Commodity Supercycle 2.0? Why the Nov 2025 Rally Is Different From 2007-2008
The commodity complex is stirring. Gold hit $4,218 this month. Silver just hit all-time highs. Copper is rallying on AI infrastructure demand. Oil is flat-lining. Agricultural commodities are barely moving.
This looks superficially like the early stages of another supercycle boom. It isn’t. Here’s the technical and fundamental case for why commodities will deliver 15-20% gains over the next 9 months, not 200%, before a healthy correction hits in late summer 2026.
The 2007-2008 Supercycle: What Actually Happened
Between 2006 and mid-2008, commodities delivered unprecedented returns. Crude oil rallied from $92 to over $200 per barrel. Wheat prices doubled in six months. Copper tripled. Gold rose steadily. Then came the financial crisis, and everything collapsed 50-75% in 2008-2009.
But the boom wasn’t random. Five forces aligned:
1. Demand explosion. China and India combined GDP growth of 9-10% per year. That’s not steady growth that’s acceleration. Manufacturing surged. Consumption surged. Infrastructure buildout was frantic. The global supply chain couldn’t keep up.
2. Supply shocks. Harvests failed across grain-producing regions in 2006-2007. Global cereal inventories hit 20-year lows. There was genuine scarcity. Wheat prices moved on supply fear, not speculation alone.
3. The oil spiral. Crude oil rising from $92 to $200 created a multiplier effect. Higher oil → higher fertilizer costs (Haber-Bosch process requires natural gas) → higher agricultural input costs → higher food prices. Higher oil also raised transportation costs across the economy. This wasn’t a bubble, it was a cost-push cycle.
4. Biofuels mandate shock. The U.S. Renewable Fuel Standard and EU directives suddenly mandated massive ethanol and biodiesel production. In 2007-2008, roughly 15% of U.S. corn went to biofuels instead of food. A World Bank post-mortem calculated that biofuels accounted for 70-75% of the food price inflation spike. This was a policy shock, not market-driven.
5. Speculative leverage. Hedge funds and commodity index funds were piling into the trade. The dollar was weakening, making dollar-priced commodities cheaper for foreign buyers. Leverage was excessive, margin requirements were low, and margin was easy to get. When credit seized in 2008, forced liquidations were brutal.
The result: commodities crashed 50-75% in 2008-2009. It wasn’t orderly. It was a margin call waterfall.
November 2025: Why It’s Different
Today, let’s run through the same checklist:
1. Demand is moderate, not explosive.
Global GDP growth is projected at 3.2% for 2026. That’s steady, not accelerating. China’s growth is decelerating - manufacturing PMI is below 50, exports are weak, and the real estate collapse is ongoing. India is growing at 6.7-6.9%, which is good, but nothing like the 9-10% of 2007.
This matters because commodities respond to acceleration, not absolute growth. Demand needs to be rising faster than expected to drive prices. Right now, the forecast is for deceleration into 2026. That’s bearish for commodities.
2. Supplies are adequate globally.
There are no widespread harvest failures. Global grain inventories are ample, not at 20-year highs, but not at lows. Weather patterns in 2024-2025 have been generally favorable for crops. The USDA projects large U.S. harvests for 2025-2026.
Without supply shocks, commodities need demand shocks to rally. The demand shock in 2007 was real and verified. The demand forecast for 2025-2026 is for slowdown.
3. Oil is stuck, not soaring.
Crude oil at $57-58 per barrel is down 18.7% year-over-year. It’s trading in a range, not trending. Why? Several factors:
Electric vehicle adoption is real. Global EV sales are 14% of total car sales and rising. This is structural demand destruction for oil.
Geopolitical tensions (Yemen Houthi attacks, Red Sea shipping disruptions) create tactical risk premiums, not sustained rallies.
OPEC+ is cutting production, but those cuts are not driving prices higher, they’re just preventing further declines.
Recessions fears are rising (more on this below), which typically pressure oil.
In 2007, oil soared because China was building everything and driving everywhere. In 2025, China is already built. The incremental demand is not there.
4. Biofuels are not a policy shock.
Biofuel mandates have been in place for 15+ years. They’re not new. The renewable energy transition has actually shifted policy away from combustion-based biofuels toward electrification. If anything, biofuel policy is getting less aggressive, not more.
This removes the policy shock that amplified food price inflation in 2007-2008.
5. Financial leverage is measured.
Yes, central banks have eased rates in 2024-2025. Yes, there’s some speculative activity in AI stocks and crypto. But leverage is not excessive like 2007. Bank capital ratios are far higher post-Dodd-Frank. Margin requirements are more stringent. Leverage-tracking indices show elevated but not extreme levels.
When the correction comes, it won’t trigger a margin call waterfall like 2008. It will be a normal profit-taking event.
What the Data Actually Shows (November 2025)
Real commodity data from late November:
RBA Commodity Index: Rose 1.4% in November. Energy fell 0.4%. Food rose 2.4%. This is bifurcation, not boom. In 2007, all commodities moved together, each up 5-10% monthly regularly.
Gold: +5.6% month-over-month. Strong, but driven by Fed dovishness and geopolitical hedging, not demand growth. This is a defensive move, not a risk-on rally.
Silver: +17.2% month-over-month, hitting all-time highs. But silver is correlated with industrial demand (copper, etc.) and also with precious metal hedging. This divergence, silver up huge while oil is flat, signals confused positioning, not conviction.
Copper: +1.9% month-over-month. This is the tell. Copper is the demand barometer. If real economic growth was surging, copper would be leading. Instead, it’s plodding. The reason: clean energy and AI infrastructure buildout is real, but it’s not broad-based growth. It’s sectoral. Copper gains +1.9% because of specific AI data center construction, not because of China booming like 2007.
Oil: -1.45% month-over-month despite November seasonality (heating demand). The dollar fell 10.7% in H1 2025, which should have supported oil. Oil didn’t respond. This is weak demand coupled with adequate supply.
Wheat: -2.29% month-over-month, -6.23% year-over-year. In 2007, wheat would be soaring. Instead, it’s under pressure. Adequate supplies globally. No scarcity premium.
The dollar: Down 10.7% in H1 2025. This supports commodities theoretically (dollar-priced commodities become cheaper in foreign currency terms). Yet commodities aren’t rallying broadly. This tells you that currency support is being offset by weak demand fundamentals.
The Forecast: November 2025 - August 2026 (9 Months)
Given the above, here’s what a realistic commodity cycle looks like:
November - December 2025: Precious metals rally, oil flat
Gold +3-5%, silver +5-8% (monetary dovishness + geopolitical hedging). Copper +2-4% (selective AI infrastructure demand). Oil stays range-bound between $55-62. Agricultural commodities +2-3%. Bitcoin and crypto enter bullish phase on year-end momentum and low rates.
January - March 2026: Post-holiday bounce, modest oil strength
Gold +2-4%, silver +3-5%. Copper +3-6% (AI buildout continues). Oil +5-10% (winter heating demand, geopolitical tensions). Agricultural commodities show mixed signals (+0.5% to -1%) as spring planting season approaches. The economic data becomes clearer: growth is slowing, not accelerating.
April - June 2026: Peak euphoria window (The Critical Month)
This is when markets get ahead of fundamentals. Copper +5-8% (peak demand from AI data center construction, EV supply chain ramp). Oil +10-15% (summer driving season, no new supply coming online). Gold +1-3% (starting to struggle as interest rates rise). Silver +2-4%. Agricultural commodities -1-0% (adequate supply still evident).
Why the peak? Two reasons. First, it’s seasonal - summer air conditioning and driving demand always creates price strength. Second, it’s the moment when markets extrapolate current conditions forward forever. “If AI demand is this strong in Q2, it will continue forever.” That thinking is always wrong.
July - August 2026: The Reset
Two catalysts converge:
First, economic data turns decisively. Q2 GDP growth reports (delayed until late July/August) show deceleration. Fed meetings signal no more rate cuts. Bond yields rise. Equity markets begin repricing.
Second, the narrative breaks. AI profit margins don’t expand as much as expected. Capex spending slows. Data center buildout moderates. The “everyone must invest in AI infrastructure” story starts to crack.
Oil crashes -15-25% from peak. Copper falls -3-8% as capex slowdown hits. Gold corrects -5-10% as rates rise. Silver crashes -8-12% (more industrial exposure). Agricultural commodities fall -5-10%. Bitcoin and crypto face -30-50% drawdowns as leverage unwinds and regulatory pressure intensifies.
The 9-Month Net Returns
Copper: +5-12% (Structural clean energy demand survives correction; this is the winning trade)
Gold: -2-5% (Strong through June, weak in July-August)
Silver: -5-10% (Hits hardest due to industrial exposure)
Oil: -5-10% (Strong in Apr-Jun, severe correction in Jul-Aug)
Agricultural commodities: -5-10% (Weak throughout)
Crypto (Bitcoin only): +30-50% net (Extreme gains, then extreme losses, but starts from oversold)
This is not a 2007-style +200% boom followed by a -75% crash. This is a +15-20% rally followed by a -10-15% correction. The net result: slightly positive for some commodities, slightly negative for others, with significant dispersion between winners (copper) and losers (oil, agriculture).
Why It Won’t Be 2008
In 2008, the crash was triggered by a systemic financial crisis. Credit markets froze. Banks couldn’t lend. Forced liquidations cascaded through markets. Leverage imploded. The system nearly broke.
In 2026, the trigger will be much more benign: growth disappoints, valuations compress, leverage unwinds in an orderly way. Banks are well-capitalized. Credit markets are functioning. There’s no hidden time bomb.
The 2026 correction will feel normal. It will be healthy. Commodities will fall 10-15%, equities will fall 10-20%, credit spreads will widen 100-150 bps, and then things will stabilize.
Compare that to 2008, when commodities fell 75%, equities fell 57%, credit spreads widened 1000+ bps, and the system nearly broke.
Your Trading Plan: 9 Months
Tactical Allocation:
40% Copper (via ETFs or futures): Hold through June, exit by July. This is the winning trade. Clean energy demand is real and structural.
30% Gold: Hold throughout as a hedge. Sell on strength in June. This is insurance, not a profit center.
20% Oil shorts: Establish positions in late May/early June when oil is strong and complacency is high. Close out by August. The July crash will be profitable.
10% Bitcoin (if you have risk appetite): Rally likely through June. Exit by end of June. Don’t hold through the summer correction.
Monthly Checklist:
Nov-Dec: Accumulate copper on any weakness. Add to gold positions.
Jan-Mar: Monitor copper uptrend. Watch for oil to break $70 resistance.
Apr-May: Watch for peak euphoria signals (daily/weekly breadth extremes, option positioning). Start reducing copper positions.
June: Take 50%+ profits on copper and precious metals. Establish oil short positions. Take all crypto profits.
July-Aug: Close remaining longs. Profit on oil shorts. Go to cash or rotate into defensive equities.
The Key Risk: Early Recession
If a recession hits earlier than expected (Q1-Q2 2026), this entire cycle compresses. Oil falls to $35-40. Copper underperforms. Agricultural commodities crater. Gold becomes the only winning trade. The 9-month net for most commodities becomes -10% to -20% instead of -5% to +12%.
Monitor these indicators closely:
U.S. Leading Economic Index (LEI): Currently declining. If it falls more than 3 months consecutively, recession probability rises to 40%+.
Yield curve: If it steepens significantly (10Y-2Y spread above 100 bps), growth may be stronger than expected. If it inverts again, recession is likely.
Copper-gold ratio: If copper significantly underperforms gold, growth expectations are rolling over. That’s a red flag for early recession.
High-yield credit spreads: If they widen above 450 bps, liquidity is tightening and recession risk is rising.
Watch these monthly. Adjust your plan accordingly.
The Bottom Line
Commodities will likely rally 15-20% from November 2025 through June 2026, with copper as the star performer (+5-12% net over 9 months). Then a healthy correction in July-August will erase most of those gains for oil and agriculture, while copper holds better due to structural demand.
This is not a supercycle like 2007-2008. This is a cyclical rally within a secular bear market for commodities.
The trade is simple: Ride copper through June. Hedge with gold. Avoid oil leverage. Exit by August.
Are you positioned for this cycle, or do you see the data differently? What’s your base case for commodities in 2026? Drop your thoughts below - I read every response.