The Greatest Metals Bull Market Ever Has Started

Ready or not, here comes the metals bull market. The last great one was from 2001 to 2011 and this new one is shaping up to be more explosive and longer lasting.

The key factors that drove the last metals bull market are in place for the current one. In fact, they are even more powerful this time around.

Back then, gold led the show as it is doing this time, followed by silver and other metals. Gold had its important breakout in early 2024 when it broke above $2000 in a convincing way and since then has made a series of record highs that has caused the price to go from the bottom right of the chart to the top left.

During the past year, copper has made three runs at $5.00 per pound, making a triple top that has set the stage for it to make a move at $6.00. Demand for copper is very powerful, yet the supply chain is weak. The world is going to need a lot more copper mines for power grids, alternative energy, technology, EVs, AI and robots.

Copper supply is struggling to keep up with current demand and is nowhere near prepared for the future. Nor can it get there because the pipeline of new mines and aging old mines is much too weak. A perfect example of how weak the supply is can be seen in the copper smelters, they can’t get enough supply and are now paying miners to send their material for smelting. Copper needs to go much higher to incentivize companies to build new mines.

Tech bros are about to get a wakeup call on how important mining is to make their dreams come true. They are already getting a taste because they know how energy intensive AI is and robots will be as much or more. They can see how poorly prepared the energy grid and sources of energy are to make the potential reality.

They are already scrambling to restart mothballed nuclear reactors, but they are going to need a lot more energy than that, and they need it immediately or they will put massive strain on the existing sources of energy and the power grid. They are likely to face local opposition from current users because the power grid is ancient and already strained.

Their latest dreams are robots. Elon Musk thinks there will be millions sold, who knows if that is wishful thinking or not, but if it turns out to be even partially correct, they will need a lot of energy and put even more pressure on the ancient power grids.

With all the demands on energy and strain on the power grids, a lot of copper is going to be needed. There is a looming supply crunch coming that very few outside of the mining sector anticipate.

Nuclear energy is a slow and expensive solution to the energy equation. Solar energy is a much faster solution, especially as solar panel prices are dropping. But, once again mining comes into the solution. To make solar panels requires a tremendous amount of silver but the supply chain is broken.

Silver miners can’t keep up with the current demand and will fall short as things ramp up. For the past four plus years, physical silver has been in a deficit that is around 25% of the annual production from mining. As demand grows, the deficit will only grow and drive silver prices much higher.

Silver recently had an important breakout above $35 per ounce, and is primed to make a move past $40 and then on to new record highs. Much like when gold broke out above $2100 per ounce in early 2024 and then made a series of record highs and I see the same thing happening for silver.

Another metal that has been gaining plenty of strength is platinum, which has also been good for palladium. The way platinum has broken out suggests that there are cracks in the supply chain forming. As platinum gains strength, those using it for industrial purposes can use more palladium.

Both platinum and palladium were left for dead with the growth in EVs, with the thinking that they would replace internal combustion engines (ICE). But, that hype got ahead of itself because EVs are not cheap and they have issues when it comes to range and time to recharge. ICE cars and hybrids are going to be around for a long time and they need platinum and palladium.

All of these various metals, and others, have been challenged for the past few decades when it comes to exploration that resulted in important discoveries and new high-quality mines being built. Which has weakened the supply chains, and the cupboards are bare when it comes to explorers with important discoveries and high-quality development projects. The net result is that the supply chains will stay broken for many years into the future.

Prior to the 2001 to 2011 metals bull market, Wall Street stocks and tech stocks had stretched valuations and the Dot-com stocks were in a bubble. Then the bubble burst and it took the Dot-com, tech stocks as well as the Wall Street stocks into a severe correction.

Here we are once again, Bitcoin and other cryptocurrencies have replaced the Dot-com stocks and are in a bubble. The tech stocks and Wall Street stocks are trading at record high valuations, while CEOs are unable to give forward guidance due to economic uncertainty and there is elevated insider selling.

I even heard a Wall Street analyst say that investors need to ignore the valuations, who says they don’t ring the bell at tops? Ignoring valuations never ends well for retail investors.

Another situation that is similar to the 2001 to 2011 metals bull market is that the US dollar which was significantly overbought, as it is now, and then went into a significant correction. The most followed prices for metals are how they are performing relative to the US dollar. So, a US dollar correction is very bullish for the metals and the metals stocks.

Trump and Bessent want a lower US dollar to help boost exports and lower the trade deficit, at the same time they want the US dollar to reign supreme. Hard to see how both of those can happen. It sure looks like the US dollar is cooperating as it has been in a significant correction, while other countries are lowering their interest rates which should be causing them weakness.

Instead, the US dollar is dropping against other currencies in the US dollar index. Something that is not being talked about at all is that the US dollar is dropping as the world’s reserve currency and gold is gaining on it. US dollar weakness is great for gold, silver, copper and other metals quoted in it, which are the key prices investors worldwide pay attention to the most.

There is a big difference between the 2001 to 2011 metals bull market, which is the stealth debt crisis. In the years since the 2008 GFC, the spending and debt junkies in Washington have created the Death Spiral of Debt. It is made much worse by the cost of servicing the debt at unsustainable levels.

Trump was a spending and debt junkie during his first term and more of the same in his second term. His big spending bill will bring the deficits much closer to $3 trillion per year, so it is clear he hasn’t kicked his addiction. If you need even more evidence, Trump and Bessent want to increase the debt limit by $4-5 trillion or eliminate it entirely.

Trump is also desperate for Powell to slash interest rates to accommodate his addiction to spending and debt. Hurling insults at Powell isn’t working, which means Trump’s wishes to move back toward free money could have to wait until Powell’s term is up.

In around a year, he can appoint his handpicked successor to slash rates, but in the meantime, he won’t be slashing spending, he will crank it up.

US debt looks very risky, there is massive supply and questions about who will buy to keep the house of cards from falling. Foreign buyers are questioning their current holdings and why they should buy more.

Bessent's disastrous plan is to allow American banks to leverage up by reducing restrictions on their amount of leverage. He also thinks that stablecoins can come to the rescue by backing up their coins with US debt. This may not concern Americans, but should cause fear amongst every buyer and holder of US debt, if you needed a tell there are problems with US debt, there you have it.

Signalling that additional leverage for the bankers and stablecoins make up the rescue plan for the extreme supply of US debt, makes it clear that there are big problems on the buy side and with those holding the supply.

The fundamentals for gold, silver, copper and other metals were impressive during the 2001 to 2011 metals bull market. They are even better now.

But, the best bullish fundamentals are in the metals stocks. When you look at the value of metals stocks, relative to the S&P 500, they have never been lower than they are now. They have a lot of catching up to do, just to reach reasonable valuations.

Meanwhile, gold miners are making money hand over fist with records being broken in their free cash flow and they are piling cash onto their balance sheets better than practically every industry. The high-cost and low-cost miners are doing great with the price of gold performing so well, and with all signals for gold to go much better that trend will continue.

Whether I’m looking at the major gold miners, mid-tier gold miners or junior gold miners, I focus on those that are able to increase their production, maintain or decrease their costs of production and replace their current deposits with new ones. Those are the key metrics that matter the most to me, there is not a big list of companies able to accomplish these goals which means they are primed to go much higher.

My favourite group to feature in my reports are the junior gold miners, gold mine developers with high-quality projects and explorers with important discoveries. These kinds of companies are practically unknown to generalist investors.

As gold goes higher, more generalists will get exposed to gold and the gold stocks, but up and down the gold stock food chain, they don’t have a big menu to choose from. Which is very bullish for the gold stocks throughout the gold stock food chain.

The menu of silver stocks throughout the food chain are in even shorter supply. Silver is one of the most coiled springs I have ever seen in any metal and the silver stocks are even more coiled. It might take $40 plus to get the generalist investors excited about silver stocks, but when they do, the runs on silver stocks will be breathtaking.

The tiniest menu of stocks in metals is the platinum and palladium stocks, as exploration is pretty much unheard of and I can only find one new mine developer to feature in my reports. This bodes very well for the price of platinum and palladium and for stocks that have great projects. It is a metal contrarian's dream situation.

Copper is the most critical of all the metals. It is crucial for everything electric and is in short supply now and will be for decades into the future. I can see a double in the price of copper needed to help the supply chain. Not only does the supply chain need that kind of move, it also needs to stay there and higher for many years to incentivize investment in new mines.

The copper miners are depending on very old mines, and new discoveries have dropped off a cliff since the 1990s. So, there is very little in the pipeline of new mines to be developed. Which ultimately means that there will be supply shocks, the copper smelters are already seeing this happen and it will work its way to the users of copper that are going to see their costs increase dramatically.

As I was writing about the supply and demand fundamentals for metals, it reminds me of the saying that Robert Friedland coined, which he calls the era we are going into as the Revenge of the Miners.

For much too long, miners have been maligned, underfunded and suffering from much too low of valuations for their stocks. That is all about to change as we enter the greatest metals bull market ever.

Now if the CEOs of mining companies, from the explorers to the majors, would get out of the FAX Machine era and join the digital marketing world we have today it would be fantastic.

As an industry, the miners are dropping the ball when it comes to telling the bullish stories for metals, and how important mining is to the global economy and what they are doing to grow their companies.

Yes, they have been underloved for a long time, but hiding in their shells doesn’t help the matter when generalist investors are out on social media sites looking for investment opportunities. Either go to where the puck is going or you won’t get a good shot on the net.

I’ve said it before and will say it again, there has never been a better time to be bullish on gold, and the bullish story for silver and copper, as well as other metals, is gaining strength as well.

Back in the 2001 to 2011 metals bull market, it was a magical time for the metals and especially the metals stocks. This new metals bull market is primed and ready for liftoff, which will drive the metals stocks to levels that even ardent metals bulls can’t imagine. It will downright shock the generalist investors.

All the best,

Allan Barry Laboucan