The Commodity Bull Market Is Broadening | Jim Wiederhold on Copper, Grains, and Bloomberg Commodity Index

**Jack Farley** (0:00)
Today's episode is brought to you by the Teucrium Corn Fund, ticker CORN. Let's get into it. Joined today by Jim Wiederhold, Commodity Indices Product Manager at Bloomberg. Jim, great to see you. Welcome to Monetary Matters.

**Jim Wiederhold** (0:13)
Jack, thanks. Thanks for having me here.

**Jack Farley** (0:15)
What's been going on in the commodity complex this year? What's your outlook going forward? I know there's a lot of different drivers. I mean, there's there's I think AI is a very big driver in terms of like copper and silver and then maybe natural gas. But what do you think are the big drivers this year?

**Jim Wiederhold** (0:33)
Overall, there's just a clear ton of tailwinds for the commodities asset class. So not only on the demand side, like you said, with AI where we data center buildouts, which require a lot of metals, power, energy to do that. But also just we have general macro themes that are really taking hold this year. They've been in place over the last few years. But basically, if you look back to the 2010s, we were in a completely different environment where we had low inflation, low rates, low volatility, a continued globalization theme that basically peaked out a few years ago. So that meant that commodity prices tend to lag and it was kind of a commodities bear market, but that has completely flipped its head over the last five years. So now we see a deglobalization theme. We have increased costs of doing business everywhere. So especially this year, we see big pickup in freight costs. So as soon as the US-Iran war started, the cost to hire a tanker increased by three to four times or more in certain areas. So the cost to actually move goods has picked up. And then with also the extreme weather we're seeing, we're seeing lower river levels across the world.
So there's drought playing out, which means that it's even tougher to move some of these goods around just from a physical standpoint, not just the cost. But the cost of doing business is going up and it's leading to increase costs across commodities. So energy was the big mover this year so far. And you basically need some form of an energy commodity in order to produce the other commodities as well.
So the input cost to production of commodities has gone up and that has just increased. We still have elevated inflation, although it's coming down somewhat. And commodities, they tend to be a diverse part of the portfolio, but also they're used as an inflation hedge. So people have gone back to the asset class and we're seeing inflows in terms of people putting total returns swaps on and inflows into ETFs. And it's all just driving more price appreciation across the commodity complex.

**Jack Farley** (2:50)
So at the beginning of the year, you had a great call. You said that industrial metals like copper, zinc, etc. were going to outperform precious metals, gold, and then also silver.
Why did you make that call? And that kind of call has worked out really well. Do you expect that trends to continue?

**Jim Wiederhold** (3:05)
The precious metals, gold and silver, they're definitely more scarce just by definition of their name. And they did have a nice run over the last two and a half year period.
Gold tends to do that historically. When it goes on these moves higher, it tends to be two and a half, three year period. We saw that. We saw a big spike in January with gold and silver, and it's come off. So there was definitely a pullback in central bank buying, at least initially, although that's changing with the latest World Gold Council surveys with more expected buying ahead. But when we go on these two and a half, three year periods, historically looking back, data going back to 1960, price action tends to spike, and then we have some sideways movement, potentially consolidation over a few months to even a few years in gold. And then on the industrial metals side, some of them were in a little bit of bear markets over the last few years. But copper in particular, it has scarcity. It's the projected demand from the energy transition from renewables, but also data center build out with AI and the increased productivity that we're going to see with everyone using AI going forward. That just means more need for the raw materials. And copper is one of the ones that's used in almost everything that we use electronically. It's a conductive and cheaper metal than silver is, which is a little more conductive. But copper, we've also had some of these issues with the tariff announcements and then pull back. So people in the US, they've imported a ton of copper to try and get ahead of potential tariffs.