Hello TheoTrader,
It's the final trading week of 2025. Both the S&P 500 and the Dow closed at their highest weekly levels in history again on Friday.
This is bullish price action. Full stop.
Overall, it was a year dominated by the tech sector. If you didn't own tech, your odds of outperforming were very slim.
But obviously, the biggest story of 2025 was precious metals - silver especially. If you missed that boat, don't fret.
Another related story is panning out in the tape right now, and it could be just as significant.
It’s All About Growth
The Sector Nobody's Talking About
The top-performing sector last week was basic materials. There's no question that precious metal mining stocks helped carry it higher - the NYSE gold mining index was up over 4.5% in just one week.
But here's the question that matters: will other base metals like copper experience a similar breakout to gold and silver?
At this point, I think it would be foolish to believe otherwise. Let me explain why.
The AI Connection
Let's take a step back and understand what's really going on here. It starts with looking at the leadership of 2025 - tech. Now consider the core metals in semiconductors:
Silicon forms the foundation of nearly all microchips and wafers used in AI processors (e.g., GPUs from Nvidia). Ultra-high-purity silicon is essential for transistors and integrated circuits.
Copper provides superior electrical conductivity for interconnects in chips, wiring, power distribution, and cooling systems in data centers. AI's energy-intensive workloads make copper indispensable, with demand projected to rise significantly.
Gallium is used in compound semiconductors like gallium nitride (GaN) and gallium arsenide (GaAs) for high-performance, efficient AI chips and power electronics.
Germanium enhances high-speed data transmission in fiber optics and integrated circuits, critical for data center networking.
Gold is employed in bonding wires, connectors, and plating for reliable, corrosion-resistant contacts in high-end chips.
Silver offers the highest conductivity; used in soldering, contacts, and high-performance PCBs for minimal resistance in AI hardware.
The Laggard With the Biggest Opportunity
Now here's what's important: compared to gold, silver, and copper, the markets for silicon, gallium, and germanium are minuscule.
But the clear laggard among the major metals - compared to gold and silver - is copper. That gap is unlikely to persist.
A real case can be made that the surge in metals has everything to do with the AI boom. This isn't speculation. It's supply and demand.
A Word to the Skeptics
For the doom and gloomers out there - take it easy. This isn't 2008.
Why not? Two reasons: crude oil isn't surging, and big companies aren't going bankrupt. The macro environment is fundamentally different.
Looking Ahead to 2026
As I conclude the final weekly Tale of the Tape of 2025, it is sure looking like 2026 will be a continued story about AI and the tech sector.
The metals trade isn't finished. It's just getting started.
Stay tuned,
Gianni