[Weekend Money] "The Commodity Supercycle Is Here" Gold, Silver ... Next Up Is Zinc?

Gold and Silver Hit Record Highs amid Strong Hedging Demand
Zinc Rebounds, Signaling Liquidity Shift to Non-Ferrous Metals

"There is no rule that says precious metals must be the only ones leading the way. Next up are non-ferrous metals."

Despite sluggish industry conditions, zinc prices, a representative non-ferrous metal that reflects construction activity, have rebounded. Securities firms are diagnosing this as a sign that the so-called "commodity supercycle," which began with gold and silver, has now entered full swing in other non-ferrous metals as well. This follows the same pattern observed during past liquidity party phases.

According to Daishin Securities on the 31st, gold and silver prices once again hit all-time highs this week. This happened even after the Chicago Mercantile Exchange (CME) raised margin requirements on precious metals futures and went further by changing the margin calculation method from a fixed amount to a percentage basis. Analysts say these measures still failed to cool investor enthusiasm. The Bloomberg Commodity Index has been rising for six consecutive months, driven solely by precious metals, despite the struggles of the energy sector, which carries the highest weighting in commodity funds.

Daishin Securities researcher Choi Jinyoung cited two major reasons why the precious metals sector continues to dominate: strong hedging demand from central banks worldwide, and hedging demand stemming from a move away from fiat currencies. He first noted that expectations surrounding a potential policy rate cut by the U.S. Federal Reserve (Fed) are likely to further stimulate gold-hedging demand among central banks. On top of this, major countries are once again rolling out stimulus measures ahead of the U.S. midterm elections, Japan's general election, and China's Party Congress.

In particular, Choi stressed that there is no reason gold and silver, as precious metals, should remain the only leaders, adding, "The sector to watch going forward is non-ferrous metals." In theory, when liquidity expands, the leading commodity sectors tend to rotate in the following order: precious metals, non-ferrous metals, energy, and agricultural products. Choi explained, "During the 2020–2021 liquidity party, precious metals initially took the lead, then leadership shifted to aluminum and battery-related metals, and later to natural gas and oil," adding, "Unlike precious metals, non-ferrous metals and energy tend to lag the global liquidity index, which is another example of this pattern." The same pattern was also clearly observed during the much earlier liquidity party in 2009.

There are also symbolic products indicating that liquidity, which had been concentrated in precious metals, has recently begun to flow into non-ferrous metals. Zinc, which serves as a barometer for construction activity, is a prime example. Choi pointed out, "Zinc demand is fragile due to the collapse of China's real estate market," but noted, "Nevertheless, zinc prices are rebounding." Despite weak construction activity, zinc prices, which stood in the 2,700-dollar-per-ton range in February last year, have recently surged to around 3,400 dollars. He assessed this by saying, "This is the same point at which non-ferrous metals have begun to reflect the global liquidity index," and, "It is evidence that liquidity has started to flow in."

Accordingly, analysts say this cycle is also highly likely to follow the same pattern as in the past, entering the "early phase of a commodity supercycle." Choi emphasized, "The liquidity that started with gold and silver in early 2024 has been extending through platinum-group metals and copper in 2025 and is now spreading into other non-ferrous metals," adding, "The commodity supercycle has begun." He went on to recommend, "Rather than further increasing exposure to precious metals, investors should actively expand their positions in non-ferrous metals."

This content was produced with the assistance of AI translation services.