Copper Investors Poised for ‘Supernormal Returns’ by Decade’s End

In a recent discussion at the 2025 Minds and Money Conference in Miami, David Finch, CEO of Ixios Asset Management, shed light on the dynamic landscape of precious and industrial metals, particularly gold and copper. His insights come amidst a notable rally in gold prices, which have surged to over $2,900 per ounce, marking more than 40 all-time highs in the past year. Finch attributed this increase to a combination of long-term central bank buying and a current squeeze in the physical gold market, revealing an interesting shift in investor sentiment.

The Drivers Behind Gold’s Rally

According to Finch, a key factor propelling gold’s recent appreciation is the shift in central bank policies. He noted that central banks are increasingly viewing their holdings of foreign debt as a “less and less tenable position,” especially in light of the U.S. government’s sanctions on Russian reserves. “I think that that’s a long and structural process. It’s going to take a decade for most central banks to make that kind of transition,” Finch explained, pointing out that countries beyond those opposing U.S. interests—such as Singapore, Saudi Arabia, and Poland—are also buying gold.

Furthermore, Finch highlighted a “squeeze on the physical gold market,” where holders of gold futures are opting for delivery, thus contributing to higher prices. Despite his bullish outlook on gold, Finch expressed reservations regarding the gold mining industry itself. He described it as “not a high-quality industry,” primarily due to its capital-intensive nature and short lifespan of mines. Finch articulated the need for constant reserve replacements and indicated that historically, gold mining has delivered poor free cash flow yields.

Challenges in the Gold Mining Sector

Finch emphasized that the upcoming year will be a pivotal test for gold mining companies, questioning whether they will prioritize returning cash to shareholders or reinvest to ramp up production. Even though some gold brands, like Newmont, have made strides toward becoming more investor-friendly through asset sales and capital return policies, Finch noted Barrick’s current struggles hinge on free cash flow limitations that prevent significant shareholder distributions.

While the industry has seen returns to shareholders rise—with $6 billion distributed in the most recent reporting season, a figure that is approximately double that of 2023—Finch remained skeptical. He pointed out, “Six on 450 is not a great free cash flow yield. So, should they be more aggressive? I think so.”

The Outlook for Copper

Shifting focus to the copper market, Finch discussed the recent uptick in prices, which have reached around $4.50 per pound. He described this rise as having both technical elements—specifically, a premium on COMEX futures compared to the LME price—as well as substantial stocking in the U.S., driven by tariff concerns. However, Finch asserts that a larger issue looms ahead, indicating a likely “structural supply deficit” in copper driven by increasing energy demands alongside the needs for power transmission.

Buoyed by these fundamentals, Finch recently launched a new copper fund, reflecting his conviction that the “energy transition is all about energy self-sufficiency,” particularly for major economies like China. He projects that the Chinese National Grid could potentially procure up to three times more copper than the construction industry itself, highlighting a significant pivot in demand dynamics.

Long-Term Projections for Copper Investment

While acknowledging the inherent volatility of commodity markets that respond to immediate supply and demand rather than future shortages, Finch is optimistic about the long-term trajectory for copper prices. He predicts, “By the end of this decade, we will have much, much higher copper prices,” concluding that savvy investors can expect “supernormal returns” from well-managed copper companies. However, he was careful to temper this optimism, indicating that this anticipated price growth may not materialize immediately.

Conclusion

The insights shared by Finch present a comprehensive analysis of the current and future landscapes for gold and copper investments. While gold’s price surge can be attributed to central bank strategies and immediate physical market pressures, the narrative surrounding copper is rooted in broader economic shifts toward energy self-sufficiency. As investors navigate these markets, understanding the underlying drivers and potential opportunities could pave the way for substantial returns in the coming decade.