Are commodities just one recession away from a "major bull market"?

In the past year, the rapid rise of copper, gold, silver, and other commodities has reignited the market's imagination for a "supercycle in commodities." But the question is: is this round of gains merely a structural market, or is it truly the prelude to a major commodity bull market?

In its latest asset allocation series report, Guolian Minsheng Securities systematically reviewed the conditions for the formation of commodity bull markets from a long-cycle perspective spanning more than 170 years since 1850. The conclusions given are not radical, and even somewhat restrained—the current commodity cycle has not yet "taken all the necessary steps."

Guolian Minsheng Securities points out that historically, true commodity bull markets often do not start in boom times, but are born from economic troughs and ultimately reach their pricing in periods of overheating or even recession.

A Century of Review: True Commodity Bull Markets Last an Average of 12 Years, But Their Starting Points Are Always "Cold"

Based on David Jacks’ actual commodity price index and the Christiano–Fitzgerald filter, Guolian Minsheng Securities decomposed commodity prices since 1850 into long cycles and identified five typical bullish commodity cycles.

These cycles have several highly consistent characteristics:

An average duration of about 11.8 yearsAfter removing inflation, actual commodity prices rose an average of about 79%; with inflation, nominal growth was about 125%The rise was not linear, but rather accompanied by repeated macro fluctuations

More crucially, the starting point of each major commodity cycle almost always coincided with a phase of “cleansing” after an economic trough or crisis:

1897: After long-term deflation and industrial adjustment1932: The bottom of the Great Depression1971: The collapse of the Bretton Woods system2002: Global recovery after the bursting of the Internet bubble2020: Global recession under the impact of the pandemic

Guolian Minsheng Securities emphasizes: The commodity bull market does not start at the “best” moment, but launches after the “worst.”

From this perspective, 2020 does indeed have the macro features of a “cycle starting point,” but the question is—has the cycle already entered a genuine expansion phase?

Distinct Structural Differentiation: The Current Rise Looks More Like a "Precious Metals Rally" Rather Than an All-around Resonance

Compared with the widely recognized commodity bull market from 2002–2011, the structural differences in this round are extremely apparent.

Guolian Minsheng Securities' statistics show:

In the last commodity bull market, over 60% of commodities rose simultaneously in most yearsIn the past three years, the breadth of commodity increases has been noticeably lackingGains in precious metals have far outpaced others, but energy, agricultural products, and some industrial metals remain mostly stagnant

By category, those with the most “cyclical attributes” historically have been:

Energy and industrial metals: Highly correlated with technological revolutions, infrastructure expansion, and geopolitical conflictsAgricultural products: Long-term trends lag behind inflation and only experience breakout periods during wars or extreme supply shocksPrecious metals: Only became true cyclical protagonists after decoupling from the gold standard and as monetary credit deepened

Guolian Minsheng Securities believes that the current commodity rise mostly reflects a rally in precious metals with strong financial attributes, rather than a full bull market driven by real demand.

This is the core of the market’s divergence: If there is no resonance from real demand, has the commodity market really entered a “major cycle”?

Three Major Long-term Variables: War, Technological Revolution, and Emerging Demand

To answer this question, Guolian Minsheng Securities starts with three structural factors that determine long-term commodity pricing.

1. War: Not all conflicts benefit commodities—key is whether “demand is destroyed”

The report clearly points out a commonly misunderstood fact: War does not necessarily drive commodity prices higher and may even suppress them.

Only two situations systematically benefit commodities:

World War-level events: Complete supply chain disruption + massive expansion of military demandConflicts that do not significantly damage demand in core economies

In contrast, prolonged civil wars or regional conflicts tend to drag down demand and suppress commodity prices. For example, in the early 1980s, the US-Soviet Cold War intensified, but both the US and Soviet economies weakened simultaneously, triggering a major bear market in commodities—a typical case.

2. Technological Revolution: Commodity Bull Markets Often Appear in Two “Window Periods”

Quoting Carlota Perez’s technological revolution framework, Guolian Minsheng Securities summarizes the relationship between commodity bull markets and technological cycles into two key phases:

Explosion/early enthusiasm phase: New technologies spur investment booms, driving rapid growth in infrastructure and resource demandTurning/collaborative phase after bubble bursts: After recession and cleansing, technological diffusion brings real demand

Historical data show that commodity price lows often coincide with the bursting of tech bubbles or economic recessions, after which a sustained growth path unfolds. Guolian Minsheng Securities judges that the current new tech revolution, represented by AI, is still in an early phase and has not yet experienced the full cleansing of a “turning point.”

3. Emerging Demand: Every Commodity Bull Market Has Its Own "New Buyer"

Whether it was 19th-century America, post-WWII Europe and Japan, or China in the 2000s, the rise of emerging demand is almost always an indispensable condition for a commodity bull market.

The current problem is that the world has not yet seen a “quantum leap in demand” like China’s accession to the WTO; AI’s impact on commodity demand remains more an object of long-term imagination, not an immediate, quantitative shock.

The Conclusion Is Restrained, But Also Clear: The Commodity Bull Market May Still Lack “A Test”

Based on historical reviews and current conditions, Guolian Minsheng Securities offers the following assessment:

The starting point for this commodity cycle very likely appeared in 2020The US dollar entering a medium- to long-term devaluation cycle is an important favorable conditionBut what’s currently lacking: an outbreak of concentrated geopolitical conflict, clearly unexpected emerging demand, and a real “validation” through economic recession

Guolian Minsheng Securities bluntly states: "An economic recession may be a crucial touchstone for testing the quality of this round of commodity price rises." In other words, without a cleansing recession, it's difficult for commodities to shift from a structural market to a full bull market.

Risk Warning and DisclaimerThe market involves risk, and investment should be handled with caution. This article does not constitute personal investment advice, nor does it take into account the particular investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific situation. Investing based on this article is at your own risk.