When Enthusiasm Becomes Dangerous

Commodities have long remained out of the spotlight. While equity markets reached new highs, interest in metals like gold, silver, and copper was relatively muted. That phase now seems to be over. Rising prices are drawing renewed attention, and commodities are increasingly featured in headlines and investor conversations.

This isn’t surprising in itself. Commodities move in long cycles. Periods of low prices lead to reduced investment. When demand picks up again, shortages arise and prices begin to rise. Sentiment improves, and investors slowly return. Eventually, a phase often emerges in which enthusiasm becomes widespread, and prices are driven not only by fundamentals but also by expectations and momentum.

This is especially evident in gold and silver. Their recent strong performance has sparked a wave of interest, not just from institutional investors, but also from retail investors entering the market based on recent gains. When an asset is bought primarily because the price is rising, caution is warranted.

This does not mean the long-term case has disappeared. Gold remains a monetary hedge, and silver has both monetary and industrial applications. Copper is essential to electrification, infrastructure, and the energy transition. The structural role of these metals in the global economy is not in question.

What does change is the risk profile when a theme becomes popular. As more investors take the same position, the likelihood increases that much of the good news is already priced in. The room for disappointment narrows, while sensitivity to setbacks grows.

Disciplined investing in such phases means not blindly following the crowd, but rationally assessing valuations and positioning. It may involve trimming positions selectively when enthusiasm dominates—even if the long-term thesis remains intact. Not out of pessimism, but out of risk management.

At the same time, new opportunities often emerge in areas that remain under the radar. Investments that are unpopular today but supported by strong underlying fundamentals can form the basis for future returns.

Markets rarely reward those who jump in last. They more often reward those who dare to be early, remain patient, and are willing to take profits when optimism becomes widespread.

Enthusiasm is pleasant. Discipline is more valuable.

Disclaimer

This article is provided for informational purposes only and does not constitute investment advice or an offer to buy or sell any financial instruments.