales, an economy industrializes, or a government program mobilizes billions. Supply, on the other hand, reacts on a different timescale. A copper mine takes ten to sixteen years from discovery to first production. Refining capacity, pipelines, fertilizer plants – none of these appear at the push of a button. This structural inertia of supply is the mechanism that makes supercycle upswings possible and sustains them.

Four historical cycles – one blueprint

Economists at the Bank of Canada developed the Commodity Price Index (BCPI) and applied it back to historical data using asymmetric bandpass filters to identify supercycle phases since 1899. The result is four clearly defined phases, each linked to a dominant economic trend of its time.

The first supercycle, from 1899 to 1932, was driven by the industrialization of the United States. Steel, coal, and railroads forged a new world power. The BCPI composite index peaked in 1904 at around ten percent above its long-term trend. The subsequent plunge into the Great Depression sent the index plummeting to minus thirteen percent by 1932—a brutal but, in the logic of the cycle, inevitable downturn.

The second supercycle, from 1933 to 1961, was triggered by a two-phase shock: first, the global arms buildup before World War II, then the massive reconstruction in Europe and Japan. Infrastructure, housing, and industrial facilities sprang up virtually from scratch on a devastated continent. The index peaked in 1947, fourteen percent above the trend.

The third cycle, from 1962 to 1998, is primarily remembered for two oil shocks. In October 1973, following US support for Israel in the Yom Kippur War, the Arab OPEC members imposed an oil embargo on Western industrialized nations. Within a few months, the price of oil quadrupled from $2.90 to $11.65 per barrel. Six years later, the Iranian Revolution withdrew 4.8 million barrels daily from the world market, and prices climbed from $13 to $34 by mid-1980. The BCPI composite index peaked at around 20 percent above the long-term trend, but crude oil alone temporarily soared 60 percent above the trend. The subsequent crash until 1998 was the deepest in the entire record: minus 38 percent—a collapse that lasted almost two decades and left a lasting mark on the industry's investment behavior.

The fourth and largest supercycle to date, from 1998 to 2020, was China's heyday. Around 500 million people migrated from rural areas to cities over two decades. Following China were the so-called BRIC countries – Brazil, Russia, India, and, after its 2010 expansion, South Africa. Each of these emerging economies simultaneously needed steel, copper, cement, coal, and oil. The BCPI index peaked in 2011 at 33.5 percent above the long-term trend. What followed was a prolonged period of falling prices, during which investments in new production projects stagnated. On April 20, 2020, this trend collapsed in an unprecedented extreme event: West Texas Intermediate, the most important US grade of crude oil, plummeted to minus $37.63 per barrel. Producers were paying buyers to take oil off their hands – because demand and storage tank capacity had simultaneously reached their limits.

The starting point of the fifth cycle

In October 2020, Goldman Sachs identified the beginning of a fifth supercycle—not as a prediction, but as a finding of accumulated imbalance. Supply had been systematically underinvesting since 2014, and Covid-19 had suddenly exposed this gap. The bank's former head of commodities, Jeff Currie, described this during an interview in August 2024 as the de facto entry of commodity markets into a new supercycle phase. However, this assessment is not without controversy among analysts: Lina Thomas, commodity analyst at Goldman Sachs, explicitly emphasized in February 2024 that the bank did not expect a supercycle in the sense of an endlessly rising price trajectory. What this discussion demonstrates is that the diagnosis depends on the prevailing conditions—and these are exceptional this time.

The crucial difference from all previous supercycles lies in the simultaneity of the driving forces. Until now, there has always been one dominant factor that moved prices over a period of decades: the industrialization of America, the reconstruction of Europe, the price of oil, China's urbanization. The fifth cycle doesn't have one driver – it has four. And all four are running at the same time.

Energy transition and the physical reality of the green transition

The energy transition is often described as a technological and political challenge. What is systematically underestimated, however, is that it is primarily a raw materials problem. A solar power plant requires roughly six times more critical minerals than a gas-fired power plant of the same capacity, and an offshore wind turbine even thirteen times more. An electric vehicle contains 80 to 100 kilograms of copper, while a combustion engine vehicle contains only 20 to 30 kilograms. With 500 million electric vehicles projected by 2040, this alone will create a structural increase in demand that far exceeds current global copper production.

Copper is the key metal of this transition. The International Energy Agency (IEA) estimates that global electricity grid expansion will require approximately 80 million kilometers of new power lines by 2040. Commodity analysts predict that global copper demand could rise from 28 million tons today to as much as 42 million tons by 2040 – an increase of almost 50 percent. Without significant new mining investments, structural supply gaps on the order of millions of tons are likely.

Lithium is the metal of energy storage. The IEA has projected in various scenarios for a rapid transition that lithium demand could increase thirty to forty times its current level. Supply cannot keep pace with this increase. While lithium prices rose dramatically in 2021 and 2022, triggering a wave of investment that has led to a massive price drop of over 80 percent since 2023, this decline is a trap: it is slowing investment precisely when capacity is needed to meet the coming surge in demand. The IEA warns that announced projects will cover only 50 percent of lithium demand in 2035 – even when measured against national climate targets, which fall far short of the more ambitious scenarios.

A similar structural imbalance is evident in the copper sector. BloombergNEF estimates the cumulative supply deficit will reach six million tons per year by 2035. This would be more than the entire annual production of Chile, the world's largest copper producer. According to estimates by S&P Global, US AI data centers alone could generate around 110,000 tons of additional copper demand in 2026.

Artificial intelligence as a physical infrastructure revolution

Those who view AI solely as a software phenomenon fundamentally underestimate its economic impact. The acceleration of language models and neural networks simultaneously accelerates the consumption of physical resources. A conventional data center consumes between 5,000 and 15,000 tons of copper. A hyperscale data center designed to run modern AI systems, on the other hand, can require up to 50,000 tons of copper per facility—three times that of conventional facilities.

The IEA predicts that the electricity demand of global data centers will more than double by 2030. Even today, data centers account for around 1.5 percent of global electricity generation – roughly equivalent to the total electricity consumption of Great Britain. Early industry estimates suggest that AI-focused data centers alone could consume more than half a million tons of copper annually by 2030 – not including the additional requirements for grid expansion and supply infrastructure.

According to S&P Global, US data centers accounted for around five percent of American electricity demand when ChatGPT launched at the end of 2022. This share is projected to rise to 14 percent by 2030. Microsoft, Google, and Amazon are jointly investing several hundred billion dollars in new data centers – a demand that will continue for decades. This infrastructure expansion relies not only on copper, but also on silicon for semiconductors, rare earth magnetic metals such as neodymium, praseodymium, dysprosium, and terbium for cooling systems, motors, and fans, as well as aluminum and silver.

Sprott analysts Paul Wong and Jacob White call this development a secular trend tied to national security imperatives – because AI computing capacity is strategic infrastructure and thus falls into the same category as energy supply and defense. Every megawatt of AI data center capacity requires between 30 and 47 tons of copper for cabling, cooling systems, and power distribution. This isn't an estimate – it's materials physics.

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Why the fifth commodity supercycle is reshaping the global economy

Geopolitics as a permanent supply shock

To understand the fifth supercycle, one must view the geopolitical dimension not as an external risk, but as a structural feature of the market. The war in Ukraine, which began in February 2022, cut off Western markets from a major supplier of wheat, fertilizers, agricultural commodities, metals, and energy within a single year. Russia and Ukraine together account for roughly 28 to 34 percent of global wheat exports. Ukraine alone supplies 31 percent of global sunflower oil exports. Before the war, more than 50 percent of the Middle East and North Africa's grain imports came from these two countries. The rerouting of these supply chains was still not fully complete in the spring of 2024.

The conflict in the Middle East, which intensified in the spring of 2024 in the context of the Israeli-Iranian attacks, has added a new dimension. The Strait of Hormuz—through which approximately 20 percent of the world's seaborne oil flows—was effectively threatened with blockade. The price of Brent crude oil rose in just a few days from around $70 to over $111 per barrel at times. At the height of the conflict, Brent was trading at nearly $120. Even the investment bank Bernstein significantly revised its annual forecast upwards: Should the conflict with Iran escalate, prices between $120 and $150 per barrel were conceivable. What initially appeared to be a shocking event reveals a deep structural problem: The dependence on a single strait for one-fifth of global oil trade is not a residual risk—it is a persistent geopolitical price risk.

In addition, there is a less considered dimension: the weaponization of access to raw materials as an instrument of geopolitics. Critical minerals have now become instruments of national security. The US, Australia, NATO states, and the EU have published lists of critical raw materials, mobilized funding, and concluded trade agreements to secure raw material supplies—because the experience of the pandemic and the war in Ukraine has shown that security of supply cannot be taken for granted. This not only increases volatility but also creates permanent scarcity premiums for certain raw materials.

Gold as a monetary barometer of system stress

Gold behaves differently in a commodity supercycle than copper or oil. It is not an industrial metal in the strictest sense. Nevertheless, its price increase is a reliable indicator of what is happening structurally in the monetary and financial system. Since the low of the fourth supercycle in April 2020, gold has risen by more than 230 percent.

The driving force comes from a source that reveals much about the systemic sentiment among state actors: Central banks are buying gold at a pace last seen in the 1960s. In 2023, central banks worldwide acquired over 34 million ounces of gold – a new record level for the second year in a row. This means that central bank purchases have repeatedly exceeded the 1,000-ton mark. At the same time, 2024 marked one of the strongest years for gold's price increases: up 27.2 percent in dollars and 35.6 percent in euros.

The geographical distribution of these purchases is revealing. China, Poland, and Turkey led net purchases in recent years. Poland's central bank bought more gold in the first half of 2024 alone than almost any other country. Goldman Sachs estimated that China added about 15 tons of gold to its reserves in September 2023 alone—though only about one ton was officially reported. The People's Bank of China (PBOC) extended its buying cycle to many consecutive months starting in November 2022. Central banks don't accumulate gold for yield. They do so when they perceive the monetary environment as being under sustained stress.

Goldman Sachs remains bullish on gold, forecasting a price increase to $5,400 per ounce by the end of 2026. Some market observers even consider $7,000 possible in the near future. This is a provocative projection – but it comes at a time when confidence in paper currencies is being systematically eroded by monetary expansion, budget deficits, and geopolitical fragmentation.

Supply side: Structural inertia as a price driver

The structural underinvestment of the past decade is at the heart of the current supply-side supercycle. When commodity prices fell after the 2011 peak, mining companies and energy corporations cut investment programs. The prolonged period of underinvestment in the 2010s has frozen supply at a level that is simply too low to meet today's demand.

Even if new mines and exploration projects were approved worldwide today, many would not come into production before 2030 to 2035. For copper, the time from discovery to first production is ten to sixteen years. Added to this are structural hurdles: highly concentrated refining capacities, lengthy permitting processes, financing constraints for smaller mining companies, and limited substitution and recycling options in the short and medium term.

The geographical concentration of supply is a risk in itself. China processes the majority of the world's rare earth elements and holds a dominant position in the battery metal supply chain. The Democratic Republic of Congo supplies over 70 percent of the world's cobalt. Chile dominates copper production. This concentration means that, even without geopolitical tensions, supply disruptions from individual key suppliers pose systemic risks. In an environment characterized by geopolitical fragmentation, this risk becomes a certainty.

The IEA calculates that by 2040, mining investments of around €740 billion will be necessary to even begin to provide the raw materials required for the energy transition. Even optimistic projections of announced projects will only cover 70 percent of copper and 50 percent of lithium demand in 2035 – and that's only if national climate targets are used as a benchmark, not the more ambitious global net-zero scenarios.

Four engines, one cycle – a structural analysis

What distinguishes the fifth supercycle from its predecessors is not merely the intensity of demand or the depth of supply shortage. It is the simultaneous effect of four structural drivers, each of which could trigger a supercycle on its own.

The energy transition will generate a baseload demand for copper, lithium, rare earth elements, nickel, and silver that will grow for decades. Even if energy policy fluctuates in individual countries, the physical core of this transformation remains unchanged: renewable energies and electromobility are material-intensive technologies. You can't argue with physics.

AI infrastructure has triggered a second wave of demand that was not included in any commodity forecast prior to 2022. Scaling data centers, power supply, and network connectivity takes decades, not quarters. Demand for copper, aluminum, silver, and rare earth elements from this sector is price-inelastic – investments proceed regardless of the current copper price.

Geopolitics has permanently restructured supply chains. A return to the cheap, concentrated supply models of the 1990s and 2000s is no longer politically desirable and logistically impossible. Security of supply comes at a price – and this price will be factored into commodity prices in the coming years in the form of risk premiums.

Gold reflects systemic distrust of paper currencies and fiscal overextensions. The purchasing behavior of central banks shows that government actors perceive the monetary system as under stress – an assessment grounded in the expansionary monetary policies of recent years, exploding national debt, and geopolitical fragmentation.

None of these four forces are temporary. They are all structural and designed to last for at least a decade. Together, they constitute the most materially powerful demand regime the global economy has ever produced.

What the fifth supercycle means for companies and economies

For companies that procure, process, or use physical raw materials in products, the risk profile has fundamentally changed. Supply disruptions are no longer rare exceptions – they are structural features of a market characterized by multiple simultaneous waves of demand, geopolitical fragmentation, and insufficient supply investment.

Those working in logistics, mechanical engineering, the electronics industry, the chemical industry, or energy supply should consider their procurement strategy from a different fundamental perspective: Cheap raw materials on demand are no longer the norm, but rather the exception of a bygone era. The 2010s, with their falling raw material prices, were not the norm; they were the result of a supply overrun following the Chinese boom. This phase has structurally come to an end.

For economies, the fifth supercycle presents a twofold challenge: firstly, import prices for industrial metals and energy, which will remain at a structurally higher level despite cyclical fluctuations; and secondly, the need to strategically secure their own raw material positions. Countries and economic blocs that established early supply relationships with resource-rich regions – whether through trade agreements, development financing, or direct investments in mines – will gain systematic competitive advantages.

Historical analysis of supercycle data reveals a recurring truth: the supply side always catches up eventually. Prices normalize, and new capacity fills the gaps. But unlike previous cycles, this time the supply response is delayed by an exceptionally long list of headwinds: geological depletion of high-grade deposits, increasing regulatory complexity, ESG requirements for mining companies, and the aforementioned decades-long investment backlog. The uptrend of the fifth supercycle could therefore last longer than any of its predecessors—and be more expensive.

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