The era of hard assets is coming! Super cycle signal strengthening: Mining and metals become the new battleground for capital.

Fund managers have expressed that the mining and metals industry will continue to experience a bullish market. Driven by the hot investment trend in artificial intelligence infrastructure, increased defense spending, and investors selling expensive tech stocks, a large amount of capital is pouring into the mining and metals industry at the fastest pace in years. Super Cycle Begins Data from research firm ETFGI shows that as of March 31, the assets under management of mining exchange-traded funds (ETFs) have more than doubled, reaching $87.4 billion, compared to $37 billion a year ago. At the same time, the oil, gas, and agriculture sectors are also drawing significant funding. The market funds are swiftly shifting towards hard assets, initiating a historic shift in asset styles. In the first quarter of this year, investors poured $8.24 billion into the mining sector, marking a turnaround from the first three months of 2025 when Trump's comprehensive tariff measures sparked a $2.52 billion capital outflow. BlackRock, Inc. portfolio manager Evy Hambro said that funds are starting to move away from overvalued tech stocks towards hard assets, which he refers to as the "early stage of a commodity supercycle". The Morningstar U.S. Technology Index fell by 9% in the first quarter. The stock prices of the world's two largest mining companies, BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US) and Rio Tinto plc Sponsored ADR (RIO.US) both reached all-time highs. Hambro pointed out that as capital investment sharply increases in infrastructure for electricity grids, data centers, electric vehicles, and charging stations, the metal content of GDP is rising. Unlike the prosperity driven by urbanization in early 21st century China, Hambro stated that the demand in this cycle is "stronger and more resilient" due to the diverse global development of artificial intelligence, electrification, and defense. However, analysts and investors warn that the influx of funds into the metal market has heightened the risk of volatile price fluctuations, as the metal market is relatively small compared to global stocks and bonds, making it more susceptible to bottlenecks in mining, refining, and transportation processes. Fidelity's Taosha Wang stated that with the Iran conflict forcing governments to prioritize supply security, a commodity and energy-focused super cycle has arrived. Industrial Metals and Gold Gain Attention There is a trend of capital flowing towards industrial metals. In March, copper funds attracted $198 million, while a significant rise in the price of gold triggered profit-taking. The VanEck Gold Miners ETF (GDX) lost $710 million last month but has still received nearly $1 billion in inflows year-to-date. The drop in gold prices during the GEO Group Inc political crisis sparked attention. The market seems to be betting that the Iran conflict will stimulate a reaction in the real economy, with increased demand for materials such as copper, steel, and rare earths for energy security and infrastructure investments. ETFGI data shows that nearly $6 billion flowed into oil and natural gas funds in the first quarter. Fund managers say this further confirms the perception that investors are preparing for an infrastructure investment frenzy. Some investment managers find diversified mining companies like BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs and Rio Tinto plc Sponsored ADR attractive, as they are positioned at the intersection of various demand drivers. Anix Vyas, portfolio manager at Harding Loevner, stated, "The demand for copper and aluminum is significant, especially amidst the escalating Iran crisis." He also pointed out that Rio Tinto plc Sponsored ADR produces both metals and can benefit from increased demand in data centers and industrial applications. Vyas described this shift as investors fleeing software companies vulnerable to artificial intelligence disruption and investing in companies with more enduring competitive advantages, such as mining companies that control key minerals. Small Market, Big Volatility The relatively small size of the metal futures market means that an influx of substantial funds will exacerbate volatility, even if the overall trend is upward. Last year, the trading volume of metal futures such as copper and aluminum on the London Metal Exchange (LME) reached $21 trillion, while the trading volume of gold futures on the Chicago Mercantile Exchange (CME) exceeded $25 trillion. In comparison, the trading volume of Nasdaq 100 futures reached $85 trillion, and S&P 500 futures exceeded $135 trillion. The drastic fluctuations in the flow of funds in mining ETFs indicate how quickly market sentiment can change and how easily these markets can reverse. The industry's share in global stock markets is also small, with the top five mining companies accounting for only 0.4% of the MSCI Global Stock Index, while the top five tech companies account for 16.8%. Metals and mining products represent only 0.57% of the total market size of stock ETFs. Currently, the valuation multiples (EV/EBITDA) of major mining companies are still at 7 to 8 times, significantly lower than the 14 times reached during the prosperous period of 2008-2010. This indicates that the outlook is highly optimistic if the super cycle is realized. Charlie Aitken, Chief Investment Officer of the Australian Regal Partners group, stated, "Copper is at the intersection of all industries, and supply is severely inadequate. I firmly believe that the price of copper is expected to double or even triple in the next decade, and the returns from investing in copper mining companies will far exceed the increase in the spot price of copper." The institution is overweight in mining and metal assets, with assets under management totaling $21 billion Australian dollars (equivalent to $150.5 billion USD) as of the end of March. However, it is worth noting that while investing in the mining sector can hedge against inflation risks, the influx of massive funds will further drive up commodity prices, coupled with the inflation pressure brought by the Iran-GEO Group Inc conflict disrupting the energy market, posing potential dangers to global economic growth.