Forget gold, BHP shares could be the better long-term buy

Gold has had a strong run.

With rising geopolitical tensions, it is easy to see why investors have been drawn to the precious metal.

But if I were looking for a long-term wealth-building idea on the ASX, I would be more interested in a business that can generate cash flow, pay dividends, and benefit from a major structural demand trend.

That is why BHP Group Ltd (ASX: BHP) shares stand out to me.

The copper opportunity

BHP is often thought of as an iron ore giant, and for good reason.

Iron ore has been the backbone of the business for years and remains a major earnings driver. But I think the more interesting long-term story is copper.

Copper is used across electricity networks, renewable energy infrastructure, data centres, electric vehicles, industrial machinery, and construction. If the world keeps electrifying, it is hard to see copper demand disappearing.

That is where BHP could be well placed.

The company already has major copper exposure, and management has been clear about its desire to increase its exposure to future-facing commodities. For investors, that gives BHP a growth angle that goes beyond the usual iron ore cycle.

I think this matters because copper is becoming more strategically important. Supply is difficult to bring on quickly, new mines can take years to develop, and permitting can be challenging.

If demand remains strong and supply stays tight, copper could be a very useful tailwind for BHP over the next decade.

A real business behind the theme

One of the risks with commodity investing is getting too excited about the theme and forgetting the business.

That is why I prefer BHP shares to many smaller resource shares.

It has scale, diversification, balance sheet strength, and a long operating history. It can invest through cycles, fund major projects, and return capital to shareholders when conditions are favourable.

BHP also has potash as another long-term option through its Jansen project. That gives it exposure to global food production and fertiliser demand, which could become increasingly important over time.

So, while copper is my favourite part of the thesis, it is not the only reason I would own the stock.

There is also the dividend.

BHP’s dividend will always move with commodity prices and earnings. It is not a fixed income stream. But over time, the company has shown a willingness to reward shareholders when cash generation is strong.

For investors who want both income and long-term growth potential, I think that combination is attractive.

Why I would buy instead of gold

Gold can help during uncertain periods, and I understand why some investors like it.

But gold does not grow earnings, expand production, or pay dividends.

BHP can do all three, although none of that is guaranteed, and commodity cycles can be brutal.

The key difference for me is that BHP gives investors exposure to real economic activity. If copper demand grows, if potash becomes a larger contributor, and if iron ore remains profitable, the company can generate cash and reinvest for the future.

That is the kind of long-term setup I would rather own.

Foolish Takeaway

Gold may continue to attract attention, especially while markets remain unsettled.

But for my money, BHP looks like the more attractive long-term ASX share idea.

It offers exposure to copper, iron ore, potash, dividends, and one of the strongest resource platforms in the world.

The post Forget gold, BHP shares could be the better long-term buy appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.