Jim Wiederhold — Gold, Silver, Copper, Oil: Why They're ALL Rallying Together

0:23 "A clear ton of tailwinds" — the regime flipped, and the 2010s are the contrast

• Demand side: AI data-center build-outs require "a lot of metals, power, energy."
• Macro side: the 2010s were low inflation, low rates, low volatility and peaking globalization — "a commodities bear market." That has "completely flipped its head over the last five years."

1:26 Deglobalization shows up as a freight and logistics bill

• As soon as the US–Iran war started, the cost to hire a tanker rose three to four times or more in certain areas.
• Extreme weather compounds it physically, not just financially: lower river levels across the world from drought make it harder to move goods at all.
• "The cost of doing business is going up and it's leading to increased cost across commodities."

2:14 Energy is the input to everything else — and the flows are structural

• "You basically need some form of an energy commodity in order to produce the other commodities as well." Energy was the big mover, so the input cost of every commodity rose.
• Money is arriving two ways: institutions putting on total return swaps, and inflows into ETFs — both driving price appreciation across the complex.

3:26 Why the industrial-over-precious call was made — and why it still stands

• Gold's move fits the historical 2½–3 year rhythm; data back to 1960 says the spike is followed by sideways action and consolidation lasting months to years.
• Central-bank buying pulled back initially after the January spike — "although that's changing with the latest World Gold Council surveys with more expected buying ahead."
• Industrial metals were coming out of bear markets, with copper carrying both scarcity and the electrification demand story.

4:44 Copper — tariff front-running, then LME backwardation

• US buyers "imported a ton of copper to try and get ahead of potential tariffs," pulling metal out of the rest of the world.
• Now LME copper prices are rising with a big increase in backwardation — the market paying up for metal today rather than later. "There's definite inventory issues in the short term."
• Macro cross-check: US GDP and retail sales slightly soft, sentiment lower, "but overall economic growth is pretty good around the world."

6:36 Supply: 10–15 years per new mine, and the weather is now a supply variable

• "Sometimes it takes up to 10, 15 years to create a new metal mine from discovery to actually be able to produce."
• New: weather as an ongoing supply drag — "increased incidence of mines being flooded and accidents like this."

7:48 Pushback on the supply story — and an honest concession

• Farley argues the bull case rests as much on constrained greenfield supply as on demand, unlike China's 2000s boom when supply could respond.
• Wiederhold's caveat cuts against his own book: high prices do incentivise production, and miners did meet demand over the past few years — which is why copper meandered. What broke this year is the cost of doing business and the weather, "and that's why you're seeing these all-time high prices."

9:23 The renewables read-through — and China's EV fleet as an oil-shock absorber

• Data from BloombergNEF: US wind projects being cancelled, but Europe's energy mix "might be 50% or more renewable currently."
• A causal point worth keeping: because China's car fleet had already shifted to EVs, China did not need to import as much oil when the war hit — "if this conflict started a few years earlier" the price response would have been worse.

12:46 Data centers, and the tariff net widening to solar raw materials

• Copper and silver are the two most conductive industrial metals; silver is ~60% industrial by end use, which is what separates it from gold.
• China routed silicon-wafer production through Africa to skirt tariffs; the US response was tariffs on all solar raw materials — which now hits silver, where it previously didn't.

14:37 The silver thrifting question — substitution has an efficiency cost

• At the January peak, silver was ~25% of the total cost of a solar panel — "historically… usually less than half of that."
• His rule: "as soon as prices are too high, it doesn't incentivize production of the goods that you're trying to create," and substitution follows across metals historically.
• But the substitute is worse: copper is less conductive than silver, so you get less efficient panels — and copper's own price is now rising, which partially closes the arbitrage.

16:39 Silver from $100 to $65 — the exponential-move rule again

• "It was an exponential move higher that's typically unsustainable… similar to what happened decades ago when it spiked up to $50."
• Huge futures positioning going in, profit taken at the top, and the demand drivers remain — but the incentive to keep getting long has gone.

17:36 Positioning has rotated from silver into gold

• Latest CFTC data: net length building in gold, less in silver — possibly even shorts increasing in silver.
• His caveat: silver is a much smaller and more volatile market, "so there's always potential for things to spike again," but the positioning doesn't currently expect it.

19:55 Gold, honestly framed — a non-yielding asset with one reliable tell

• Farley's challenge is that gold is unmodelable — a 19-year bear market from 1981 to 2000 while debt exploded — whereas silver, copper and tin demand can be put in a spreadsheet.
• Wiederhold doesn't fight it: gold is non-yielding, uncorrelated, helped by dollar weakness. The one durable signal: "as soon as you see big pickups in central bank buying that's usually a pretty good indicator that the price is going to go higher."
• He shares the preference for industrial and industrial-adjacent metals — "unless you're calling for a recession."

20:57 The scoreboard — BCOM +27% ytd and it is not a gold story

• BCOM = 25 commodities across six sectors, up 27% this year, one of its best years — with gold roughly flat. Energy is the biggest contributor.
• Copper up ~15% on the year; aluminium and nickel doing okay.
• The macro tell he trusts: copper is one of the most PMI-correlated commodities, especially China and US PMIs. He also notes solar is now among the cheapest energy sources "for the first time ever."

24:38 Central-bank gold, in tonnes rather than dollars

• Over 1,000 tonnes bought every year from 2022 to 2024 — a step change from prior years, and the cause of the price rise.
• Farley's methodological point, which Wiederhold endorses: charts showing "purchases went from X to 5X" often just capture the price 5x-ing. Look at tonnage.
• The latest WGC survey (run 6–7 years) had its highest-ever reading: over 40% said they would increase holdings over the next 12 months.
• Crucial nuance: central banks are price sensitive. They didn't chase the January spike; the pullback is what brought them back.

26:40 Grains — the sector rotation reaches the ags

• Grains were in a bear market for years and are now performing, "somewhat of a sector rotation move."
• The US wheat crop was just rated the lowest since 1970; Chicago and Kansas City wheat are each up over 25% on drought in US and South American growing areas.
• Soybean oil is the standout on a demand change — a higher percentage of soybean oil in the renewable fuel standard mix.
• Ags are genuinely seasonal (winter and summer crops) — as Farley puts it, "real seasonality… it's weather," not "sell in May."

29:32 Corn as the sleeper — the fertilizer chain runs through Hormuz

• Farley's puzzle: corn is by far the most fertilizer-intensive US crop, fertilizer costs spiked in April–May, sulfur is still expensive — and corn hasn't moved. "Could be a sleeper."
• Wiederhold's mechanism: with the Strait shut, fertilizer prices were among the first things to spike because a lot of fertilizer inputs come from that region.
• The second-order effect he's hearing from Midwest farmers: cost-sensitive growers are applying less fertilizer and buying cheaper, lower-quality seed — which shows up as reduced yields in a future crop year, and therefore future corn price appreciation. They may also simply have planted less corn.
• Farley adds the concentration point: corn and soybean production is concentrated in the US and Brazil, while ~50 countries grow meaningful wheat — so a corn/soy supply shock is structurally easier to trigger.

31:30 Wheat's own chokepoint — the Black Sea is being attacked again

• European wheat is concentrated in the Ukraine region, the source of the spike four years ago.
• In the last few weeks commodity tankers in the Black Sea have been attacked, echoing the Red Sea and Hormuz — "that could lead to increased wheat prices from here potentially."

32:31 Where the biggest upside is — and it is not crude

• Because of the shut-off, North American content was at one point producing almost 50% of world supply, which hasn't happened in 150 years. With everyone maximising output, "oil probably has the least incentive to move higher here."
• The upside sits in refined products — inventory drawdowns, real scarcity in the derived products.
• Second candidate: the softs (cocoa, cotton, coffee) — structurally the most volatile. Cocoa spiked two years ago and is down on the year, but El Niño-driven drought in West Africa could spike it again, while the same pattern gives India ample sugar.
• Third: he still likes the major industrial metals — "copper's clearly trending higher, aluminium's following."

35:23 The super-cycle claim, and the mechanism that makes it self-reinforcing

• "People talk about being in a commodity super cycle and I think we really are" — across the six BCOM sectors basically everything is up on the year now, precious metals being the last to turn.
• The self-reinforcing loop: energy rises → the input cost of producing every other commodity rises → their prices rise → "it's just a vicious spiral of increased price appreciation across all the raw materials that basically fuel our global economy."
• Practical conclusion: "it's a good time to have a small piece of allocation to commodities in a portfolio."

36:46 The rule from his blog: gold ATH → broaden the exposure

• Most people's commodity exposure is a physical gold holding. His finding: every time gold made a new all-time high over the last six decades, BCOM rose ~5% over the next quarter and ~15% over the next year.
• The trade it implies: take profit on gold at the high and broaden into a diversified commodity basket. "Some big pension plans in the US did that" — moving into the broader exposure with its heavier energy weight, "right before the shut off of supply at the end of February."
• Farley confirms the same conclusion independently: macro hedge fund managers at a February dinner said "every time gold goes up, it always broadens out."

38:27 …and why it works — the wealth effect, not a demand link

• Farley's challenge is fair: silver going up doesn't mechanically create demand for soybeans.
• Wiederhold's answer is a financial channel: gold and silver are held partly as investments, so as their prices rise holders get richer and spend more. In an economy over 60% consumer spending, that wealth effect lifts activity, capex and government stimulus capacity — which raises raw-material demand across the board.

40:06 El Niño, crop by region

• El Niño means heavy drought in some regions and excessive rain in others — the effect is entirely regional.
• Likely ample supply: sugar in India. Likely better US conditions for corn, soy and wheat (more rain in the growing regions), which "could potentially lead to lower prices."
• The trap: after drought comes a higher chance of flooding, so better growing potential can still end in crop damage. Grains and softs are the most directly exposed.

41:35 How the money actually gets in — swaps for institutions, ETFs for everyone

• Two or three years ago global commodity allocations were very small — a hangover from the 2010s when the 60/40 portfolio worked and no diversification was needed.
• Now: commodities are "the most uncorrelated of the major asset classes" and allocators typically put 5 to 10% of a portfolio in.
• Large institutions use a total return swap with a bank; retail and many institutions use ETFs, and BCOM-tracking ETF inflows show no sign of slowing.
• Oil at $80–90 a barrel with "no incentive from either side to try and slow things down."

44:42 "The elevator up and the stairs down" — the diversification argument stated precisely

• Commodities are a spot asset class; equities are forward-looking. A supply disruption is priced instantly in the physical, so commodities jump and then grind lower.
• Equities do the reverse: "immediate quick drawdowns" when volatility picks up, then a slow recovery.
• That mirror image is the diversification: in 2022, when equities and fixed income both fell, BCOM was up 16% on the year.

47:30 BERY — buying the curve premium and the carry premium

• BCOM dates to 1998 (Bloomberg took it over in 2014) and holds most of the AUM. BERY has ~5 years of history and has scaled toward the $10bn mark in the last 18 months.
• Curve premium: instead of only the front-month contract, BERY holds four futures contracts equally weighted across the curve. Because the front month moves most in both directions, this lowers volatility — and has added over 1% of outperformance per year over five years.
• Carry premium: it reads each commodity's futures curve and tilts weights toward backwardation and away from contango. Contango bleeds a negative roll yield — so natural gas carries about half its BCOM weight in BERY.
• Scoreboard: BERY ~+30% ytd vs BCOM ~+25–26%. BCOM led in Q1 when front-month oil spiked; BERY shines in the aftermath, with lower drawdowns by construction.

49:40 Why BCOM's energy weight is "only" 30% — diversification by design

• Construction: two-thirds on futures liquidity / trading volumes, one-third on world production, then caps and floors applied.
• No commodity group above 33%; no single commodity above 15%, reset at each annual reconstitution.
• Competitor indices weight purely on world production, and energy is the most-produced commodity — hence their far heavier energy tilt.
• The payoff: BCOM's volatility profile is similar to broad equities and at times dips below the S&P 500's — counterintuitive, because individual commodities are volatile but a broad basket is not.

51:29 The oil question — a closed Strait and sub-$100 crude

• Farley: 99% of the oil world said a closed Strait of Hormuz meant $150, $200, maybe $300. It's closed. Oil is below $100. What happened?
• Four answers: China immediately hit its economic levers and imported less; US administration jaw-boning talked prices down; North American production rose across US and Canada at exactly the right time; and importers drew down inventories — the SPR was used, and China had plenty of its own.
• Plus physical workarounds: Saudi Arabia diverted volume west through its east–west pipeline, and the dark fleet is getting cargoes through.

53:38 Farley pushes back — jaw-boning doesn't move barrels

• "You say I'm the president and I say we're doing a deal, the price of oil goes down, production does not go up, more oil doesn't get through." If the fix is rhetorical, the setup is bullish for oil and bearish for the economy and stocks.
• Wiederhold concedes the timing logic: it worked because positioning assumed a deal within weeks — and that has now dragged on for months.

55:15 "There's no deal coming" — and the $150–200 models are back

• In the last few weeks the market has started to price that no deal is coming; he read an article that day saying Iran is preparing for a prolonged conflict, and both sides are "really stubborn."
• An analyst model he read at the outset: if the Strait stays closed for six months, $200 oil is technically warranted — and it has now been six months.
• The only offset he can name is demand destruction: "if we see weakening economic data continuing here… that could potentially save us. But that's probably too optimistic a hope at this point."

57:30 The shadow-fleet numbers — what is actually transiting Hormuz

• ~9 million barrels a day are still getting through — more than half of it the shadow fleet, and that is roughly half of the pre-war flow.
• So the effective disruption is ~10% of global supply, not the 20% shut off in February.
• Tracking caveat Farley raises: Bloomberg's ship tracker only sees vessels with transponders on. Wiederhold's tell instead: 150+ tankers are parked off Oman versus 30–40 historically — they load there and switch transponders back on.
• The reported mechanism: ADNOC, the UAE's state oil company, moving oil through the Strait at night with transponders off, escorted by (or under guarantee from) the US military.
• His generalisation: "historically commodity traders and commodity companies, they find a way to move goods" — as with Russian oil. "They get very creative."

59:46 Crack spreads above 2022 — the scarcity is in the products, not the crude

• Farley: the crack spread is now higher than 2022, "which is really something remarkable to say."
• Wiederhold's explanation: there was plenty of crude inventory to backstop prices, but not enough inventory of refined products — and refining requires specific facilities in specific regions and takes time.
• The company datapoint: Marathon Petroleum's $7.3bn quarterly income from operations. Refiners aren't adding capacity; they've had efficiency gains — "very fortuitous for all these companies."

1:01:42 Where to follow him

• On the Bloomberg terminal (Jim Wiederhold), on LinkedIn, and — no terminal required — the Bloomberg Insights page on bloomberg.com, where he posts regularly.