For decades, copper was considered a thermometer of the global economic cycle. While the copper market has always enjoyed significant financial depth, it is now in a different phase, no longer only as an industrial metal, but also as a financial asset, exposed to all the forces of capital markets.
In recent weeks, the price of copper, as well as gold and silver, has experienced wild fluctuations, including record prices as well as corrections never seen before. These recent movements are not explained solely by physical demand. They also reflect a global financial rotation toward real assets in a context of monetary fragility, persistent fiscal deficits, and geopolitical tensions.
The magnitude of this financial shift is striking. In 2025, open interest in base metals on the London Metal Exchange increased by US$32.4 billion, of which US$21.9 billion corresponded to investment funds, with copper capturing nearly half of these flows.
The hypothesis that appears to be gaining strength is that if copper is indispensable for the future economy, then it can behave as a safe-haven asset. The problem is that when this narrative becomes dominant, the market stops moving solely on fundamentals and enters a logic of massive financial speculation.
Recent experience with gold and silver is illustrative. After sharp increases over a few months, silver plunged by more than 30% in a single session. There was no collapse in physical demand, but rather a synchronized exit of financial capital, creating the paradox that its mass adoption left it financially vulnerable and, for a moment, no longer a store of value.
Copper’s long-term fundamentals are exceptionally strong due to a scarcity of projects, declining grades, higher capital costs, and robust structural demand. But strong fundamentals do not guarantee stable prices when the metal begins to be treated as a financial asset.
For Chile, this phenomenon presents both an exceptional opportunity and greater risk. With prices at such high levels, the country faces extraordinary revenues, but also much greater volatility. The question is how to manage a temporary windfall in an increasingly volatile market. The first step is to rebuild stabilization funds and ensure the fiscal rule functions properly. The second is the ongoing challenge of transforming extraordinary rents into durable assets.
Copper is not gold; it is the material foundation of the economy to come. But when it is treated as a financial safe haven, it also assumes its risks.
Source: El Mercurio