The world could be on the cusp of a commodity war as nations worldwide continue to grapple with growing demand and falling supply of important base metals and critical minerals.

A recession means lower copper prices; equities are cheap and it's worth looking at adding the commodity to your portfolio.

In a recent interview with Kitco News, Robert Minter, Director of ETF Investment Strategy at abrdn, said that investors need to hold some gold as a core asset in their portfolios; however, he added that now is also the time to load up on other commodities, particularly base metals.

Although base metals like copper have been struggling in recent months as global recession fears grow, Minter said that fundamental shifts are occurring within the global economy that will provide long-term support for industrial metals like copper, zinc, and nickel.

Minter said that broken supply chains are forcing many governments to develop their own supply chain of critical metals and minerals. However, as commodities become nationalized, many are starting to worry that there isn't enough supply to meet growing demand needs. He added that this could lead to a commodity war as nations chase down dwindling supplies.

"Supplies of industrial metals like copper are near-all-time low levels," he said. "Maybe we have enough copper to meet current demand, but we can't take any significant demand surprises in industrial metals."

What Is Doctor Copper?

The term Doctor Copper is market lingo for this base metal that is reputed to have a "Ph.D. in economics" because of its ability to predict turning points in the global economy. Because of copper's widespread applications in most sectors of the economy — from homes and factories to electronics and power generation and transmission — demand for copper is often viewed as a reliable leading indicator of economic health. This demand is reflected in the market price of copper.

Why this metal may see an ‘absolutely ballistic’ price spike.

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Goldman Sachs metals strategist Nick Snowdon believes the global renewable power drive will push copper prices from the current US$4.29 per pound to US$6.80 per pound by the end of the decade. He adds that the fundamental supply and demand outlook is so dire that he doesn’t rule out an “absolutely ballistic” temporary price spike to over US$20 per pound before 2030.

Mr. Snowdon appeared on Bloomberg’s Odd Lots podcast on May 30 with a remarkably bullish story. The key points were that copper inventories are already low, the metal is largely irreplaceable as an electricity conductor for electric vehicles and renewable power, and there’s little-to-no new copper production on the horizon.

Goldman Sachs estimates global copper production of 24 million tonnes for 2022. Of that only 1.5 million tonnes will be consumed by decarbonization efforts - primarily electric vehicles and new wind and solar power.

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