The longest performance window for companies each year generally occurs from November of the previous year to March of the following year. Investors not only enter the &#34;fog&#34; of stock performance but also lose the pathway for macro narratives and micro facts to corroborate each other. Therefore, during this period, investors often develop a habit of trading expectations. Through recent trading results and asset performance, where can we glimpse the strongest consensus direction in the market for the new year? In the minds of investors, who is most likely to become the sharpest &#34;spear&#34; among assets?
The answer is resource products led by precious metals. Since November of last year, metals such as silver, copper, and gold have led global assets in both returns and Sharpe ratios, and the acceleration of their market has occurred in the past two to three weeks. We believe that in addition to the market pricing in expectations of medium to long-term supply-demand imbalances and a weaker dollar, the short-term catalyst is the expectation of loose monetary and fiscal policies.
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In fact, the effect of the RMP (Reserve Management Purchase) introduced at the December interest rate meeting may have been underestimated by the market. Because at the beginning of the RMP's introduction, U.S. stocks, U.S. bonds, and even Bitcoin reacted generally, and the market did not take seriously the liquidity improvement effect it brought. However, at the same time, commodities began a new round of magnificent market trends, starting with silver, then spreading to other precious metals, and now it has expanded to base metals like copper, as well as petrochemicals and agricultural products.
So why is this liquidity easing not &#34;evenly distributed&#34; in the capital market, but rather so &#34;biased&#34; towards resource products? We believe there are two main reasons: First, aside from resource products, other major asset classes each have their own &#34;hidden worries&#34;; Second, resource products are in a resonance cycle that is favorable in the short, medium, and long term.
For the first reason, the market has already discussed a lot in the past two months, and we will not elaborate further here. We will present the core issues below:
In the equity market: U.S. stocks face the risk of over-investment due to the divergence between AI capital expenditure and ROIC; European stocks, although driven by favorable fiscal shifts, are relatively weak in the short term, and fiscal easing is hesitant amid partisan divisions, leading to doubts about the effectiveness of fiscal implementation; Japanese stocks are constrained by the inability of domestic monetary and fiscal policies to coordinate (tight monetary and loose fiscal), and the subsequent expectations of easing and economic prospects (the risk of stagflation brought by continuous depreciation and stagnation in industrial upgrades) are relatively tortuous; Emerging markets are affected by the &#34;shadow&#34; of tariffs on fundamentals, and the recent slowdown in the weak dollar narrative has also affected capital inflows to some extent.
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In the bond market, bonds from major countries face common core pressures, namely that fiscal expansion has led to a significant increase in the scale of government bond issuance, and the concentrated shock on the supply side may directly suppress bond prices
In the commodity market, the oil price lacks sustained upward momentum under the pattern of oversupply and is unlikely to attract significant capital allocation, which is generally viewed pessimistically by the market.
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Therefore, in the context where various assets have clear concerns and insufficient cost-performance ratios, other resource products led by metals, with relatively clear supply and demand patterns and favorable logic, naturally become the direction with the least resistance for current market funds.
The second reason may be more important than the previous factor. From the current standpoint, resource products are actually in a favorable cycle of three-phase resonance:
Short-term: The improvement in liquidity at the beginning of the year and expectations for &#34;easing&#34; within the year jointly drive commodity prices up. On one hand, under the influence of the U.S. RMP (Reserve Management Purchase) and the release of TGA funds, it is expected that at least $600 billion in liquidity will be added in the short term (asset side $220 billion + TGA release of about $400 billion), thereby bringing the basic liquidity (bank reserve balance) back to a relatively comfortable scale in the market (see the report &#34;How Will Liquidity Trading Change the Market?&#34;).
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On the other hand, the market still holds expectations for an unexpected interest rate cut, or even a restart of QE. Although the subsequent pace of liquidity easing continues to depend on data, considering the current significant disconnection in U.S. economic data: high-income groups and AI growth ensure the resilience of U.S. economic growth; while non-AI sector enterprises are under pressure, and the employment quality of those below the high-income level is deteriorating, leading to the current weak inflation and weak employment pattern. Therefore, unless there is an unexpected improvement in employment and an upward trend in inflation, or large-scale policy support for low- and middle-income groups from the fiscal side, it may be difficult to completely reverse the current expectations for easing. The potential addition of fiscal measures combined with the already effective &#34;Great Beauty Act&#34; this year keeps expectations for further fiscal easing high.
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Mid-term: Incremental industrial demand combined with a weak dollar cycle creates a dual favorable resonance. The rapid development of emerging industries such as new energy and artificial intelligence provides core support for the expansion of resource product demand. According to the International Energy Agency (IEA), it is predicted that by 2030, global copper demand will increase by more than 20% compared to 2024, with major incremental sources coming from new energy fields such as grid construction, electric vehicles, and photovoltaics. The same logic applies to silver.
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Another boost in the mid-term: The weak dollar cycle will further support the upward movement of resource product prices. As the interest rate differentials between the U.S. and European and Japanese economies narrow, and economic growth expectations converge, coupled with the constraints of the mid-term debt cycle, the growth potential of the U.S. economy is gradually under pressure, making the trend of dollar depreciation difficult to avoid
If we simply refer to historical trends, it is expected that by the end of 2027, the US dollar will likely maintain a relatively weak pattern, which will provide continuous favorable support for the commodity market.
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Long-term: Geopolitical conflicts intensify resource competition, and supply-side disturbances continue to escalate. On one hand, the global strategic attributes of resources are becoming more prominent, with multiple countries including metals other than gold in their strategic reserve lists, simultaneously advancing stockpiling and export controls, further strengthening supply constraints on resource products; on the other hand, the Venezuela incident may mark a strategic contraction of the United States in the Western Hemisphere, where the Western Hemisphere has a high proportion of key resources such as lithium and copper, making it increasingly difficult for the Eastern Hemisphere to acquire these resources in the future; additionally, if the United States accelerates its exit from the Eastern Hemisphere, it may further trigger a power vacuum of superpowers in regions such as the Middle East and Africa, potentially increasing the intensity of regional &#34;infighting&#34; and further amplifying the disturbance risks on the supply side of resources.
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If the core logic mentioned above does not reverse, we may have already entered the strongest momentum period for resource products in this bull market, and resource products will firmly hold the position of the sharpest &#34;spear&#34; in asset allocation. So, what &#34;milestones&#34; will indicate market fluctuations?
Short-term &#34;milestones&#34;: First, major exchanges tighten speculation regulations on resource products, such as raising margin ratios, setting trading limits, or implementing liquidation restrictions; second, a reversal in key US economic data (unexpected increases in non-farm payrolls and inflation). It is important to note that current policies (whether interest rate cuts or the US Inflation Reduction Act) may have little effect on changing the current pattern of &#34;weak employment, low inflation&#34;; only policies with a more &#34;wealth redistribution&#34; attribute can effectively bridge the gap in the US K-shaped economy. Therefore, if direct cash subsidy policies aimed at the general public are implemented, it will become an important short-term reversal &#34;milestone.&#34; Third, a significant alleviation of market concerns about other assets (most importantly, US stocks) may provide evidence during the annual and quarterly report disclosure periods.
Mid-term &#34;milestones&#34;: Non-US economies fall back into political turmoil, and the economy shows no signs of improvement. On one hand, this will lead to delays in the implementation of fiscal policies or results that fall short of expectations, breaking the mid-term logic of recovering demand for resource products; on the other hand, it may further push up the US dollar, suppressing the prices of resource products priced in it.
Long-term &#34;milestones&#34;: A clearer and more stable global geopolitical landscape is needed. The final outcome may be that countries stockpile sufficient resource products and backup long-term necessary production capacity, thereby weakening the long-term premium logic of resource products, becoming a long-term &#34;milestone&#34; for market reversal, but this process is fraught with challenges.
Risk Warning and Disclaimer
The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at their own risk

In the current bull market, resource products led by precious metals have become the focus of investors. Since November last year, the returns and Sharpe ratios of metals such as silver, copper, and gold have outperformed global assets, with the market accelerating in the past few weeks. The market is pricing in expectations of medium to long-term supply-demand imbalances and a weakening dollar, while the expectations of loose monetary and fiscal policies in the short term serve as catalysts. The easing of liquidity has significantly benefited resource products, mainly due to concerns facing other assets and the favorable resonance cycle of resource products

- The article discusses investment trends focusing on resource commodities, particularly precious metals like silver, copper, and gold, which have outperformed other asset classes recently.  
- It highlights that the market is responding to expectations of long-term supply-demand imbalances and a weaker dollar, driven by short-term monetary and fiscal policy easing.  
- The article suggests a strong momentum phase for resource commodities, while cautioning that external geopolitical and economic factors may influence market dynamics in the future.

The sharpest spear in this bull market: resource products led by precious metals