Finding value in today’s commodity cycle

Boston Partners argues that the commodity upcycle creates selective value opportunities in energy, gold and copper companies with disciplined capital allocation, resilient profitability and improving free cash flow.

• The Bloomberg Commodity Index gained 45% since the end of 2024 through September 1, 2026; Brent rose 27%, gold 65%, silver 119% and copper 63%, while the S&P 500 gained 30% and the Bloomberg Dollar Index fell 8%.
• The Iran war and the closing of the Strait of Hormuz pushed Brent above $120 per barrel and WTI above $110, while disruption to refining capacity widened refined-product crack spreads; Boston Partners favors energy companies that remain profitable at conservative oil prices and generate controllable free cash flow.
• Gold’s traditional relationship with real interest rates broke down after Russia’s invasion of Ukraine in February 2022 as central banks increased purchases to diversify reserves; miners are now benefiting from gold prices near $4,500 per troy ounce, stronger balance sheets and rising shareholder distributions.
• Copper combines demand from electrification, electric vehicles, solar panels and AI infrastructure with supply constraints including long mine-development lead times, declining ore grades, few new discoveries and geopolitical disruptions; large deposits can operate for decades but carry significant execution risk.
• Boston Partners’ own comparison averages free cash flow as a percentage of market capitalization across seven gold miners, three copper miners and the S&P 500 Energy Index, using historical data through 2025 and blended 2026 estimates; the resulting series shows cash flows inflecting higher for all three groups.

Takeaway: Investors should favor commodity-linked companies with strong execution, improving earnings revisions, healthy balance sheets and cash flows that do not depend on peak prices, while recognizing that oil volatility, mining costs, operational risks and commodity-cycle reversals remain material reservations.