Jeff Currie on the Crazy Surge in Metals, And Why The Supercycle Has Years to Run
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This Odd Lots podcast episode features Jeff Currie, a Carlyle partner and former Goldman Sachs commodities analyst, discussing the explosive rally across metals markets. Currie explains why gold (above $5,500), silver (above $120), and copper (over $14,400/ton) are all surging simultaneously - something historically unusual given their different economic functions. He attributes this phenomenon to what he calls the "three Ds": debasement, de-dollarization, and diversity, driven by geopolitical tensions and emerging market central banks reducing dollar holdings. (06:45)
- Main theme: The emergence of a new commodity supercycle driven by structural shifts in global trade, electrification demands, and geopolitical fragmentation
Speakers
Jeff Currie
Jeff Currie is a partner at Carlyle and former head of commodities research at Goldman Sachs, where he gained recognition as one of the world's leading commodities analysts. He has been predicting the current commodity supercycle for years and coined terms like "revenge of the old economy" during previous market cycles in the 2000s.
Joe Wiesenthal & Tracy Alloway
Joe Wiesenthal and Tracy Alloway are the hosts of Bloomberg's Odd Lots podcast, where they explore the most interesting topics in finance and economics. Both are experienced financial journalists with deep expertise in markets and economic analysis.
Key Takeaways
Asset Light Companies Are Becoming Asset Heavy
Currie explains that tech companies (hyperscalers like Google, Microsoft) are fundamentally changing from infinitely scalable software businesses to commodity-intensive operations as they build data centers and AI infrastructure. (18:32) This represents a massive shift where the asset-light sector is colliding with the physical world, requiring enormous amounts of steel, copper, and other materials. The practical implication is that these companies will see their valuations re-rated from high-multiple software companies to lower-multiple commodity producers, while simultaneously driving unprecedented demand for raw materials.
The Three Ds Drive Metals Demand
The simultaneous rally across all metals stems from three structural forces: debasement (currency devaluation concerns), de-dollarization (emerging markets reducing dollar holdings after Russia's assets were frozen), and diversity (stockpiling due to supply chain vulnerabilities). (06:34) This explains why gold, silver, and copper are all rising together despite serving different economic functions. Investors and nations are moving away from assets that can be seized toward physical commodities that cannot.
Supercycles Last About 12 Years
Historical commodity supercycles have lasted approximately 12 years (1968-1980 and 2002-2014), and Currie believes the current cycle started in 2020. (22:46) These cycles are driven by massive global capital expenditure booms - whether from defense spending, electrification, or industrial buildouts. The current cycle is still in early stages, with major capital rotation from asset-light to asset-heavy industries yet to occur, suggesting years of potential upside ahead.
Policy Decisions Drive Commodity Cycles
All major commodity supercycles have been policy-driven rather than purely market-driven phenomena. (24:28) The 1970s cycle was driven by LBJ's war on poverty and defense spending, the 2000s by China's WTO admission, and the current cycle by the "war on free trade" and forced supply chain regionalization. This policy foundation makes the cycle more predictable and sustainable than market-driven fluctuations.
Capital Hasn't Rotated Yet
Despite rising commodity prices, institutional capital remains heavily allocated to asset-light technology sectors rather than moving into commodity-producing industries. (34:14) Currie notes that investors are still reluctant to rotate capital after being "cremated" during previous commodity pullbacks in 2022-2023. This suggests the real commodity boom is still ahead, as massive capital rotation will be necessary to fund the infrastructure needed for electrification and supply chain regionalization.
Statistics & Facts
- Central bank gold reserves have risen from around 27-28% at the end of last year to potentially 30% now, compared to 40% in 1970 when Nixon took the US off the gold standard. (08:54) This indicates significant room for further central bank accumulation as they diversify away from dollar assets.
- European defense spending alone is likely to be €9 trillion over the next decade, compared to China's $10 trillion boom in the 2000s (now worth about $15 trillion in today's money). (13:19) This massive spending represents just one component of the current global capex cycle.
- Energy represents only 2.5% weighting in the S&P 500 versus 7-8% weighting on revenues, while the combined market cap of major copper producers like FCX and Ivanhoe Mines is around $200 billion versus Nvidia's $4.5 trillion. (36:37) This massive underweight positioning suggests potential for significant capital rotation.
