How the race for AI and energy security is squeezing global metal markets

For market veterans, the violent price action evoked memories of the Hunt Brothers’ infamous attempt to corner the silver market four decades ago. Yet, to dismiss the rally of 2025 as mere speculative mania would be a dangerous miscalculation. Unlike the financial engineering of 1980, today’s commodity squeeze is driven by a far more intractable force – a collision between the insatiable physical demands of the energy transition and a chronic, structural deficit in global supply.

The catalyst for the recent chaos was a perfect storm of thinning liquidity and industrial panic. By late 2025, speculation that the United States would levy new tariffs on critical minerals triggered a stampede. Traders rushed to move silver into Comex-linked warehouses in New York to capture premium prices, draining the available float in London. The squeeze became acute when industrial buyers, spooked by dwindling inventories which hit their lowest levels since 2015 in Shanghai, scrambled for physical metal. 

AI and the new demand curve

This industrial utility is precisely what separates current market dynamics from the Hunt Brothers' era. In 1980, Nelson and William Hunt aggressively bought physical silver and futures contracts to artificially inflate prices. Today, the buyers are not just speculators, but nations and industries fighting for technological survival. Silver is no longer just a store of value. It is a critical component in solar panels, electric vehicles, and the sprawling AI data centres that are reshaping the global economy. 

While silver stole the headlines with a staggering 2025 performance that dwarfed even gold’s +60% rise, the “yellow metal” has quietly carved out its own historic trajectory. Gold prices have been propelled by a structural shift in central bank behaviour, particularly in emerging markets. Institutions like the People's Bank of China are aggressively diversifying reserves away from the US dollar to hedge against geopolitical sanctions. Various market participants project this trend will continue, forecasting gold could climb a further 14% to reach USD 4,900 per ounce by December 2026.

The broader metals complex is exhibiting a similar, albeit uneven, resurgence. Platinum and palladium rallied to record highs in late 2025, buoyed by supply risks in South Africa and Russia. Meanwhile, copper, the central nervous system of electrification, faces perhaps the most acute long-term pressure. Experts warn that copper is entering a structural deficit that could widen to a massive 19 million metric tonnes by 2050 if new supply is not unlocked. The metal is being pulled in two ways: traditional demand remains robust, while the energy transition and the explosion of AI data centres are creating a new layer of consumption that miners are struggling to match.

2026: Divergence in the “scarcity supercycle”

In 2026, the outlook for commodities will be defined not by a rising tide that lifts all boats, but by extreme divergence. The era of cheap, abundant raw materials appears to be over for “scarcity metals”, while others face a glut.

On the bullish side, copper stands out. Various market experts expect the price of copper to rise further, citing unique mining supply constraints and the electrification boom. They expect the price gap between copper and aluminium to reach record levels, as copper becomes scarce due to mining struggles, while aluminium is becoming abundant as China builds massive new factories overseas to secure its own supply. Furthermore, the US data centre boom is expected to tighten power markets significantly, exacerbating the need for grid infrastructure upgrades and the copper that entails.

Conversely, markets for battery metals like lithium and nickel face a different reality. Despite the long-term promise of electric vehicles, a wave of new supply, driven in part by Chinese state-backed investments in Africa and Indonesia, has pushed these markets into surplus. Similarly, the nickel market remains oversupplied due to the relentless expansion of Indonesian capacity.

Ultimately, 2026 promises to be a year of reckoning. The “silver squeeze” of late 2025 was likely a tremor preceding a larger earthquake. As the world pivots toward a digital, electrified future, the physical constraints of the mining industry are colliding with the exponential demands of technology. Back in the 1980s, the Hunt Brothers tried to corner the market for profit. Today, the market is cornering the world for progress. In this high-stakes environment, the most valuable asset may simply be physical possession.

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Patrick Quensel joined MBaer Merchant Bank in 2021. As head of investments, he is responsible for the bank’s investment strategy and oversees both advisory and discretionary mandates. He runs a macro-based asset allocation strategy to navigate global markets and uses a systematic model to capitalise on tactical trends.