Why commodities matter more than ever

The rise, and rise, of the price of gold in recent years has attracted much commentary. It has risen by more than 40% in the past year – from around $2,300 per ounce at the beginning of July 2024 to $3,680 per ounce in mid-September 2025. The precious metal, historically used as a currency and which has few industrial applications, is seen as a safe source of value at a time of high public sector debt and declining confidence in paper currencies.Yet it is not the only metal or mineral to have increased substantially in value. According to the UN Trade and Development Department, the price of metals, ores and minerals rose 23.6% between March 2024 and March 2025. The price of precious metals jumped 37.4%. Much of the increase in demand is for industrial reasons, neither speculative nor as a currency hedge. Nickel, lithium and cobalt are in demand. Use of copper is projected to rise by more than 40% by 2040, the UN group noted. This would require an estimated 80 new mines and $250bn in investment. More than half of copper reserves are located in five countries.Rare earth metals have emerged as commodities of global strategic importance. There are a total of 17 chemically similar metals categorised as rare earths, and they are essential for the manufacture of many hi-tech products, including smart phones, televisions, cars, wind turbine engines and military devices. They are also used in medical devices, such as MRI scans and laser surgery.According to the International Energy Agency, China controls 61% of rare earths extraction, and 92% of its refining. It was notable that this control was a significant bargaining chip in the trade negotiations between China and the US in Geneva in May. China had restricted export for seven rare earth metals – not a ban, but exporters had to apply for a licence – and ending this restriction for non-military purposes was a key outcome of the negotiations which resulted in a substantial reduction of tariffs. The seven are samarium, gadolinium, yttrium, terbium, lutetium, dysprosium, and scandium.Specialist magnets require rare earths, are used in many products. China manufactures many of the magnets, as well as mining and refining the metals.Demand for rare earths is projected to rise 50-60% by 2040. The US has identified its own sources for rare earth metals, investing in mines in its own territory, in Brazil and South Africa. But developing and scaling supply would take time.The metaphor of the ‘cloud’, referring to shared computer storage place, gives the impression of a nebulous space. But AI and the cloud involve engineering: Huge energy-consuming data centres with cooling systems. Data centres require rare earths, gallium, copper and silicon.A time of rising global tension and conflict has resulted in increased military expenditure. Defence is now hi-tech – it could almost be categorised as a sub-branch of the computing and AI industry, following rapid advances in drone warfare in the Russia-Ukraine conflict. Many hi-tech weaponry uses a diverse range of materials, including rare earth metals.High-volume commodities, notably oil and liquefied natural gas (LNG) also remain in high demand. The energy transition involves a strategic switch from fossil fuels to renewable sources, but it will take decades to complete, moreover oil and gas have more applications than their direct use for generating electricity and the internal combustion engine. Oil is the primary raw material for manufacturing plastics, including for components used in electric vehicles, for example.The economy of the 21st century features AI, cryptocurrencies, cloud computing and renewable energy, but this hi-tech superstructure rests upon the traditional foundations of mining, cargo ships, refining plants and factories – features that never went away and are not about to go out of fashion.Investing in commodities and the companies that refine and supply them has growing appeal. Commodities have tangible value, real-world applications and are finite in supply. Gold is precious, but perhaps samarium, gadolinium, yttrium, terbium, lutetium, dysprosium, and scandium are more precious still.The author is a Qatari banker, with many years of experience in the banking sector in senior positions.