Commodities have never been cheaper relative to the US! Wall Street is reaching a consensus: a "squeeze" on hard assets.

Commodity valuations relative to the U.S. stock market have fallen to their lowest level in over 50 years, and major Wall Street institutions are rapidly reaching a consensus on a common judgment: the scarcity of physical resources is simultaneously manifesting in multiple commodity categories, and a systemic "squeeze" on hard assets may have quietly begun.

From Barclays, UBS, and HSBC to JPMorgan Chase and Goldman Sachs, numerous top institutions have issued warnings that physical shortages of commodities are driving prices sharply higher. Last week, UBS strategist Sagar Khandelwal gave clients clear guidance, recommending "positioning for an upward cycle in commodities." Last Saturday, Christopher LaFemina, Global Head of Metals and Mining Research at Jefferies and a veteran commodities expert on Wall Street, further pointed out that commodities remain extremely undervalued relative to US stocks historically.

Meanwhile, prices for several key commodities have risen significantly: copper broke through $14,000 per ton in the London market, tungsten exceeded $3,000 per ton, uranium returned above $90 per pound, and agricultural product prices continued to surge. Senior commodities strategist Jeff Currie warned that "scarcity in the physical world" is now the most important theme to watch, and "the illusion of abundance may be a thing of the past."

Valuation Comparison: Lowest in 50 Years, Historical Turning Point Signals Emerging

In a report to clients, LaFemina compared the S&P GSCI (S&P Commodity Index) with the S&P 500, showing that the ratio is currently hovering near its lowest level in over fifty years.

This extreme low is not the first time it has occurred. Historically, similar valuation troughs have appeared during the "Nifty Fifty" bubble and the dot-com bubble, after which commodities significantly outperformed the stock market. Subsequent upward cycles have been corroborated by the oil embargo and inflationary shocks of the 1970s, the Gulf War, and the 2008 oil price surge.

The current downturn is characterized by highly concentrated holdings of hyperscaler and memory chip stocks by retail and institutional investors, as well as extreme enthusiasm for a few artificial intelligence concept stocks. LaFemina's implication is clear: once the AI craze cools down, funds may be reallocated to long-neglected physical assets.

Supply side: Multiple forces combined, a "perfect storm" is forming.

The rise in commodity prices is not driven by a single factor, but by the simultaneous resonance of multiple structural forces.

Accelerated electrification, surging demand from AI infrastructure construction, continued increases in global electricity consumption, geopolitical fragmentation—especially the control of exports of key minerals such as tungsten and germanium—and years of insufficient capital investment are creating a "perfect storm" of supply constraints in the energy, metals and other raw materials sectors.

Otavio Costa of Azuria Capital wrote on social media: "The dollar's decade-long rolling change remains one of the most important macroeconomic developments globally today." This statement suggests that the long-term weakening trend of the dollar will further support the rise of dollar-denominated commodities.

Institutional consensus: From scattered warnings to collective appeals

It is worth noting that the current bullish sentiment on commodities is no longer an isolated judgment by individual institutions, but is evolving into the mainstream narrative on Wall Street.

According to reports, Barclays warned that "the next commodity shock is taking shape"; HSBC issued a warning that "buffer reserves are rapidly depleting" and pointed out that the risk of a global food shock is brewing; UBS explicitly advised clients to position themselves for an upward cycle in commodities. Meanwhile, the global supply of key raw materials on which the AI industry chain depends—such as tungsten—has been described as "nearly exhausted."

However, despite the accumulating signals, most traders remain cautious about the commodity market, with their attention still focused on technology stocks. This discrepancy in perception may be precisely where the historic opportunity, as emphasized by LaFemina et al., lies—and why the market reaction may be particularly dramatic when potential risks are finally released.

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