Commodities Will Kill Us All

A Real-Time Reading of the Structural Commodity Crisis Nobody Wants to Name

“The Stone Age did not end for lack of stones, and the Oil Age will not end for lack of oil.” — Sheikh Ahmed Zaki Yamani, former Saudi Oil Minister.

He was right. But what he didn’t say is that the age in between, the one we’re living in, might end for lack of everything else.

This is not a commodity bull thesis dressed in fear. It’s a structural reading of what happens when the physical layer of the global economy fractures simultaneously across metals, energy, agriculture, and rare earths, while the countries that depend on these inputs the most have spent three decades outsourcing their capacity to extract, refine, and secure them.

The thesis is simple and uncomfortable: the world has built a $100 trillion economy on commodity supply chains it does not control, cannot quickly replace, and is now actively breaking through tariffs, sanctions, and geopolitical brinkmanship. The bill for this negligence is coming due. And unlike a financial crisis, you cannot print copper.

I. The Setup Nobody Wants to See

Let me start with what’s happening right now.

Copper hit $13,524 per metric tonne in January 2026, a record. It has since pulled back slightly but remains in a range that would have been considered unthinkable two years ago. Aluminum surged past $3,100 per metric tonne in March. Gold is trading above $4,600 per ounce, not as a speculative play, but because 43% of the world’s central banks are simultaneously increasing their reserves. 95% of central banks surveyed by the World Gold Council expect global gold reserves to increase over the next twelve months. That is the highest level of institutional consensus in the survey’s eight-year history.

These are not signals from the margins but from the center.

On the agricultural side, the FAO Food Price Index rose for the second consecutive month in March 2026, driven by higher energy costs linked to the conflict escalation in the Near East. Coffee prices peaked at 370 US cents per pound in Q4 2025, up over 30% from already record levels. Cocoa hit $9,627 per tonne in mid-2025 before settling around $6,000, still multiples above pre-2024 prices. U.S. food prices in February 2026 were 3.1% higher than a year ago, with beef hitting record levels and nonalcoholic beverages running 5.6% above the prior year, largely due to the coffee situation.

And then there’s what Trump just did.

On April 3, 2026, the administration signed a proclamation adjusting Section 232 tariffs on steel, aluminum, and copper. Effective April 6, goods made almost entirely of these metals face a 50% tariff. Derivative articles face 25%.

This is on top of the existing tariff architecture that the Tax Foundation estimates amounts to the largest U.S. tax increase as a percentage of GDP since 1993, an average of $1,500 per U.S. household in 2026.

So, let me get this straight. The world’s largest economy is simultaneously facing structural supply deficits in critical metals, record commodity input costs, a fragmented global supply chain… and it just put a 50% tax on the metals it needs most.

I mean, shit happens, but at some point we need to acknowledge this isn’t just random bad luck. This is a system expressing its contradictions.

II. The Copper Problem: Or, How AI Will Eat Itself

Every data center requires massive quantities of copper for power distribution, wiring, cooling systems, and transformers. Every electric vehicle uses three to four times more copper than a combustion engine car. Every solar farm, every wind turbine, every grid upgrade, copper.

S&P Global published a landmark study in January 2026 titled Copper in the Age of AI, and the conclusion is stark: demand is projected to reach 42 million metric tonnes by 2040, a 50% increase from current levels. Global production is expected to peak in 2030 at 33 million tonnes. The resulting supply deficit: 10 million metric tonnes by 2040, or 25% below projected demand.

Daniel Yergin, vice chairman of S&P Global, put it plainly: economic demand, grid expansion, renewable generation, AI computation, digital industries, electric vehicles, and defense are all scaling at once, and supply is not on track to keep pace.

Let that sink in. The commodity that physically connects every sector of the modern economy, from the data center running your AI model to the power grid feeding your house, is entering a structural deficit. Not a cyclical one. A structural one.

And it gets worse on the supply side.

Chile, the world’s top copper producer at 25% of global supply, saw output decline for each of the last five months of 2025. Indonesia’s Grasberg mine, the second largest in the world, suffered a mud intrusion that has temporarily shut it down. The DRC’s Kamoa-Kakula mine was flooded by an earthquake. Anglo American cut its 2026 copper production forecast to 700,000–760,000 tonnes, down from a previous range of 760,000–820,000 tonnes. Wood Mackenzie forecasts a 304,000-tonne refined copper deficit in 2025, widening in 2026.

Opening a new copper mine in the United States takes an average of 29 years. Not a typo. Twenty-nine years.

And here is the second-order punchline that should keep you up at night: the companies building the AI data centers that are supposed to save the economy are now outbidding grid suppliers for transformers and electrical components. Hyperscalers with unlimited balance sheets are cannibalizing the infrastructure that ordinary industry needs to function. There is a two-to-five-year backlog on transformers, which are hand-wound in a process that cannot be automated.

The AI revolution, in its current form, is consuming the physical inputs required for the rest of the economy to function. This is not a problem that software can solve. You cannot train a large language model to produce copper.

Here is the irony that future historians will marvel at: the most capital-rich companies in history, the ones sitting on hundreds of billions of dollars in cash, are building an industry that depends on a resource whose supply expansion requires decades, not quarters. And instead of investing in mining, they are competing with each other for the last available transformers, driving up electricity costs for ordinary consumers, and complaining to governments about permitting timelines.

Bloomberg reported that global miners have “shot to the top of fund managers’ must-have lists” as soaring metals demand and tight supplies make them strategically essential. The investment world is beginning to wake up to the fact that the physical layer matters. But “beginning to wake up” and “adequately positioned” are two very different things.

The copper story alone is a systemic risk. But copper is not alone.

III. Rare Earths: The Weaponization of Geology

If copper is the nervous system of the modern economy, rare earth elements are its brain chemistry. Neodymium, dysprosium, terbium, scandium, yttrium, these names sound obscure until you realize they are inside every electric vehicle motor, every wind turbine, every precision-guided missile, every MRI machine, and every smartphone.

China controls roughly 70% of global rare earth mining, 90% of processing, and 94% of sintered permanent magnet production. That last figure is worth repeating. Ninety-four percent. Of the component that makes the most powerful motors work, the ones in your EV, your wind turbine, your F-35 fighter jet, China makes 94%.

• In April 2025, Beijing imposed export licensing requirements on seven rare earth elements in direct retaliation against U.S. tariffs. The result was immediate: European rare earth prices rose to up to six times their pre-restriction levels, according to the IEA. Some European carmakers were forced to cut utilization rates or temporarily shut down factories because they could not get permanent magnets.

• In October 2025, China escalated further, extending controls to additional elements and, for the first time, applying extraterritorial reach, requiring foreign companies to obtain Chinese licenses to export products containing Chinese-sourced rare earth materials, even if manufactured outside China.

The suspension of these measures in November 2025 for one year, until November 10, 2026, was widely reported as a diplomatic thaw. It is not. It is a countdown. The architectural framework for comprehensive denial of rare earth supply to Western defense and industrial sectors is built, tested, and ready to be reactivated at Beijing’s discretion.

The European Central Bank assessed that over 80% of large European firms are no more than three intermediaries away from a Chinese rare earth producer. Read that again. Eighty percent of Europe’s industrial base is three handshakes from a supply chain that one government can shut off with a signature.

Europe’s Response

And what is Europe’s response? The EU Critical Raw Materials Act sets non-binding targets: 10% domestic extraction, 40% processing capacity, and 15% recycling by 2030. As of today, the EU imports 98% of its processed rare earth oxides and over 90% of its battery-grade graphite. The RESourceEU Action Plan aims to mobilize up to €3 billion by 2029, a figure that the Jacques Delors Centre has described as falling “far short of what is required.” For reference, the United States has committed $100 billion to its critical minerals strategy.

The EU’s largest operational response to date? An €800 million demonstration plant in Sweden, scheduled for 2026 operational status, that will reach full capacity in the 2030s. One plant. For a continent of 450 million people trying to rearm, electrify, and digitize simultaneously.

I’m not making fun of Europe. I’m pointing out that the gap between the scale of the problem and the scale of the response is not a gap. It is a chasm. And chasms, in geopolitics as in geology, tend to swallow things.

The United States is not immune either. There is currently zero heavy rare earth separation happening in the United States. None. The only operational heavy rare earth supply chain outside China is in Malaysia. The U.S. Defense Department has acknowledged that China’s munitions production and weapons system acquisition is proceeding at a pace five to six times faster than America’s, and a significant reason for that gap is raw material access.

The F-35 fighter jet requires approximately 920 pounds of rare earth materials. The DDG-51 destroyer requires approximately 5,200 pounds. Every Tomahawk cruise missile, every Patriot system, every satellite guidance unit, all depend on permanent magnets made from neodymium and dysprosium. And ninety-four percent of those magnets come from one country that has explicitly prohibited their export for military end-use by foreign nations.

This is a sovereignty risk disguised as a procurement problem.

The responses are accelerating, but the timelines are brutal. Australia is developing the Browns Range deposit, which would produce 279,000 kg of dysprosium annually, but it remains years from commercial production. The U.S. and Australia signed a $1 billion framework agreement in October 2025. Japan has been working with Vietnam on rare earth extraction since 2012. These are all serious efforts. They are also all inadequate relative to the scale and urgency of the problem.

Here’s what you need to understand about the rare earth situation: the suspension of China’s export controls expires in November 2026. That is seven months from now. If geopolitical conditions deteriorate, another tariff escalation, a Taiwan incident, any number of flashpoints, Beijing has the demonstrated capability and the legal framework to restrict or deny supply to any country, any company, for any end-use it designates. And when that happens, there is no alternative supply chain ready to absorb the shock.

leverage

The word for this, in strategic terms, is leverage. The kind of leverage that makes military alliances, trade agreements, and diplomatic postures functionally subordinate to who controls the rocks in the ground.

IV. The Agricultural Layer: Where the Pain Gets Personal

Metals and rare earths affect manufacturers, defense contractors, and tech companies. Agricultural commodities affect everyone. And the signal from that front is less dramatic but more pervasive.

U.S. food prices are up 3.1% year on year as of February 2026. That’s the headline. The decomposition is worse. Beef hit record highs in 2025 and shows no sign of reversing, the U.S. cattle herd continues to decline. Coffee has experienced double-digit inflation driven by adverse weather in growing regions and tariff-related supply disruptions. Eggs remain volatile due to recurring avian influenza outbreaks. The USDA’s Prices Paid Index for farm inputs was up 8.1% year on year in February 2026, driven by feeder cattle, diesel, and feed costs.

The FAO’s March 2026 report flagged something that should get more attention: the latest food price increases are being driven not just by weather and supply, but by “higher energy prices linked to the conflict escalation in the Near East.”

This is the feedback loop at work. Geopolitical conflict raises energy costs. Energy costs raise fertilizer prices, fertilizers already surged 18% in 2025. Fertilizer costs raise food prices. Food prices compress consumer purchasing power. Compressed purchasing power reduces demand across the economy. Reduced demand destroys jobs. Destroyed jobs further reduce purchasing power.

You know what this loop is called?

It’s called the thing that central banks cannot fix by adjusting interest rates.

Rabobank’s 2026 agrifood outlook warned that the mitigating factors from early policy responses, frontloading of exports, targeted subsidies, emergency reserves, “will fade and the negative effect of tariffs and uncertainty are likely to surface in 2026.” Fertilizer prices jumped 18% in 2025, driven by strong demand, trade restrictions, and production shortfalls. Natural gas is a primary input for nitrogen fertilizer production. When gas prices rise, fertilizer prices follow. When fertilizer prices rise, the cost of growing food rises. When the cost of growing food rises, either food prices increase or farmers produce less. Usually both.

And then there’s the weather variable, which is not a variable anymore, it’s a trend. The incidence of severe weather events affecting agricultural regions has been rising for at least two decades. Coffee production was hammered by drought in Brazil and Vietnam. Cocoa yields collapsed due to disease and heat in West Africa. The current La Niña pattern threatens hotter, drier conditions in Argentina, southern Brazil, and the U.S. Gulf Coast, all major crop producing regions.

The consumer feels this before anyone else. U.S. farm-level cattle prices were up 20% year on year in February 2026. Ground beef hit record highs. Egg prices remain volatile. Dairy is getting squeezed by higher fuel and feed costs.

The American consumer, already carrying over $18.8 trillion in household debt with credit card rates averaging 21-22%, is being hit on the one expenditure they cannot eliminate.

This is the grocery bill.

The grocery bill is the most politically explosive economic indicator there is, because everyone experiences it, every week, in cash.

V. The Energy Paradox: Lower Prices, Higher Risk

Here’s where the conventional analyst gets confused.

Oil prices are trending lower. Brent crude is projected to average $60 per barrel in 2026, down from $68 in 2025. OPEC+ is gradually increasing production targets. Non-OPEC supply is growing three times faster than demand. The energy outlook, on paper, looks bearish.

And that is precisely the problem.

Low oil prices destroy investment in new production capacity. Projects get delayed, deferred, mothballed. This is the pattern that produced every energy shock of the last fifty years: a period of low prices, followed by underinvestment, followed by demand recovery, followed by a supply crunch that nobody anticipated because everyone was looking at the previous year’s price instead of the next decade’s capacity.

Meanwhile, U.S. natural gas prices are projected to rise 11% in 2026, supported by rising LNG export demand, driven in part by the insatiable energy requirements of AI data centers.

Power prices surged in 2025, and the cost to the U.S. consumer has been rising as data center electricity demand reshapes utility bills. Europe’s energy position remains structurally fragile: dependent on LNG imports to replace Russian pipeline gas, vulnerable to Middle Eastern shipping disruptions, and facing its own internal contradictions between green transition ambitions and security of supply realities.

And here is the kicker that nobody discusses publicly: the Middle East war. As of this writing, the conflict in the region has directly contributed to rising food prices (per the FAO), energy price volatility, and disruption to smelting operations in the UAE and Bahrain that contributed to the aluminum price surge.

A further escalation, particularly involving the Strait of Hormuz, would create an oil and gas shock that makes everything described in this article dramatically worse.

The energy market is not a separate story from the commodity crisis. It is the transmission mechanism that connects every other supply chain disruption to the consumer. Lower oil prices today do not mean safety.

They mean that the system is reducing its immune response at precisely the moment when it needs it most.

VI. The Second Order, What Nobody Is Pricing

Here’s where I think the market is fundamentally wrong.

The consensus view is that commodity price pressures are cyclical, manageable, and already partially priced in. Markets see copper at $11,000+ and think “it’s already expensive.” They see rare earth export controls suspended and think “crisis averted.” They see food price inflation at 3% and think “normal.”

The second-order view is different. It sees the following:

Structural deficits, not cyclical ones. The copper deficit is not a supply hiccup. It’s a geological and regulatory reality: declining ore grades, 29-year permitting timelines, and demand vectors (AI, EVs, defense, grids) all scaling simultaneously. The IEA projects existing and planned mines will meet only 70% of 2035 copper demand. You cannot solve this with monetary policy.

Weaponized interdependence, not trade friction. China’s rare earth export controls are not tariff negotiation tools. They are a structural feature of Beijing’s industrial policy. The one-year suspension is not a retreat, it is a demonstration of capability. When that suspension expires in November 2026, the world will be in the same position, except seven months older and no closer to alternative supply.

Cascading fragility, not isolated risks. The copper shortage affects data centers. Data center demand raises electricity prices. Electricity prices raise fertilizer costs. Fertilizer costs raise food prices.

Food prices compress consumer spending.

Compressed spending reduces industrial demand. Reduced demand hits the very mining companies needed to produce more copper. Each of these nodes is individually manageable. Together, they form a system that is self-reinforcing in the wrong direction.

Fiscal exhaustion, not policy headroom.

The traditional response to a commodity supply shock is government intervention: subsidies, strategic reserves, emergency procurement. But the Western democracies that would need to intervene are running structural deficits, carrying record debt loads, and facing populations already exhausted by post-2020 inflation.

The EU’s €3 billion commitment to critical minerals over four years is a rounding error against the $210 billion Wood Mackenzie estimates is needed for copper mining alone by 2035. You cannot fund a commodity security strategy with the fiscal margins of a state that spends more on debt interest than on defense.

The emerging world is not waiting. While Europe debates non-binding targets and the U.S. slaps tariffs on the metals it imports, central banks in Poland, China, Brazil, Kazakhstan, and Uzbekistan are buying gold at an accelerating pace. India is accumulating physical commodities. African nations are beginning to exercise greater bargaining power over their mineral resources. The commodity map of the world is being redrawn, and the countries that assumed cheap, abundant, frictionless access to physical inputs are discovering that assumption was a luxury of a geopolitical order that no longer exists.

The gold signal deserves a moment of its own. J.P. Morgan forecasts gold prices averaging $5,055 per ounce by Q4 2026, rising toward $5,400 by end of 2027. Central bank purchases are expected to total around 755 tonnes in 2026, lower than the 1,000+ tonne pace of recent years, but still far above the pre-2022 average of 400–500 tonnes. And here is what matters: central banks are buying gold above $4,000 per ounce not for short-term profit but for long-term stability. They are diversifying away from dollar-denominated assets.

They are building reserves against the exact scenario described in this article, a world where financial assets underperform physical ones, where the monetary system is under stress, and where the country that prints the reserve currency is simultaneously imposing tariffs that fragment the trading system that gave that currency its value.

When Poland’s central bank governor says he wants to increase gold reserves to 700 tonnes for “national security reasons,” that is a geopolitical positioning statement. When China extends gold storage facilities to foreign banks, an offer Cambodia has already accepted, that is not financial services innovation.

That is infrastructure for a parallel monetary system.

The commodity crisis is the restructuring of global power along lines determined by who controls physical resources, not who controls financial instruments.

VII. The Transmission Mechanism, How This Becomes a Crisis

The commodity fractures described above do not automatically produce a systemic crisis. They create the conditions in which a normal shock becomes catastrophic, because the system has no slack to absorb it.

The mechanism follows a logic of nested feedback loops, familiar to anyone who read The Economic Eclipse:

The Economic Eclipse: Anatomy of a Systemic Crisis in Formation

What makes the current moment historically unusual is that all four loops are operating simultaneously. And the instruments available to interrupt one loop either fail to reach the others or actively worsen them. Rate hikes worsen the fiscal loop. Fiscal spending worsens the inflation loop. Trade policy worsens the geopolitical loop. There is no elegant exit. There is only the question of which pressure point breaks first.

VIII. Who Benefits, Who Gets Crushed: A Non-Exhaustive Reading

Let me be clear about what I’m not saying. I’m not saying “buy commodities.” That is a trading thesis and this is not a trading newsletter this week.

What I am saying is that the companies and countries positioned along critical commodity supply chains, the ones who extract, refine, process, and transport the physical inputs of the modern economy, are moving from the periphery to the center of strategic importance. Companies like Air Liquide, Linde, and their peers in industrial gases and specialty chemicals are already seeing this: their products are essential to semiconductor manufacturing, hydrogen production, healthcare, and food processing.

They sit at the intersection of every supply chain discussed in this article.

The companies that get crushed are the ones with long supply chains, thin margins, and zero commodity hedging. Consumer goods manufacturers who import aluminum for packaging. Automakers who assumed permanent magnet supply was somebody else’s problem. European defense contractors who procurement systems have zero requirements for sourcing origin of raw material inputs.

And the broader macroeconomic picture is this: commodity supply shocks are inflationary. They are the kind of inflation that central banks cannot address without destroying demand. And in an economy already carrying record household debt, showing signs of labor market deterioration, and depending on consumer spending for 70% of GDP, demand destruction is a recession trigger.

IX. The Eclipse, Continued

In my previous piece, The Economic Eclipse, I documented the convergence of financial, technological, and geopolitical signals that were flashing simultaneously in February 2026. I described an eclipse as a rare alignment of forces that produces temporary darkness.

The commodity story is not separate from that eclipse. It is the physical layer underneath it. The financial signals I documented, stagflation, regional bank stress, sovereign debt refinancing risk, all sit on top of a physical economy that requires continuous, reliable, affordable access to metals, energy, and food. When that access is disrupted, every financial fracture widens.

The established consensus treats commodities as a background variable, an input cost to be managed, hedged, or passed along. That view made sense in a world of globalized supply chains, cooperative trading partners, and abundant geological reserves accessible at low cost.

That world is over.

What we are entering is a world where the physical layer reasserts itself. Where the countries that control actual resources have leverage over the countries that control financial assets. Where the companies that can secure supply chains outperform the ones that optimize for margins. Where the governments that invested in extraction and refining capacity decades ago are positioned for sovereignty, and the ones that didn’t are positioned for dependency.

“Commodities will kill us all” is, of course, an exaggeration. But the underlying reality is not.

The physical economy is constrained and the constraints are structural. The policy responses are inadequate and the market, as it always does, has not priced what it has not yet been forced to acknowledge.

Let me leave you with a historical parallel that I think is more instructive than 2008 or even 1973.

In the 1870s, the world went through a period now called the Long Depression, a quarter century of deflation, technological disruption, and geopolitical realignment. The industrialized nations of that era had built their economies on assumptions about resource access that proved fragile when tested. The scramble for Africa, the race for colonies, the Berlin Conference of 1884, these were, at their core, commodity plays. The great powers looked at a map and asked: who controls the rubber, the copper, the tin, the agricultural land? And then they acted on the answers with a ruthlessness that remade the world.

We are in a version of that moment, except the map is different. The critical resources are not in Africa alone, they are in China’s refineries, Chile’s copper mines, the DRC’s cobalt deposits, Indonesia’s nickel laterites, and Australia’s rare earth basins. And the scramble is happening through tariffs, export controls, strategic stockpiling, and bilateral mineral agreements rather than through colonial occupation.

But the fundamental dynamic is identical: when the physical inputs of economic power become scarce, contested, or weaponized, the financial abstractions built on top of them become unstable. Asset valuations that assumed frictionless supply chains must be re-rated. Business models that assumed low-cost inputs must be restructured. National strategies that assumed cooperative global markets must be revised.

This revision is happening now. It is happening faster than most institutions are acknowledging. And the window for preparation, as always, is closing before the consensus recognizes that it was ever open.

X. What This Means For You

I don’t know your portfolio.

I don’t know your risk tolerance.

I’m not going to tell you what to buy or sell.

But I will tell you what I think the second-order framework demands of anyone paying attention to this moment:

It’s Over.

First, understand that the era of cheap, abundant, globally accessible commodities is over. Not cyclically. Structurally. The combination of underinvestment, geological depletion, geopolitical fragmentation, and demand acceleration from AI, EVs, and defense spending has created a regime change in the physical economy. Pricing your assumptions on the previous regime is the most common and most expensive mistake in investing.

It’s Not Gambling.

Second, recognize that commodity exposure is no longer a “sector bet.” It is a macro position. Every company in every sector is affected by what happens to copper, rare earths, energy, and food prices. The companies that understand this and have secured their supply chains will outperform. The ones that don’t will discover their margins were always a function of commodity prices they assumed were somebody else’s problem.

Supply Chain Matter.

Third, watch November 2026. If China’s suspended rare earth export controls are reactivated, the impact on European and American defense and industrial supply chains will be immediate, measurable, and structurally significant. The market is not pricing this. The market rarely prices seven-month risks until they are seven-day risks.

Keep Eyes Open.

Fourth, pay attention to what central banks are doing, not what they are saying. They are buying gold. They are diversifying reserves. They are building physical commodity stockpiles. These are not speculative positions. These are strategic preparations for a world that looks fundamentally different from the one financial markets are currently pricing.

The signals are documented, the data is public and the trajectories are visible.

The question, as it always is, is whether you see them before the consensus does, or after.

It will be forced to acknowledge it.

Because it always is.

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Lucidity is not pessimism. It is the capacity to read probabilities as they are, neither darker nor brighter than the data justifies, and to act accordingly, while the window remains open.

— Emerald

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This analysis is not investment advice. It is a reading of documented signals through the lens of second-order thinking. The data cited is sourced from: S&P Global (Copper in the Age of AI, January 2026), the International Energy Agency (Global Critical Minerals Outlook 2025), the World Gold Council (Gold Demand Trends, Full Year 2025), the FAO (Food Price Index, March 2026), Wood Mackenzie, the European Court of Auditors (Special Report 04/2026), the USDA Economic Research Service (Food Price Outlook, March 2026), Bloomberg, CSIS, the Jacques Delors Centre, the IEA, the Tax Foundation, and public filings from Anglo American, OPEC+, and the European Commission.

Think for yourself.