Have you ever watched gold and silver fly while something even more essential to modern life quietly lagged behind?
That’s exactly what’s been happening with copper this cycle. Gold is up nearly 60% in 2025, silver more than doubled, yet copper — the metal that literally powers the future — has “only” gained about 56%. For a commodity everyone says is in structural shortage, that feels almost… polite.
But here’s the twist that keeps me up at night: copper is still historically cheap relative to gold. And when a metal that’s indispensable for electrification, AI data centers, and renewable energy is trading near multi-decade lows against the ultimate monetary hedge, something has to give.
Why Copper Deserves More Love Right Now
Let me take you back a second. In 1990 you needed roughly 45 metric tons of pure copper pennies to buy an average U.S. house. Fast-forward 35 years — after all the inflation, all the money printing, all the everything — you still need about the same amount if those pennies were real copper (not the zinc impostors we mint today).
Think about that. The dollar lost 87% of its purchasing power against houses, but almost none against copper. That’s wild. Meanwhile gold went from needing 300-400 ounces to buy a house down to barely 120 ounces at recent peaks.
In other words, gold got the “fear trade.” Copper never really did — until perhaps now.
The Dual Demand Engine Nobody Can Turn Off
Everyone knows the green energy story: EVs need 3-4× more copper than combustion cars, solar and wind farms gobble it up, grid upgrades across the West are mandatory. That’s the easy part.
What fewer people talk about is the AI data-center boom. Training large models and running inference at scale requires insane amounts of power, and power needs copper — lots of it — for transformers, cooling, cabling, everything. Hyperscalers are building facilities measured in gigawatts. A single large campus can eat 50,000–100,000 tons of copper. And they’re coming online every quarter.
Supply? Not so much. Major new mines take 10-15 years and billions of dollars. Permitting delays, grade declines, and water issues are crushing output growth. The math is brutal: we’re looking at persistent deficits through the end of the decade.
Miners: Where the Real Leverage Lives
Here’s the thing I love about commodity bull markets — the miners usually outperform the metal itself. Why? Operating leverage. When copper rises $0.50/lb and your all-in sustaining cost is $1.80/lb, almost the entire increase drops to the bottom line.
That’s why gold miners have crushed the GLD this year, silver miners crushed SLV, and why the right copper name can absolutely run if the metal catches up to its fundamentals.
“In a commodity bull market, I’d rather own a low-cost producer with leverage than the commodity itself.”
— Old-school resource investor wisdom
Meet the 800-Pound Gorilla: Southern Copper (SCCO)
If you’re going to pick one copper pure-play, it’s hard to beat Southern Copper. Majority-owned by Grupo Mexico, they control the largest reserves in the industry — over 42 million tons — and produce north of a million tons per year.
What really sets them apart is cost structure. Through the first nine months of 2025 their net cash cost was just $0.61 per pound. Yes, sixty-one cents. Current spot price? Around $4.80. Do that math on margins.
Compare that to Freeport at ~$1.70 AISC or Rio Tinto pushing $2.20+ and you see why SCCO is the margin king. When copper moves a dime, Southern Copper makes money like it’s printing it.
Option Strategy #1 – The Low-Drama Buy-Write
If you’re happy owning the stock and just want to lower your cost basis while collecting juicy premiums, the classic covered call (buy-write) works beautifully here.
SCCO pays a variable dividend that has been running 3-5% most years, but the options are where the real income lives. The Jan 2026 $150 calls were recently bid around $14 when the stock was near $140. Sell those and your breakeven drops to ~$126 while you pocket 10% premium in 13 months.
Not bad for a stock that already yields dividends and has among the best balance sheets in the sector.
Option Strategy #2 – Zero-Cost (or Close) Risk Reversal
But what if you think we’re at the very beginning of copper’s catch-up move and want asymmetric upside without laying out net premium? Enter the risk reversal.
Here’s a real-world example from early December 2025 (prices move, so always check current markets):
- Sell the Jan 2026 $120 put @ ~$12.50 credit
- Buy the Jan 2026 $160/$200 call spread for ~$12.00 debit
Net cost ≈ $0 or even small credit some days.
Maximum risk: you buy the stock at $120 (net ~$107.50 after premium) if copper completely collapses.
Maximum gain: $80 per spread ($200 − $120) if SCCO runs past $200 — a 86% move from current levels, which is actually modest if copper re-rates to even half of gold’s 2025 gain.
Breakeven on the upside is ~$172, which is only about 23% higher. That feels very achievable in a continued commodity bull.
Why This Setup Excites Me Personally
I’ve traded commodity cycles for years, and the setups that have made the most money are always the ones where:
- The underlying asset is fundamentally mispriced versus history
- demand tailwinds are structural and multi-decade
- you can structure the trade to be long gamma with defined risk
This copper miner trade checks every box. You’re long the best-in-class operator, you have massive operating leverage to the metal, and the option structure gives you 3-4× the upside of just buying the stock for essentially zero net debit.
Even if I’m wrong and copper stalls, worst case I get assigned a world-class asset at a 20%+ discount to spot with a mid-teens earnings yield. That’s the kind of “wrong” I can live with.
Final Thoughts – Positioning Before the Crowd Wakes Up
Gold and silver got the headlines in 2025. Copper got the shrug. But the fundamentals for the red metal are arguably stronger than either precious metal — and the valuation gap has rarely been wider.
When the narrative finally shifts — and it always does — the move in quality copper names can be violent. Using options lets you ride that move with leverage while keeping risk clearly defined.
So while everyone else is still debating whether gold goes to $4,000, a quieter and potentially more explosive trade is setting up in the mining pits of Peru and Mexico.
I know which one has my attention right now.
Trade safe, and may your fills be clean and your margins fat.
