Beyond gold: These three asset classes attract inflation skeptics

• Copper and uranium benefit from supply bottlenecks and the energy transition
• Tangible assets can become more important when inflation is persistently high
• Bitcoin is seen as a possible hedge against inflation, but remains controversial and volatile

Why real assets become more important in an environment of increased inflation

If you want to understand why copper, uranium and Bitcoin have become the focus of investors in the current market environment, you first have to take a step back and look at the overall economic framework. Many countries are pursuing expansionary fiscal policies despite high levels of debt. Defense spending is increasing, infrastructure programs are being launched, and state subsidies are flowing for the restructuring of the energy supply. The result is a structural demand for money and capital that meets a limited supply of real goods.

Raw material prices and inflation rates are closely linked. In a study for the economic service, the Hamburg Institute of International Economics (HWWI) shows that industrial raw materials such as copper and aluminum particularly influence core inflation, i.e. that part of price development that excludes energy and food. Central banks can dampen these price movements through various channels, for example by making higher interest rates increase the cost of storing raw materials and slowing industrial demand. But structural shortages cannot simply be inflated away through monetary policy.

In this environment, investors are increasingly looking for real assets that maintain their value even when the purchasing power of currencies is under pressure. Gold traditionally plays a leading role. But raw materials are increasingly coming to the fore, which are not primarily seen as a store of value, but rather as indispensable raw materials for industrial transformation.

Copper: Key raw material for the energy transition with a growing supply deficit

Copper is an electrical conductor and is therefore irreplaceable for almost everything related to the electrification of the economy: power grids, wind turbines, solar farms, electric vehicles and data centers. The global electrification boom is encountering stagnating supply: As the International Energy Agency (IEA) predicts in its “Global Critical Minerals Outlook”, the current pipeline of mining projects could lead to a supply bottleneck of around 30 percent by 2035. The main drivers of this deficit are declining ore grades, rising capital costs, a lack of new deposits and long project lead times.

The structural reasons for this deficit are diverse. The ore grades in copper mines have fallen significantly since the early 1990s, the development time of new mines is now many years, and significantly fewer new copper deposits have been discovered in recent years than in previous decades. At the same time, demand is growing from several quarters. Electric vehicles, renewable energy, power grids and the rapidly expanding data center sector are increasing demand. The supply gap for copper is particularly structural in nature because new mining capacities can only go into operation with a considerable delay, as the IEA emphasizes in its outlook for critical minerals.

For investors thinking in this context, this means that demand for copper is directly linked to the implementation of the energy transition, while supply can only react sluggishly. It is the interaction of both factors that makes copper interesting as a possible inflation indicator in addition to its industrial importance.

Uranium: Renaissance of nuclear energy meets tight supply

Similar to copper, uranium is also experiencing a tension between growing demand and limited supply.

The background is a global reassessment of nuclear power. Countries that abandoned nuclear power or scaled back their programs after the Fukushima nuclear accident are now returning. In Europe, the USA, China and India, new reactors are being built or existing plants are being reactivated. The global reassessment of nuclear energy is based on energy security, security of supply and decarbonization. The IEA currently sees more than 40 countries with expansion or new construction plans; IAEA data on reactors and projects under construction support the trend.

The global supply of uranium largely comes from a few countries, with Kazakhstan being by far the largest producer and covering over 39 percent (World Nuclear Association, 2024) of global production. This geographic concentration makes the uranium market vulnerable to geopolitical disruption. Central supplier countries have recently made access to their resources more difficult, which is placing greater focus on issues of security of supply and long-term supply contracts. The interaction of structurally increasing demand, long lead times for new mining capacities and geopolitical dependence gives uranium particular weight as a raw material in an inflationary environment.

Bitcoin as Inflation Protection: What the Research Actually Shows

In addition to physical raw materials, Bitcoin is often brought into play as a possible protection against inflation. The reasoning is familiar: limited total quantity, decentralized network, no access by governments. But what does empirical research say about this?

A study by Harold Rodriguez and Jéfferson Colombo, conducted at the Getulio Vargas Foundation (FGV-EESP) in São Paulo and published in the Journal of Economics and Business, analyzes how Bitcoin responds to unexpected inflation shocks based on monthly data over more than a decade. The results suggest that Bitcoin returns increase after a positive inflation shock, which empirically supports that Bitcoin can act as an inflation hedge. However, this property depends on the price index used and the observation period.

A temporal differentiation is crucial. Bitcoin’s anti-inflation property largely dates back to the cryptocurrency’s early phase. Since the outbreak of the COVID-19 pandemic, this property has decreased for Bitcoin while it has increased for gold. A possible explanation lies in increasing institutionalization. The more professional investors trade Bitcoin and the more closely it approximates the price movements of other risky assets such as stocks, the less reliable its behavior as an independent inflation hedge becomes.

In summary, it can be said that Bitcoin can keep up with increasing inflationary pressure in certain market phases, but is not a reliable replacement for proven real assets. Gold demonstrated stronger hedging properties precisely when it was needed most, namely during turbulent market phases with high uncertainty. For investors looking for a classification, the following picture emerges: copper and uranium address a structural boom in demand driven by the energy transition, which exists independently of inflation expectations. Bitcoin offers, at least historically, potential as a portfolio addition, but is significantly more volatile than gold and its protective effect against inflation is context-dependent and shows signs of weakening. Anyone who understands these connections can assess for themselves what value such positions deserve in their own portfolio, without relying on promises that empirical evidence does not support.

Jonas Vogt, editorial team at finanzen.net

This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.