Copper analyst speculates about a bubble

In 2025, the price of copper, including recycled copper, in the United States spiked in part because of the possibility a tariff could make the material up to 50 percent more expensive compared with Europe or China.

Another factor boosting copper’s demand and price includes the construction of artificial intelligence- (AI-) related data centers and the perception of a bolstered electricity grid needed to power the new facilities.

An October report from Miami-based CRE Daily says data center investments account for 92 percent of GDP growth in the U.S. in the first half of 2025 despite making up just 4 percent of total U.S. GDP, citing an analysis by Harvard University economist Jason Furman.

Data center or “hyperscaler” capital spending is approaching $400 billion annually, according to CRE, with investors including Amazon, Alphabet (Google), Microsoft, Meta and chip maker Nvidia.

“GDP growth in the first half of 2025 was driven almost entirely by [the] rapid expansion of AI infrastructure and data centers,” CRE says, citing Furman’s analysis and reporting by Fortune.

In a late December issue of "The Copper Journal," longtime New York-based red metals industry analyst John E. Gross recaps the soaring metals pricing that typified 2025.

“We’ve been trying to put a finger on what this market reminds us of, and it came to us in a flash while reading an article from Friday’s Wall Street Journal," he says.

That article was on the rise and fall of Gary Winnick, who rose to fame after founding Global Crossing in 1997. Global Crossing was a telecommunications company with a goal of building an undersea fiber optic cable network.

“The thesis was simple: As the internet became ubiquitous, the world’s communication arteries were about to be rewired, and those who owned the fiber would own the future," the article says.

Gross notes that for Winnick, things did not go according to plan, and that Global Crossing fell victim to the dot-com era when demand for its bandwidth fell far short of projections, and the aggressive buildout left it with billions in debt.

“One can’t help but think we are living in the echo of the dot-com era, when all things today are focused on AI," Gross says. "Maybe things will play out as planned—or maybe they won’t. Maybe precious metals [prices] will rise to the sky, or maybe they won’t.”

U.S.-based Comex copper pricing reached a record high in July at $5.80 per pound, while the price as of Dec. 26 was $5.44 per pound.

Gross says some analysts are predicting another new record high in 2026, but he adds a note of caution regarding that enthusiasm.

“In the meantime, while copper continues moving into Comex warehouses, the month-to-date spot Comex premium over the London Metal Exchange has come in to 4.6 cents as of [Dec. 26], down from 12 cents in November and 17 cents in October," he says. "Might we see an LME arbitrage premium soon?”