The commodities trap that catches investors every cycle
Global X's Justin Lin on how supply and demand tailwinds are combining to drive a commodities supercycle and why ETFs are the way to play it
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Please note this interview was filmed on 28 August 2026.
AI may be driving much of the demand behind the ongoing commodities boom, but there's a separate supply story that is turning this into a potential supercycle, says Justin Lin, Investment Strategist at Global X ETFs.
As part of our Commodities in Focus series, I sat down with Lin to discuss the key drivers behind the boom, the biggest opportunities in commodities right now, and how ETFs can offer the diversification and exposure investors need to play the sector correctly - and avoid the common mistake that can cost them dearly on returns.
A new commodities cycle - and a new role for commodities
AI is undoubtedly driving huge demand across many aspects of the commodities sector, whether it's copper for data centres, battery metals for energy storage, steel and aluminium for infrastructure and even silver and uranium.
"There's a lot of demand across innovation technologies that's lifting demand across the whole commodities complex in a way that we haven't seen in the past 10 to 15 years," says Lin. "What's actually also interesting to me is the supply side."
A huge structural change in the demand for commodities since Covid has reshaped the sector even if supply remains readily available.
"Post-2022, we are in a bit more of a de-globalised economy: less rules-based, more tariffs, more trade sanctions. And so as sovereign nations, these countries have to think about supply in a different way than they did before. And when you have to think about supply that is accessible, no matter the circumstances, it starts to fragment supply across the world."
The end result is a potentially unprecedented commodities boom where demand and supply both drive the opportunity.
"This kind of pseudo scarcity combined with the demand coming from the AI side is creating the environment for this super cycle."
Because of the structural changes to supply and demand, Lin says the investment profile of commodities has changed.
"For 10 to 15 years, commodities have been very boring," he says. "They were sitting exclusively in the sleeve of your portfolio where it's inflation hedging or perhaps if you're a bit more tactical, you were trying to take advantage of economic cycles in emerging markets."
"What we're seeing now, because of a lot of demand coming from more long-duration themes such as AI, EVs, clean energy - and as those demand streams can really last for quite long periods of time - they're entering that growth thematic sleeve of the portfolio in a way that they haven't done so, at least for the past 10 years."
"Investors are thinking about commodities in a different way. They're thinking about it as something that can actually drive a lot of capital appreciation and I think that is the right way to think about it."
The big mistake to avoid
Previous commodities cycles have seen many investors fall into familiar traps, and those traps have often crippled potential returns. But there is one mistake that Lin says can have the biggest impact.
"The most egregious is definitely the tendency to latch onto a single producer or a single equity name as your main exposure to a commodity," Lin says. "The biggest examples in Australia, at least in recent memory, were in the battery metals and lithium space."
"A lot of investors really latched onto names like Liontown and Pilbara [PLS Group], and they went through a very wild ride through 2021 and 2022 - some very high highs and then came back down to some very low lows."
Concentration pays off if you get it correct, but the nature of the sector makes that a challenging endeavour.
"There are definitely benefits sometimes in investing in single producers - you get that operating leverage and if the underlying commodity does very, very well, the equity will also do very well."
"But it also requires you to have a very keen understanding of the assets that they own, the financials, the management team. There's a lot that could go wrong."
Different ways to play
If commodities are now a growth sector, there's two ways investors should look to play it, says Lin.
Given how wide the commodities boom has been, one approach would be to take broad-based commodities price exposure, such as the Global X Bloomberg Commodity Complex ETF (ASX: BCOM) which tracks a basket of commodities futures, offering a high level of diversification and helping avoid the concentration risk problem.
"That way you're already diversified across all the different demand streams, all different supply dynamics," says Lin. "So you're not really worried about a single commodity going out of fashion or really being extremely volatile."
For investors wanting to plug into a single commodity or theme, Lin says it may be worth considering a targeted stock ETF, which offers diversified exposure to miners and producers in the sector.
He points to the Global X Copper Miners ETF (ASX: WIRE) and a real-world example of how it offered investors diversified downside protection. In 2025, the Kamoa-Kakula copper mine in the DRC was hit by an earthquake, which wiped out much of its future forecasted supply.
For investors in Ivanhoe Mines, the Canadian company that owns the mine, the news sent the share price plummeting 18%. For diversified copper investors, it was a much different story, says Lin.
"If you invested in the wire ETF, it was actually up 15% over the next month because investors had accounted for the fact that supply has actually meaningfully reduced across the global supply chain and therefore as supply goes down and demand stays stable, the price of copper has to go up."
"You had benefited from an idiosyncratic event that would've otherwise been negative. That is another way where ETFs are really built for this commodity exposure, and I think a lot of investors are unaware of that."
It's a clear case study of the potential advantages ETFs can offer in what is a challenging and idiosyncratic sector, he says.
"The benefits come from diversification, away from idiosyncratic risks and also away from very, very volatile price action. If you're investing to really hedge out inflation, you're concerned about the economic cycles, investing in a broad-based commodity ETF can really help with that in terms of your portfolio allocation.
The key opportunities
While this commodities boom is notable for its breadth, Lin says there's three specific opportunities he's watching closely.
1. Gold
"Gold is one of the strongest opportunities within the commodity space by far." says Lin. "Why do I say that? When I think about gold, I think about it from the perspective of who are the buyers and who are the sellers."
There have been three major participants in the gold trade over the last five years, says Lin - Asian ETF buyers, central banks and western ETF buyers and each had reason to move out of gold in 2026.
"Asian ETF investors were shocked by the volatility so they pulled back. Central banks were concerned about the energy crisis, so they wanted to keep liquidity on hand in case they need to buy energy from the global markets if there's not enough to go around at home. And Western ETF investors were really concerned about the inflation story, which is in and of itself an interest rate story."
It's only in recent months that they have had reason to come back, he says, and that has tipped the supply demand balance once again.
"Now with the currency debasement trade making a comeback, you have the central banks buying and gold ETF investors reentering the market. And when you have essentially no real marginal sellers to speak of, that is when you can have very, very significant surges in price and strong rallies in terms of commodity movements."
"Depending on how the macro continues to develop in terms of inflation and interest rates, I think gold could really be one of the main beneficiaries and winners of this year."
2. Copper
"Copper is one of those commodities that has a very obvious headline story in terms of electrification, grid infrastructure and low supply, says Lin. "But the more interesting part to me is what is going on in the background that is causing those prices to stay high and potentially could trigger a further rally."
There are a few key factors that have contributed to an extreme tightening in global copper supply. Since 2022, global visible copper inventory in the US has risen from single digits to more than 50% thanks to a combination of tariff fears and the deglobalisation and national resilience trends we've seen.
"We've seen one of the biggest generational migration of copper from the global markets into the US physically, perhaps ever," says Lin.
"Most of the copper is used by non-US industrialists, so the ex-US supply is very, very thin. That makes us very sensitive to any supply disruptions or any demand upside. And what has happened this year is that Chinese demand has been surprisingly strong and overall the mine production has been quite weak."
"Multiple major mines have run into disruptions," says Lin. "So overall, that's why we're seeing copper prices hover and hit near all time highs. And if tariffs are enforced this year and if they're enforced in a way that is constructive to continuous importing in the US, then we can really see those copper prices continue to head higher."
3. Battery metals
The final opportunity is one Lin describes as the most under-the-radar play in commodities.
Battery metals like lithium, nickel, manganese and cobalt have become "extremely critical to multiple technologies", says Lin, with three key demand tailwinds - clean energy, EV adoption and AI data centres - driving the opportunity.
The increasing need for national energy security in the light of the Russia-Ukraine and Iran wars has made battery technology something of a necessity.
"If you're a country that doesn't have natural resources in your backyard, the rational decision is to invest in clean energy," says Lin. "And the one thing that we know about solar and about wind is that they're variable and energy storage systems must be built to account for that variability."
Recent conflicts have also proved to be a tailwind for EV adoption, as consumers now have to weigh up the legitimate risk of higher oil prices at a time when EV prices have also become extremely competitive.
"When you are purchasing your next vehicle, it has become a decision that is less about pure economics or a personal choice and more about hedging risk," says Lin.
And the final driver for battery metals is the AI hyperscaler data centre rollout, says Lin.
"Grid infrastructure is expanding at a much slower pace than the energy demands of AI data centres, especially in the US," he says. "It's gotten to the point where if you want to develop an AI data centre in the US, it now takes up to seven years to connect to the US grid."
"That is completely untenable for something like for a company like Microsoft or Google or Meta, they're not waiting seven years to build out an AI data centre. So instead what they're doing now is they're building their own power plants, whether that be gas, lead or solar or nuclear and supplementing that with a huge energy storage system."
And the battery metals thematic is a perfect encapsulation of what marks out this new commodities boom as one of huge opportunity. What's important for investors is not wasting it, says Lin.
"Don't latch on to any single producer or get caught up on one name. Think about how ETFs can provide a bit more of that diversification, a bit more of that risk-adjusted return."
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Tom is a Senior Investment Writer and Presenter at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance.
He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to football.
He has a Masters in Media Production and a Bachelor's in Journalism.
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Tom is a Senior Investment Writer and Presenter at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering...
Expertise
Tom is a Senior Investment Writer and Presenter at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering...
Expertise
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