Central Banks Buy Gold and AI Consumes Copper: The 2026 Commodity Realignment [EN]

"Copper is the new oil of the AI era. We will need one billion tons of copper over the next 30 years."

— Robert Friedland, Founder of Ivanhoe Mines (March 2026, PDAC Conference)

Prologue: The Market Observer's Perspective

Three metals are moving simultaneously. Gold surged 65% in 2025 alone, recording over 50 all-time highs. Silver soared 147%, breaking through an all-time high for the first time in 40 years, and continues a five-year consecutive supply deficit. Copper renewed its all-time high at 14,527 USD per ton on the LME in January 2026. These three numbers are not mere price indicators. They are signals of three structural trends erupting simultaneously in a single commodities market: the realignment of the global monetary order, the acceleration of the energy transition, and the infrastructure revolution of the AI era.

What this observer focuses on is not the price level of each metal, but the nature of the forces moving them. Gold is no longer a 'fear index.' Structural accumulation by central banks strategically replacing dollar assets is supporting the price. Silver has shed its nickname "poor man's gold" and redefined its industrial identity as a core material for solar panels and AI chips. Copper maintains its function as "Dr. Copper," a leading economic indicator, while being equipped with new demand engines: AI data centers and power grids. This report simultaneously illuminates the three metals through four lenses—geopolitics, central banks, industry, and retail investors—and reads the current coordinates of the global economy at their intersection.

EXECUTIVE SUMMARY

Gold continues its structural bull phase, with J.P. Morgan's year-end 2026 target at 5,055 USD and Goldman Sachs at 4,900 USD. In a World Gold Council (WGC) survey, 76% of central banks responded that they will increase their gold holdings over the next five years, with an expected average quarterly purchase of 585 tons in 2026.^¹ Silver recorded an unprecedented supply deficit of approximately 120 million ounces in 2025 according to the Silver Institute, continuing its deficit for a fifth consecutive year. With silver breaking its all-time high of 64 USD in 2025, BNP Paribas projected 100 USD for 2026, as demand for solar, EV, and AI hardware structurally outpaces supply growth.^² For copper, as J.P. Morgan forecasts a 330,000-ton deficit of refined copper in 2026, AI data center demand alone is expected to consume 475,000 tons in 2026.^³

01. Gold: Structural Accumulation Created by Cracks in Dollar Hegemony

The Strategic Shift of Central Banks: The Structure of Accumulation Has Changed

The most important structural change in the gold price is that the primary buyers have changed. Past gold rallies were driven by speculative demand from retail investors and hedge funds. Now, central banks are the core buying force. Since 2022, central bank gold purchases have surged to more than double the 2015-2019 average, and their share of total gold demand has doubled from 12% in 2015-2019 to roughly 25% in 2024.^⁴ The National Bank of Poland emerged as the most aggressive buyer, purchasing an additional 83 tons by October 2025, followed by Kazakhstan, India, Turkey, and China. Poland's goal is to increase gold's share in its total foreign exchange reserves to 30%.

The backdrop for this strategic shift is a response to the weaponization of the dollar-based financial architecture. Having witnessed Russia's exclusion from SWIFT, sanctions on Iran, and the US weaponization of tariffs, emerging market central banks are migrating to gold to diversify the risk of concentrating in dollar assets. In October 2025, BRICS officially launched a gold-backed 'Unit' currency pilot program. The fact that the BRICS alliance controls about 50% of global gold production lends substantial weight to this movement.^⁵

Geopolitical Risk and Gold's Reaction: Immediacy and Persistence

Following the outbreak of the US-Iran war on February 28, 2026, gold showed stable high-level maintenance rather than an immediate spike. As accurately captured by Oxford Economics' analysis, during the initial phase where geopolitical shocks and liquidity pressures overlap, gold can temporarily decline. This is because investors liquidate their most liquid assets first to raise cash. However, the subsequent recovery is faster and stronger, and gold's real return stands out most in the phase where the shock transitions into structural inflation.^⁶

The reason gold is particularly strong amid the Iran war shock is that the energy supply shock transmits into inflation, pressuring real interest rates. Even if the Fed's rate cuts are delayed, if the pace of rising inflation outstrips the pace of rising nominal rates, real interest rates fall. This is the mechanism providing structural support to gold. As examined in the analysis of gold's structural strength and the de-dollarization trend, the gold price no longer functions as a short-term risk indicator, but as a long-term thermometer for the realignment of the global monetary order.

Retail Investor Gold Investment Flows: ETF Re-inflows and Asia's Physical Demand

The net outflows from gold ETFs that lasted for about four years from 2021 to 2024 completely reversed in 2025. According to S&P SPDR (State Street) analysis, the simultaneous expansion of gold ETF restocking and physical demand is tightening the physical market even further.^⁷ Demand from Asia is particularly noteworthy. In China, a pilot program began in 2025 where 10 insurance companies allocate up to 1% of their assets to gold, and six insurers opened accounts on the Shanghai Gold Exchange. China is also considering acting as a gold custodian for foreign sovereign wealth funds, leaving ample room for further expansion of institutional demand. In India, Assets Under Management (AUM) for gold ETFs surged 15.5 times compared to 2020, reaching 10.9 billion USD.^⁷

02. Silver: From "Poor Man's Gold" to an "Essential Material for Industrial Civilization"

5 Consecutive Years of Supply Deficit: The Structure of the Numbers

According to the Silver Institute, the silver market recorded a massive supply deficit of approximately 120 million ounces (Moz) in 2025, continuing its deficit for the fifth consecutive year. The cumulative deficit from 2021 to 2025 exceeds 800 million ounces. The issue is the structural limitation of supply elasticity. Over 70% of global silver production is produced as a byproduct of mining gold, copper, lead, and zinc. It is a structure where no matter how much the silver price rises, it is difficult to immediately increase new mine development solely for silver. This means that silver supply is practically inelastic to demand changes.^⁸

China strengthened silver export licenses starting in January 2026, further pressuring global spot supply. Silver inventories in London's LBMA vaults plummeted throughout 2025, causing an anomalous phenomenon (spot premium) where spot prices significantly exceeded futures prices. Lease rates soaring to 39% illustrates just how severe the physical shortage of spot silver is.^⁹

The Explosion of Industrial Demand: The Triple Engine of Solar, EV, and AI

The industrial demand structure of silver has been fundamentally realigned. As of 2025, about 59% of total silver demand is for industrial use. Solar energy is a particularly key driver. Global solar power capacity is projected to reach 665GW in 2026, generating a silver demand of 120 to 125 million ounces from this sector alone. High-efficiency next-generation solar cells like TOPCon use 50% more silver than conventional panels. EVs consume 2-3 times more silver (25-50g per vehicle) than internal combustion engine vehicles, creating a demand of roughly 70 to 75 million ounces from the production of 14-15 million EVs in 2026. The expansion of power infrastructure for AI data centers constitutes additional demand.^¹⁰

The core characteristic of this industrial demand is price inelasticity. For solar panel manufacturers or EV battery makers, silver accounts for only a fraction of the total production cost. There is no reason to halt panel production even if silver becomes twice as expensive. As Saxo Bank's analysis aptly pointed out, "supply depletion is not an option." This price-inelastic industrial demand is the strongest long-term support for the silver market structure.^⁸

Retail Investors' Silver Investment: India's Rapid Rise and ETF Explosion

In 2025, India emerged as the world's largest importer of refined silver. The import volume surged by 44% compared to 2024 to approximately 9.2 billion USD. The fact that demand did not decline despite the silver price nearly tripling in Rupee terms is the result of a combination of alternative demand against higher gold prices, cultural consumption during the Diwali season, and the expansion of solar and electronics manufacturing.^⁹ Net inflows into silver ETFs recorded about 130 million ounces in 2025, pushing total holdings to 844 million ounces. This ETF holding volume continuously pressures the physical market. For retail investors, massive buying sprees poured in once when silver broke 30 USD, and again when it broke 50 USD. The sentiment of it being "affordable gold" increases accessibility and expands retail participation.^¹¹

03. Copper: The New Oil of the AI Era

The Demand Revolution Created by AI and Energy Transition

Copper is the metal that makes electricity flow. And now the world has begun to use electricity more, faster, and in more diverse ways. J.P. Morgan projected that copper demand generated by AI data centers alone in 2026 will be 475,000 tons, an increase of 110,000 tons from the previous year. A single ultra-large AI facility requires up to 50,000 tons of copper. Global data center power demand is predicted to increase by 165% by 2030, and the core comprising that power grid infrastructure is copper. Goldman Sachs analyzed that power grids and power infrastructure will drive over 60% of copper demand growth by 2030.^³

EVs are also a strong demand driver. EVs consume 3 to 4 times more copper than internal combustion engine vehicles (about 80-100kg per vehicle). The International Copper Study Group (ICSG) forecast that refined copper demand will increase by 2.1% in 2026 to reach 28.73 million tons, predicting a 150,000-ton deficit exceeding supply growth. The IEA warned that the copper supply deficit could reach 30% of demand by 2035. Meeting this requires over 21 billion USD in new mining investments.^¹²

The Structural Vulnerability of Supply: Mines Cannot be Expanded Quickly

The average time required for copper mine development, from exploration to production, is about 15 to 16 years. Even if investment decisions are made right now, it is difficult for production to get into full swing before 2040. The 2025 production of Codelco (the world's largest copper producer) effectively stagnated at 1.332 million tons. A fatal mudflow accident at Grasberg (the world's second-largest mine) caused production disruptions lasting through Q1 2026. The global average copper ore grade fell by 13.4% between 2012 and 2022 to a mere 0.52%. This means that more ore must be processed to obtain the same amount of copper.^¹³

The complexity of 2026 lies in the stark divergence in forecasts among J.P. Morgan (330,000-ton deficit), Goldman Sachs (300,000-ton surplus), and the ICSG (150,000-ton deficit). Due to tariff uncertainty, record pre-inventories piled up on the COMEX (503,400 tons as of January 20, 2026), artificially driving up prices in some respects. However, regardless of the possibility of a short-term price correction, major institutions have no disagreement regarding the direction of a structural deficit for 2027-2030. It is in this context that copper is emerging as a core geopolitical asset. The DRC (Democratic Republic of Congo) is emerging as the "Saudi Arabia of Copper," supplying over 25% of global copper exports by mid-2026, and the US signed a strategic reserve supply agreement with the DRC's state-owned mining company Gecamines.^¹⁴

Retail and Institutional Investor Access to Copper: Equity Alternatives and Strategic Assetization

Unlike gold and silver, direct investment in copper via physical ETFs is limited. Retail investors' primary mode of exposure is indirectly through copper mining stocks (Freeport-McMoRan, Southern Copper, etc.) or commodity index ETFs. Institutional investors pushed prices higher as speculative long positions in LME copper futures reached an all-time high in December 2025. Demand for preemptive inventory securing ("pre-positioning") before the US government's tariff announcement was also a factor driving COMEX prices unusually high relative to the LME. What is noteworthy is that copper is now beginning to be recognized as a "national security asset" beyond an industrial raw material. The fact that AI, energy transition, and national defense all require copper has elevated the status of copper in Western governments' supply chain strategies to the level of rare earths.

04. The Geopolitical Lens: Commodities are Already at War

The Chain Shock in Commodities Triggered by the Hormuz Blockade

Following the outbreak of the US-Iran war on February 28, 2026, repricing occurred across the entire commodities market. According to Oxford Economics, over two-thirds of all commodities are projected to record price increases in 2026, demonstrating how drastically geopolitical shocks have upended commodity price forecasts. With approximately 20 million barrels of crude oil per day and 20% of global LNG trade volume via the Strait of Hormuz cut off, energy, fertilizer, and food prices rose in a chain reaction.^⁶ The WEF warned that global food prices will rise by about 6% in 2026, and the reduction in fertilizer supply will affect crop yields into 2027.

US-China Resource Hegemony Competition: The Weaponization of Rare Earths, Copper, and Silver Supply Chains

China controls 60% of the world's rare earth refining capacity and a significant portion of silver production. China's tightening of silver export licenses in January 2026 is an example demonstrating the reality of this supply chain control. If China, which holds 50% of copper refining capacity, restricts or reduces exports for strategic reasons, it will deal a direct blow to the West's AI and energy infrastructure construction. This is why the US is strengthening critical mineral diplomacy with countries like the DRC and Rwanda, and attempting to connect DRC minerals to the US supply chain through the Washington Consensus. Commodities have already become a core front in geopolitics.

05. Historical Analogy Comparison: Fusion of the 1970s Inflation Cycle and the 2000s Supercycle

Simultaneous Explosion of Currency Debasement and Physical Demand

The current commodity bull market takes a mixed form of the gold/silver price surges following the Nixon Shock in the 1970s and the China-driven supercycle of the early 2000s. While the 1970s had a strong 'inflation hedge' character due to pure currency debasement and geopolitical shocks, the 2026 market is simultaneously driven by the weaponization of resources and cracks in dollar hegemony (the 1970s element) coupled with explosive physical demand from AI and the energy transition (the 2000s element).

Whereas past rallies in silver and copper relied on speculative capital or single-country infrastructure investments, the current rally has a much more structural and long-term character, based on the irreplaceable industrial depletion from solar panels and AI data centers on a global scale.

06. Variables and Limitations: Tail Risks of the Macro Cycle

Hard Landing of the Chinese Economy and Demand Destruction

The biggest Achilles heel for copper and silver is the macroeconomic fundamentals of China, the world's largest commodity consumer. Despite the continuous stimulus measures by Chinese authorities, if real estate PF insolvencies and domestic stagnation become entrenched as structural deflation, even the increments in global AI and energy infrastructure investments may not offset the sudden plunge in industrial demand from China. This is the biggest variable that could act as strong downward pressure on copper prices in the short term.

Commercialization of Alternative Technologies and Sudden Shifts in Monetary Policy

If global inflation spirals out of control again and the US Fed completely withdraws its rate-cutting cycle to pivot to a rate hike, a short-term plunge in gold prices is inevitable due to spiking real interest rates. Furthermore, if technological innovations aimed at substituting silver and copper with cheaper new materials in secondary battery chemistry and next-generation solar panel manufacturing processes cross the commercialization threshold faster than expected, a full-scale downward revision of long-term demand estimates is unavoidable.

07. Implications from an Investor's Perspective

Short-Term (2026)

Even with short-term correction risks, gold's structural support base is solid. Short-term profit-taking sell-offs may occur upon progress in Middle East war negotiations, but it is highly likely to maintain a support line above 4,500 USD, with central bank purchases propping up the bottom. Silver exhibits high short-term volatility, but supported by the supply deficit structure, the Gold/Silver Ratio is expected to be maintained at the 55-65 level or converge in a direction favorable to silver. Copper could see a correction (towards 10,000-11,000 USD) following the liquidation of speculative positions after the US tariff review on June 30, but the long-term supply deficit narrative remains uncompromised.

Mid-Term (2027-2028)

Gold could sustain structural strength in the 5,400-6,300 USD range under a scenario where de-dollarization and BRICS currency experiments accelerate. J.P. Morgan forecast an average of 5,400 USD for 2027. Industrial demand for silver is highly likely to show an additional step-up starting in 2027 when the commercialization of next-generation solar cells (TOPCon, Perovskite) goes into full swing. BNP Paribas' 100 USD forecast for 2026 could be delayed to 2027 in terms of timing, but the directional trend remains valid. Copper is highly likely to enter a mid-term bull phase as the structural deficit for 2027-2030 materializes. Goldman Sachs also anticipates a transition from surplus in 2026 to structural deficit in 2027.

Portfolio Perspective

The three metals have different risk exposures and thus function complementarily within a portfolio. Gold is suitable for a stable weighting in its role as a currency hedge and tail risk insurance. Silver has a greater leverage effect relative to gold and is linked to the industrial economy, resulting in high volatility but also large upside potential. For copper, indirect exposure through mining stocks or commodity ETFs is more realistic than direct physical investment. As per CME Group's analysis, in an environment where the correlation between equities and bonds in a traditional 60/40 portfolio has increased, a combination of these three metals can be an effective diversification tool. In particular, a strategy of increasing the weight of physical assets alongside Treasury Inflation-Protected Securities (TIPS) is valid in the current macro environment.^¹⁵

Conclusion

The fact that gold, silver, and copper are simultaneously at all-time highs is not a simple commodity bull market. It is a structural signal that the global economic system is being realigned in three directions simultaneously.

The first realignment is the transition of the monetary order. As trust in the dollar-based global financial architecture is structurally damaged, central banks are accumulating gold as a strategic alternative. This trend is unlikely to be reversed by any single event or policy. Whether the Fed Chair is replaced or the US-Iran war ends through negotiation, central banks' strategy of diversifying dollar assets will continue. As examined in the analysis of the new normal of a 1,400-won USD/KRW exchange rate and cracks in dollar hegemony, this weak dollar structure is the most powerful long-term support for metal prices.

The second realignment is the material foundation of the energy transition and AI infrastructure. Many anticipated that the digital transformation would bring dematerialization. The reality is the exact opposite. AI computation and renewable energy require more copper, silver, lithium, and rare earths. This material demand cannot be copied and pasted like software. Mines take 15 years to develop, and mined grades decline every year. Demand is dictated by policy, but supply is constrained by geology. This asymmetry is the core sustaining the structural strength of the commodities market.

The third realignment is geopolitical fragmentation. The Hormuz blockade, the US-China tech war, China's export controls on rare earths and silver, and Russia's weaponization of energy. As the global supply chain realigns to prioritize security over efficiency, commodities have transcended economic goods to become strategic assets. This fragmentation structurally heightens the volatility of commodity prices and bestows a premium on nations and corporations that control specific resources.

In conclusion, a world where gold, silver, and copper are simultaneously strong is a world where inflation, de-dollarization, energy transition, and geopolitical fragmentation are progressing all at once. These forces reinforce each other and are highly likely to persist for a considerable period. Short-term price corrections are possible at any time. However, what can overturn this structure is not a short-term catalyst, but a reversal of a decades-long trend. The global economy is currently passing through the most dramatic inflection point of that trend.

※ Disclaimer

This report does not recommend the purchase or sale of any specific assets, nor does it support or criticize any specific regime, government, or politician. It is an article of macroeconomic system analysis based on publicly disclosed data and historical indicators. It is impossible to predict all market variables, and the responsibility for all judgments and subsequent consequences rests entirely with the reader. While the author (Neutral Observer) makes every effort to ensure the reliability of the analysis, the flawless accuracy of the provided information is not guaranteed.

Sources and References

¹ J.P. Morgan Global Research, Gold Price Predictions 2026 (2026.02.02) — https://www.jpmorgan.com/insights/global-research/commodities/gold-prices

² Carbon Credits, Silver Price Hits $64 as Supply Deficit Enters Fifth Year (2025.12.11) — https://carboncredits.com/silver-price-hits-64-as-supply-deficit-enters-fifth-year-prices-may-reach-100-oz/

³ Disruption Banking, Are Copper Prices About to Surge? (2026.03.09) — https://www.disruptionbanking.com/2026/03/09/are-copper-prices-about-to-surge/

⁴ World Bank Blog, When Uncertainty Rises, Gold Rallies (2025.12.09) — https://blogs.worldbank.org/en/opendata/when-uncertainty-rises--gold-rallies

⁵ Kavout, Gold and Silver Price Forecast 2026: Why Precious Metals Hit Record Highs (2025.12) — https://www.kavout.com/market-lens/gold-and-silver-price-forecast-2026-why-precious-metals-hit-record-highs-and-what-comes-next

⁶ Oxford Economics, How the Iran War Is Reshaping Commodity Markets in 2026 (2026.04.01) — https://www.oxfordeconomics.com/resource/how-the-iran-war-is-reshaping-commodity-markets-in-2026/

⁷ SSGA (State Street Global Advisors), Gold 2026 Outlook: Can the Structural Bull Cycle Continue to $5,000? (2026.01) — https://www.ssga.com/us/en/intermediary/insights/gold-2026-outlook-can-the-structural-bull-cycle-continue-to-5000

⁸ Saxo Bank, Silver's Breakout Year: From Monetary Hedge to Industrial Powerhouse (2025.12.10) — https://www.home.saxo/content/articles/commodities/silvers-breakout-year-from-monetary-hedge-to-industrial-powerhouse-10122025

⁹ Kotak Mutual Fund, Silver Is the New Rare Earth: Demand, Supply and Global Shifts (2026.01.21) — https://www.kotakmf.com/Information/blogs/silver-is-the-new-rare-earth_

¹⁰ Equiti, Strong Industrial Demand Supports Silver in 2026 (2026.01.21) — https://www.equiti.com/sc-en/news/global-macro-analysis/strong-industrial-demand-supports-silver-in-2026/

¹¹ Investing News Network, Silver Price Forecast: Top Trends for Silver in 2026 (2025.12.30) — https://investingnews.com/daily/resource-investing/precious-metals-investing/silver-investing/silver-forecast/

¹² Mead Metals, 2026 Metal Market Forecast: Copper, Steel and AI Demand (2025.12.31) — https://www.meadmetals.com/blog/metal-industry-outlook-2026-procurement-guide

¹³ Canadian Mining Report, Why Copper May Become the Most Strategic Metal of the AI Era (2026.03.09) — https://www.canadianminingreport.com/blog/why-copper-may-become-the-most-strategic-metal-of-the-ai-era

¹⁴ Financial Content / Market Minute, Copper's Crimson Peak: Record Prices Face Mid-2026 Correction (2026.03.30) — https://markets.financialcontent.com/stocks/article/marketminute-2026-3-30-coppers-crimson-peak-record-prices-face-mid-2026-correction-as-goldman-warns-of-speculative-cooling

¹⁵ CME Group, Precious Metals Outlook 2026: Market Dynamics Following a Record-Breaking Year (2026.01.08) — https://www.cmegroup.com/articles/2026/precious-metals-outlook-2026-market-dynamics-following-a-record-breaking-year.html

¹⁶ World Gold Council, Gold Outlook 2026: Push Ahead or Pull Back (2025.12.04) — https://www.gold.org/goldhub/research/gold-outlook-2026

¹⁷ Goldman Sachs, 2026 Commodities Outlook: Ride the Power Race and Supply Waves (2025.12) — https://www.goldmansachs.com/pdfs/insights/goldman-sachs-research/2026-outlooks/CommoditiesOutlook2026.pdf